tax, ni, student loan relief), Income withdrawn from it will be entirely tax free (if in an ISA). The USS pension scheme has proposed a change from the defined benefits (DB) model to the defined contributions (DC) model. The Canadian pension programs included in the Agreement are the Canada Pension Plan (CPP) and the Old Age Security (OAS) program. I am. Am I missing something obvious? In an FT article from 3 years ago someone mentioned a 33x CETV [edit: 51x on MSE thread https://forums.moneysavingexpert.com/discussion/6045374/another-cetv-thread , which would be a no-brainer I think ] , which already seems high (and conditions now for DB pensions seem to imply a higher valuation). For the USS in particular, discount rates have halved in the matter of a few years as market gilt yields have catastrophically - for pension funds at least - fallen with QE. The valuation would have improved because bonds have got less valuable (higher yields) since March 2020. Universities UK registered Charity No. However, I noticed a news article mentioning USS has a big deficit and I suspect they might offer enhanced transfer values for people like me. USS faces the risk that it will become a decisively inferior package to the Teachers’ Pension Scheme, which staff in new ‘post-92 universities’ pay into. It also provides the results for the Post 92 Teacher Pension Scheme (TPS) for comparison. I pay as much as I can, or the scheme limits will let me. Since then they've risen considerably, so it seems to me that the valuation paints a gloomier picture than necessary. 1001127. Quote was only 25x. USS, as an independent private company, remains based in Liverpool – a location chosen primarily due to proximity to the consulting actuaries and the solicitor to the scheme. In terms of next steps, there will be a consultation organised by Universities UK (UUK) starting later this month which will provide all USS employers with the opportunity to comment on ways to address the scheme’s high opt-out rate and the sizeable deficit, including covenant support measures, affordable benefit structures and changing contribution levels. The valuation is a joke and the employers seemingly think so as well. It has been submitted to … I’ve been in a similar situation and doing similar calculations as OP. I am in good health (non-smoker, active, not a big drinker etc) so from that perspective the lifetime income guarantee is reassuring. In 2008 the scheme … The other pension is very good but its final salary scheme closed to new entrants in 2015, so it's defined benefits. RG: When I arrived, about 8% of USS’s portfolio was in private equity, infrastructure funds, and property. What's the risk of it collapsing before my retirement (40/45 years time)? Honestly they've lost their minds. I'm assuming they had to re-evaluate things based on the covid dip but it does seem rather silly and hopefully it will go back down due to the covid recovery. The total compensation of those in the USS is the aggregate of pay and benefits, if benefits are reduced, does this not put upward pressure on pay? One thought is that 80s onwards have been roughly: abundance of oil, cheap manufacturing in Asia and efficiency gains from technology. The scheme is funded by contributions from employers and scheme members, and returns on investments made by the Trustee. USS is governed by a trust deed and rules and your benefits will always be paid in accordance with the trust deed and rules (as amended from time to time). I'm not a member, but even if the contribution rate was to rise a bit it still seems look a good deal to get that guaranteed income and have no risk of market movements in retirement. A number of elements from this valuation have been particularly challenging, and we have spoken out about these, most notably through a letter to USS. I'm 31 but due to delaying pension contributions to save up for a house, I started paying when I was 29, so about 2 years into it now. However, I noticed a news article mentioning USS has a big deficit and I suspect they might offer enhanced transfer values for people like me. I'm really thinking about just setting up a private pension or paying into a S&S ISA instead (already maxing out my LISA for retirement too). I assume, sadly, that this is the younger members subsidising final salary pensions for the older cohorts who have lived longer than expected. USS Employers is a site owned and managed by Universities UK, the nominated formal representative for over 340 employers in the Universities Superannuation Scheme. I think it’s worth getting a transfer value from USS each year to explore options as this problem persists. You’ll have your own view on whether you wish to take the CETV and take the investment risk. Suggested changes could equal nearly £1k post tax for me lost to pension costs. Advice- seems I might have underestimated this hurdle (both in cost and persuading an advisor that I understand the risk and will gamble). I'm really concerned about the rate at which contributions are increasing and what this means in the long-term. You should get your quote and come back with what they say. It's an odd siutation to be in as should I be caring about the now