Wrap your USS pension up with the rest of your future planning

Read our top tips on making a financial plan for your future

It might seem a long way off but planning and saving for retirement now, could have a big impact on what you’ll get in the future.

Knowing what your USS pension could give you might help you plan for your future, even if it’s just thinking about how it could work with any other pensions and savings you might build up, so here’s a quick reminder.

Understanding your pension

A guaranteed income for life when you retire – The Retirement Income Builder

When you started contributing to USS, you automatically joined the Retirement Income Builder – the defined benefit (DB) part of USS – which gives you a guaranteed income for life and a tax-free lump sum (up to HMRC limits) when you retire.

According to the Pension Regulator’s (TPR’s) Occupational defined benefit (DB) landscape in the UK 2023 report, there are only 199 DB workplace schemes open to new members, compared to 25,800 defined contribution workplace pensions, as reported in TPR’s Occupational defined contribution landscape in the UK 2023 report. This means your USS pension and the guaranteed benefits it gives you are rare.

Every year you paid into USS you built a block of pension based on an accrual rate used at the time you were paying in. The pension you built up was banked and increases in line with inflation (subject to certain caps), giving you an element of inflation protection. These pension benefits continue to increase in value each year, even though you’re no longer paying in and even in retirement.

If you’re still in USS eligible employment, you can pick up where you left off and continue building your USS pension, instead of having to start building in a new scheme, like many pension scheme members who move jobs. The benefits you build up if you rejoin will be linked to the ones you’ve built up already.

You can estimate what you might get in retirement by logging into My USS and using the Benefit Calculator.

Life and ill health cover

When paying in to USS, you get life cover to help take care of loved ones should the worst happen. But even if you’re no longer paying in, your beneficiaries could still receive benefits when you die, so it’s important for you to update your Expression of Wish form in My USS every three years to reflect any changes in circumstances. Find out what benefits your loved ones could get while you're not paying in to USS.

Members who are paying in to USS also receive ill health cover, so if you have to stop working due to your health, as long as you’ve been building your pension with USS for at least two years, you could retire early with full USS benefits.

The Investment Builder (DC) – A flexible savings pot

USS is a hybrid scheme, which means we also have a defined contribution (DC) part, the Investment Builder. You have savings here because you either transferred a pension to USS, made additional contributions or earned above the salary threshold.

The value of your pot in the Investment Builder is based on what you and your employer put in and the investment returns you get. If you haven’t already, it’s worth logging in to My USS to do a quick check on your savings pot:

1. Check your money is invested were you want it to be. You can choose to manage investments yourself or decide to let us do it for you. We automatically invest in the Do It For Me Option, if you don’t make a choice.
2. Check your Target Retirement Age (TRA) is right for you. Your TRA is important if you’re in the Do It For Me Option, we use this to determine when to start moving your investments to lower risk funds as you get closer to retirement.

When you want to use your Investment Builder pot, which you can do from the normal minimum pension age (55 rising to 57 in 2028 for some members), you have a range of options to suit you, from cash payments to converting to an annuity if you transfer to another arrangement.

Published: 24 October 2024