So, where do you start?
A good place to begin is by reviewing your pension. Look at what you’re currently putting in and what this is expected to give you when you retire. Will it provide you with the retirement you want?
Research by Which?* suggests that couples will need a pension income of around £25,000 a year to cover household bills and provide the odd luxury, like a holiday or a few meals out.
If you want something a bit less austere, like a few holidays, regular meals out and a new car every five years, you’re going to need around £40,000 a year per couple.
If you’re single it will be less, but not significantly less, around £20,000 a year for a comfortable retirement and £35,000 for a luxurious one.
What do you need to save?
What you need to save for retirement is dependent on what your aspirations are, and the age you start building your pension.
According to Money Saving Expert**, if you’re saving into a defined contribution (DC) scheme, a very rough rule of thumb is that you should take the age you start building your pension and halve it. This gives you the percentage of your pre-tax salary that you need to contribute into your pension each year until you retire. This figure includes your employer’s contribution.
For USS members, it’s different
Things are different for you because rather than being in a DC scheme you’re part of a defined benefit arrangement, the Retirement Income Builder. Your employer contributes a significant amount to this pension, in addition to your own contributions, so that you are guaranteed an income for life when you retire. This income is based on how many years you’ve been in USS and your salary each year (subject to a cap).
USS also offers members access to a DC arrangement to boost their retirement savings (members who earn above the salary threshold - £59,585.72 for 2020/21 will automatically join).
However, it’s still important to look at what you’re projected to get with USS and ensure it meets your retirement aspirations.
So, how does your retirement look?
Look at your Annual Member Statement (you can find this by logging in to, or registering for My USS) or use the Benefit Illustrator tool, to see what your retirement currently looks like with USS.
Remember to consider any other income you may have in retirement. Don’t forget, you may also be entitled to a state pension. You can get an estimate of your state pension by visiting the Department of Work and Pensions website.
Not on target?
If it looks like you’re going to need more when you retire, you can boost your pension savings by making additional contributions to the Investment Builder.
The Investment Builder is the defined contribution part of USS, where your contributions build up in a savings pot, which is invested in a range of funds based on the investment choices you make.
Just like your Retirement Income Builder contributions, payments you make to the Investment Builder benefit from tax relief, but on top of that, you get some added flexibility, including being able to access your pot in a variety of ways, and you don’t need to wait until you retire because you can start accessing your Investment Builder savings from age 55.***
Need further guidance?
If you need further guidance or financial advice on saving for the future, visit the guidance and financial advice page.
*Which? article - How much will you need to retire?
**moneysavingexpert.com - Pension-need-to-knows
***The government has announced that it will raise the minimum pension age to 57 in 2028. Depending on where you are in your retirement journey, this could impact how early you can access your USS benefits.
Published: 19 January 2021