The cost of a Mars bar and your pension
This year it’s the 50th anniversary of USS. When we started, in 1974, you could buy a Mars bar for a few pence, now you don’t get much change from a pound. But what’s that got to do with your pension?
The price of chocolate is a good illustrator of how the economic landscape has changed over time and the impact inflation has on what your money is actually worth and what it will buy.
When you save money, whether it’s in a pension or elsewhere, inflation will have an impact on its relative value. If your savings grow at a slower rate than inflation, your spending power with that money will shrink.
As a member of USS, you’re part of a relatively small group of people who still have a defined benefit (DB) pension. This DB pension, the Retirement Income Builder, promises you a guaranteed income for life, which is inflation protected (subject to certain caps), regardless of what happens in the economy in the future.
So, once earned, your DB benefits increase in value, broadly in line with inflation (subject to certain caps) every year of your working life and every year of your life in retirement. This can help to ensure they have a similar buying power when you retire, as they do now.
As long as you’re paying in to USS, you also get life cover to help take care of your loved ones once you’re gone. They may be able to get a lump sum of three times your salary – and an inflation-protected pension too (subject to certain caps).
Read more about your Retirement Income Builder pension.
Published: 14 October 2024