or the future. Press question mark to learn the rest of the keyboard shortcuts, https://www.uss.co.uk/for-members/articles-for-members/2021/03/03032021_valuation-update-for-our-members. Older threads typically suggest transfer is not worth the loss of guaranteed income. I think the valuation from 2020 is depressed due to the fact that the financial year end is 31/03 which is obviously when there were the big dips due to covid. Thanks, good to know I'm not totally bonkers thinking this! General wisdom is to advise AGAINST transfers out of DB on the basis they are guaranteed inflation linked values paid in annuity. My institute had a pay freeze last year and I’ll be lucky if I get 1% for the next few years so massive increase in pension contributions will be really tough! Would you like to learn more about the changes to the Universities Superannuation pension scheme (USS)? If so, come along to a one-hour presentation by Kevin Painter from Mercer on either 30 June or 18 July. Finance. This app provides some projections that shows the likely impact on future performance for these different models. USS are just bonkers. I think the scheme would be closed to new accruals rather than than happening. As a member you will accrue: 1. a pension of 1/75 of your salary for each year of pensionable service up to a salary threshold 2. a cash lump sum of 3/75 of your salary for each year of pensionable service, up to a salary threshold 3. a money purchase pot in the USS investment builder for some of the contributions paid over the salary threshold The salary threshold is £59,585.72 from 1 April 2020. It’s changing to aged 57 in 2028, and will be likely be later by the time you get there. Full details here: Currently: Combined contribution rate is 30.7% Members pay 9.6% of salary Employers pay 21.1% As of October 2021: Combined … Oxford have just shared this with staff (note, one outcome is contributions of 56% of salary!! So I left it for now. Press question mark to learn the rest of the keyboard shortcuts. The CETV would definitely be over £30k and I've learned financial advice is actually compulsory for that... and it won't be cheap! Our members and over 350 employers in the higher education sector rely on our companies to provide a high-quality pension service and strong returns on … More posts from the UKPersonalFinance community, Discuss, learn and request help on how to obtain, budget, protect, save and invest your money in the UK, Press J to jump to the feed. Is it worth somebody with previous time on the scheme (who now no longer contributes due to different employment) transferring to something like a Vanguard SIPP? As a young HE professional who has recently started to contribute to USS I'm finding it difficult to understand the security of continuing to contribute to USS compared to alternatives. Update: Friday 13 April 2018Statement from the University and College Union:The USS consultation closed at 2pm today. Welcome to the USS The Universities Superannuation Scheme (USS) is specifically designed for all Academic and Academic-related members of University and College staff, and is administered centrally by the USS in Liverpool. The USS Trustee, which is responsible for the scheme, is deciding how much money needs to be paid into it to maintain the current level of defined benefit pensions. 23 Responses to “USS changes — don’t be fooled” Chris Says: March 12, 2015 at 11:39 pm | Reply. In addition, the final pension received under the career average system would be cut by 6 per cent under the proposals, Times Higher Education understands. It will be hard to judge how much better it will be. I'm in the exact same position. We have been surprised and disappointed that the USS report is even more challenging than we had expected. I'm single with only myself to fall back on, no-one else to turn to, and so financial security is really important for my likely long old age (women in my family live into their 90s). It does seem silly though to base this on a valuation report done with depressed values due to Covid. Why not do it yourself? Why should tPR be intervening in what is fundamentally a matter of reward? Surely contributions can't continue to increase so what's the end game here? If you can make more money elsewhere then consider leaving. If you gave me 40% of your salary and asked me to invest it for the next 25 years, I could do a lot better than what they're offering. The Government Pension Getting a monthly check the rest of your life sounds really great in theory. USS and Thames Water. That’s quite a challenge year in year out. The USS pension fund deficit is not exactly news, but the latest round of headlines only adds to the stink of intergenerational unfairness that surrounds universities. I find the USS communications fairly impenetrable and my AVCs (halted for the moment while I pay childcare fees) aren't going up in value. There is an element of that already for some of us - I pay into a DC scheme because my salary is over the threshold. I have a DB pension (USS). On the other hand, I am willing to take a small risk (say 5%) of needing to work a few years extra for the opportunity to retire much earlier. The USS Trustee has