Should you join or re-join USS?

Since 1 January 2024 member contributions have reduced from 9.8% of salary to 6.1%.

Use the USS Contributions & Tax Calculator in My USS to find out how much you would pay as an active member.

If you are eligible and have any period of active membership between 1 April 2022 to 31 March 2024, and you do not retire before 1 April 2024, you will receive a one-off annual pension uplift of £215 and an associated £645 retirement lump sum. If you re-join and start paying in before 1 April 2024 you’ll still receive this uplift. This is subject to certain criteria and you can find out more here in our Q&As.

Build more defined benefits

The rate at which active members build up benefits in the defined benefit part of USS, the Retirement Income Builder, will increase.

Currently active members get 1/85 of salary (up to the salary threshold) in defined benefit pension each year and 3/85 of salary as a lump sum on retirement. This will increase to 1/75 of salary for pension benefits and 3/75 of salary for the lump sum respectively (for salary up to the salary threshold).

Salary threshold increase

The salary threshold is anticipated to be £70,308 (this will be confirmed in the next few weeks). This means if you earn below this salary threshold and start paying in, you’ll build up defined benefits in the Retirement Income Builder.

The salary threshold will be increased annually until 31 March 2028 in line with increases to official pensions, which broadly go up with CPI inflation, subject to certain limits. It is proposed that the limit would be changed from the current 2.5% to a maximum of 10% (subject to certain limits).

Higher cap for future pension increases

The defined benefits that you have built up since 1 April 2022 in the Retirement Income Builder would increase every year both before and after you retire in line with increases to official pensions, which currently go up with CPI inflation. They will be subject to a higher maximum increase of 10% rather than the current maximum of 2.5% (which had been deferred to 1 April 2026 but applying to benefits built up from 1 April 2022). Increases will be as follows:

• Where inflation (currently CPI) is 5% or less, the increase will be matched.
• Where inflation is more than 5% but less than 15%, the increase will be 5% plus half of the percentage increase over 5%.
• Where inflation is 15% or more, the increase applied will be 10%.

• Example members do not represent real members but have been chosen to reflect a range of current salaries, ages and accrued rights within the scheme, and draw from average ages and accrued rights of members with similar salaries.
• Example members receive tax and NI relief (assuming their only income is the pensionable salary referred to in the examples) and do not contribute to USS via a salary sacrifice arrangement.
• Example member salaries are increased by 2.5% a year.
• Inflation is assumed to be 2.5% per annum. For figures provided under the current benefit structure, the salary threshold is projected to get an average increase of 1.9% each year, and for those figures under the new structure, effective from 1 April 2024, the new salary threshold gets an average increase of 2.5% each year.
• Example members’ existing DC savings have been assumed to be allocated to the USS Investment Builder Growth fund, for which the underlying investment return assumption is 5.5% per annum (3% above assumed inflation).
• Investment management costs are not included.
• Example members illustrate the projected impact of the proposed changes at a member's normal pension age. The retirement age for all examples is 66 – no early reductions or late retirement increases are applied to past and future service.
• Pension figures are based on the assumption that the scheme changes come into effect from 1 April 2024, and for the purposes of the deferred members the re-joining date is assumed to be 1 January 2024.
• The one-off uplift is applied to the example eligible members in USS between 1 April 2022 and 31 March 2024 and is reflected in pension figures by retirement age.
• No other pension provision that members may have in any other arrangement / the state pension is included.
• All pension figures are examples only and are shown in today’s money, to reflect what a member may view within the My USS Benefit Calculator.
• All projected pension figures are rounded to the nearest whole number.
• The examples are based on a member having not made any elections in respect of their benefits such as EOO and who have not transferred out, taken flexible retirement or taken a refund of contributions prior to 1 April 2024.