proposed three illustrative scenarios for the outcome of the 2020 valuation, two of which will require higher levels of covenant support from employers, such as pledging assets and/or contingent contributions. I hope so anyway, because I don't think the employers would stand for the combined contribution rising to 42%. For example, a researcher joining USS at 38 with a 30 year career will receive more than £200,000 less in the USS scheme than they would in TPS over an average retirement. (I would also get financial advice but prefer to spot big holes before getting that far :)), If anyone had a USS (or similar) CETV quote recently please share (understand if you prefer not though :)), Given low interest rates (and therefore bond rates) CETVs will be very high right now. It’s just genuinely how much it costs USS to meet the expected liabilities for you. A Company limited by guarantee and registered in England and Wales Company No. The employers have said that they want to close the USS defined benefit pension (DB) scheme to future accrual, which means that new members will not be allowed to join, and existing members will not be able to contribute any more into it than they have already built up. Find more subreddits like r/Pension -- Eventually this will hopefully be a resource for pensions and other retirement advice. obviously get professional advise before making any decisions.... All consultations with financial advisors are free so id say quiz them until you are comfortable. Imagine a DC scheme with those contribution levels where you could choose the funds, you'd make way better than USS is forecasting. These scenarios will now be discussed by the Joint Negotiating Committee (JNC). Proposals for its future are made at a national level by Universities UK (representing all 350 employers) and UCU (representing employees). The three illustrative scenarios are as follows: one in which, based on the current employer covenant support commitments, the total contribution rates increase to 56.2% of salary; another which is based on an illustrative package of covenant support commitments suggested by Universities UK (UUK), who represent employers, in which contribution rates increase to 49.6% of salary; the most favourable scenario presented, which would require further financial commitments from employers to strengthen the scheme’s covenant, and has an increase in the overall contribution rate to 42.1% of payroll. It's still a good pension and I'll keep paying in because the employer contribution makes it worthwhile, but at this point, yeah, it's getting borderline and I'd be much happier to take my and their contributions and DIY it. Anyone able to share their advice? I am 30 and really do worry about the future, as much as I try not to. The valuation was done using market data from March 31st 2020, when asset prices were still down after the coronavirus crash. We hope that all USS eligible staff will engage with the consultation. However much they've jerked around with USS, it's still a better deal than other pension … Just to add, you definitely won’t be able to take it at 55. The Universities Superannuation Scheme, the UK’s largest defined benefit pension fund with assets of £63.6 billion, is the latest scheme to be bound by this financial straitjacket. Now academics have both low salaries and a "meh pension" in the UK - what's the attraction? Even 1% real return and 3.5% draw down would give me +40%. The new pension scheme was finally introduced on 1 April 1975 – with contributions set at 16% of salary (members paying 6% plus a 2% surcharge for back service). I am an economist and have been staring at historical (200-300 years+) interest rate data from around the world for a long time. 11% for a 1/75th accrual scheme is criminal. I was only a postdoc and my CETV is ~£50k. There also seems a regulatory/taxation risk- someone has to pay for covid and Brexit and DC pots seem a far easier target for raiding. There is practically no period in history when real returns where less than 4 percent over a stretch of 30-40 years. I can't afford for my take home to take a hit. USS membership. My colleagues overseas have transferred to SIPPs and have received high transfer values. USS pension honestly just confuses me. Click for printable PDF. Let's say I'm 35 and have a nice round 30 years till 65. I'd also have the option of taking some at age 55 (although rules may change by then..). Given the IFA requirement (looks like £3k for non-dodgy options) and advice below I'm discarding this option. We use cookies on our websites for a number of purposes, including analytics and performance, functionality and advertising. Thanks. We will keep you informed in coming months through the channels you have previously told us are most helpful to you: webinars, emails and updates both to our web pages and in the University Bulletin. However, I’ve always wondered what the breakeven would be between choosing to work for the government and receiving its pension versus going private sector. Perhaps I am missing something truly obvious... but I don’t see it. Define USS Pension Plan. As an employer, the University provides USS with the information they need in order to maintain your pension record, and the USS team are here to field Followup: My CETV was only 25x. USS need an investment strategy that will meet liabilities with almost certainty. USS pension presentations. This is a USSbrief, published on 23 August 2018, that belongs to the OpenUPP (Open USS Pension Panel) series. USS Investment Management’s Steve Deeley, and Thames Water’s Head of Sustainability, Richard Aylard, explain why USS first invested and the long-term partnership that has developed to enable the company to effectively manage future challenges such as climate change. I am thoroughly pissed off about this, even if it is entirely unsurprising and we all could've seen it coming a mile off. This is a subreddit to discuss all things relating to gaining financial independence and retiring early (FIRE) with a focus on the UK. True. Furthermore, the OSPS and OUP pension schemes at Oxford already operate on the basis of defined contributions. The modeller should be used in conjunction with other available information when making decisions about your pension arrangements. There are circumstances where they’re likely to be suitable including serious ill health where there are no dependants eligible for a survivor pension. means the USS Plan for Employee Pension Benefits (Revision of 1950), as amended. Pension cuts dressed up as “liability reduction exercises”? 40x plus should be expected. Unless my salary is going to somehow increase to cover the rise I'm really not sure what to do. Universities now make a contribution of 18% of salary, up from 16%, for each scheme member and will continue to do so. To leave, the university has to pay its entire liability so that's not affordable either. The current valuation (2018) of the USS pension scheme is ongoing. The pension fund issue was a big factor in Carillion going bust. I think I did the maths once and it was barely better to keep paying in than just take my contribution and invest myself on average, even assuming some quite pessimistic long term growth with a self-invested pension, but obviously you're protected from risk with this and there's the life insurance etc. If that happened in one go, universities and academics between them would have to find £700 million more a year, equivalent to 8 per cent of the universities’ annual income. These valuations are nonsense. The long term (~30 year) investment risk is a struggle to evaluate TBH. I wish we were given the option to use a different pension scheme and still have some form of employer contribution and salary sacrifice, not just have the only option be the USS. I am still based in the UK and would probably only live abroad temporarily for work. If you are a current USS member and have received a benefit statement you can login to the illustrator below using your eight digit USS member number. The big, Russell Group - only mentioning that simply because they are likely a relatively 'powerful voice' in the HE sector - institution that I work for has rightly already come out firmly against the valuation via email this morning. Members interested… But alterations to the USS are a thorny subject. The CETV will be set by the actuary and based on cost of benefits potentially with a discount to take a funding gain so it’s unlikely it’s enhanced to persuade people to exit. At the rate we're going, we'll soon be contributing 20%+ of our salaries. If I were to invest 42.1% of my salary for the rest of my career in sensible ETFs I'd have an insane pension pot. USS - For the future Welcome to the Benefit Illustrator, designed to provide you with an estimate of your USS benefits at retirement. However, I think the cost of that security would fall on young academics (postdocs, new lecturers etc) and having been there don't like the thought of leeching off them. https://forums.moneysavingexpert.com/discussion/6045374/another-cetv-thread. Nonsensical and just another way young people are getting screwed by the already retired. Hopefully things have picked up this year. It's making our already underpaid sector even less attractive of a place to work. Both doesn't look like an option. ): As you may have seen, we have now heard from USS about the outcome of the 2020 valuation. Threat to the defined benefit pension scheme. Higher asset prices means lower expected returns. You’ll certainly have more flexibility but generally I see advice that you have to be able to clear 5% net of fees to make it worthwhile. If you do not qualify for a Canada Pension Plan benefit, Canada will consider your periods of contribution to the pension program of the United States as periods of contribution to the Canada Pension Plan. To meet all its current pension promises, the USS says, would require the combined employer and employee contribution rate to rise from 26 per cent of salary to 33 per cent. I very much struggle to understand why the USS would be able to offer better returns than the market and offer lower costs than someone like Vanguard. I have a DB pension (USS). The number I get is 1.2% annual real returns. In all three scenarios benefits would remain the same but there would be significant increases to the current total contribution rate of 30.7% of salary (21.1% paid by the employer and 9.6% paid by the member). With more than £60 billion ($78 billion) in assets, the USS is the largest private sector pension scheme in the United Kingdom. That means conservative choices. Every three years, USS carries out a valuation – a detailed analysis of the factors that influence the scheme’s funding position. USS invested in the UK’s largest water company, serving 15m customers, in 2017. If however, after you have retired you are subsequently offered new employment that is pensionable in USS, you can accept that job but you cannot rejoin the scheme, unless you are in receipt of a non-enhanced partial incapacity pension; in this situation, contact USS … Appendix: technical details USS is a very healthy pension scheme. Press J to jump to the feed. If you can beat that you can beat the benefits of the USS. This would suggest that, for anyone in the first half of their careers (earning less than their anticipated career-average salary), the final salary scheme provides a lesser pension, at a greater cost (7.5% vs 6.5%) than the career revalued scheme. Always seems that the USS seems to have constant negativity attached to it. 2517018. You can transfer out. Home Staff Gateway Staff news USS pension presentations. Universities Superannuation Scheme (USS) is one of the largest private pension schemes in the UK with £60 billion in assets. A ~£3k IFA fee is quite punitive and transferring is also a hassle. However, I'm still optimistic about hitting 1.5% (after fees) long term real return (which should make the transfer more than worthwhile). Imagine a DC scheme with those contribution levels where you could choose the funds, you'd make way better than USS is forecasting. One annoying issue is that apparently you require IFA advice for CETV> £30k. The Universities Superannuation Scheme is a pension scheme in the United Kingdom with over £67 billion under management as of March 2019. Currently doing a postdoc abroad coming to the end of my term and starting to seriously look at assistant professor positions; this continuing pension fiasco is making the UK look less and less attractive compared to other countries. They can’t realistically expect people (employees and employers) to pay those sorts of contributions to the pension scheme! I think most universities will seriously think about a switch to a different scheme, it’s unaffordable! They cannot do better than the market and they must charge higher fees than passive funds to pay for all their managers. Assuming 30x CETV now, 2.5% real return in SIPP (i.e. USS DB offers inflation proofing and general security. Basically, assuming the CETV is really 30x I am considering ignoring conventional wisdom and rolling the dice. Honestly, they're just better off making it DC at this point. It's not totally clear to me where next 30 years' growth will come from. The USS is a multi-employer pension scheme for around 350 organisations, of which the University of Sussex is one. Older threads typically suggest transfer is not worth the loss of guaranteed income. It is a monstrously inefficient bureaucracy run by over paid administrators. … For members of USS, what are your thoughts? Miss out on salary sacrifice (e.g. Big decision and you’ll need advice to release funds in any case. and yes the short answer is that they have a huge deficit and due to low interest rates transfer values are at the highest they have ever been... i work in the recruitment side of a financial advisory so my knowledge is limited but i obviously listen to these sort of conversations on a daily basis, and you are definitely thinking in the right direction. That's possible of course! 5% nominal and 2.5% inflation) and then 4% draw down from age 65, the income would be 2.5X of my inflated DB amount. Given the IFA requirement (£3k for non-dodgy options) it's not worth it. I'm just feeling very chastened. Full details here: https://www.uss.co.uk/for-members/articles-for-members/2021/03/03032021_valuation-update-for-our-members, Combined contribution rate is due to rise to 34.7%, Combined contribution rate is due to rise to (at least) 42.1%, It doesn't say what members will pay, but based on Oct 2021 proportions, this could mean an increase to 13.3% to members and 28.8% for employers. I am positive I can beat the CPI growth rate over the next 20 years until I’m 60 by investing in a diversified global passive tracker but I’m forced to find someone willing to sign off and pay them £3,500 plus to do so, Are you currently based in the UK or have you moved to the EU? It's a really tough call. Getting an IFA to do a review however is both costly and difficult (not to mention anti pension freedom). Too young and trying to save for a house. I only just submitted a CETV request but already trying to run some numbers. Nothing in the current proposals changes anything that USS members have already accrued as pension rights. Unless I'm mistaken, the next 30 years would have to be unprecedentedly bad to leave me significantly worse off. Instead, all active members of the USS – about 150,000 in total – would start to pay into schemes where benefits are calculated on a career average basis from 2015-16. Share on Reddit.