Suggested changes could equal nearly £1k post tax for me lost to pension costs. I assume, sadly, that this is the younger members subsidising final salary pensions for the older cohorts who have lived longer than expected. A ~£3k IFA fee is quite punitive and transferring is also a hassle. 2517018. Press J to jump to the feed. Universities UK registered Charity No. Thanks, good to know I'm not totally bonkers thinking this! Surely contributions can't continue to increase so what's the end game here? These scenarios will now be discussed by the Joint Negotiating Committee (JNC). 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? However, I'm still optimistic about hitting 1.5% (after fees) long term real return (which should make the transfer more than worthwhile). Home Staff Gateway Staff news USS pension presentations. Members interested… However much they've jerked around with USS, it's still a better deal than other pension … USS are just bonkers. 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. Why should tPR be intervening in what is fundamentally a matter of reward? I'm just feeling very chastened. Proposals for its future are made at a national level by Universities UK (representing all 350 employers) and UCU (representing employees). I'm in the exact same position. 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. If so, come along to a one-hour presentation by Kevin Painter from Mercer on either 30 June or 18 July. RG: When I arrived, about 8% of USS’s portfolio was in private equity, infrastructure funds, and property. At the rate we're going, we'll soon be contributing 20%+ of our salaries. The Universities Superannuation Scheme is a pension scheme in the United Kingdom with over £67 billion under management as of March 2019. Now academics have both low salaries and a "meh pension" in the UK - what's the attraction? Pension cuts dressed up as “liability reduction exercises”? I have a DB pension (USS). 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. 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. 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. Anyone able to share their advice? So I left it for now. obviously get professional advise before making any decisions.... All consultations with financial advisors are free so id say quiz them until you are comfortable. But alterations to the USS are a thorny subject. The Canadian pension programs included in the Agreement are the Canada Pension Plan (CPP) and the Old Age Security (OAS) program. 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 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 only just submitted a CETV request but already trying to run some numbers. What's the risk of it collapsing before my retirement (40/45 years time)? It's an odd siutation to be in as should I be caring about the now or the future. Imagine a DC scheme with those contribution levels where you could choose the funds, you'd make way better than USS is forecasting. The Government Pension Getting a monthly check the rest of your life sounds really great in theory. 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. There is an element of that already for some of us - I pay into a DC scheme because my salary is over the threshold. 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. For members of USS, what are your thoughts? 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. 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. Assuming 30x CETV now, 2.5% real return in SIPP (i.e. USS Employers is a site owned and managed by Universities UK, the nominated formal representative for over 340 employers in the Universities Superannuation Scheme. The valuation would have improved because bonds have got less valuable (higher yields) since March 2020. I hope so anyway, because I don't think the employers would stand for the combined contribution rising to 42%. There are circumstances where they’re likely to be suitable including serious ill health where there are no dependants eligible for a survivor pension. I am. This is a subreddit to discuss all things relating to gaining financial independence and retiring early (FIRE) with a focus on the UK. USS invested in the UK’s largest water company, serving 15m customers, in 2017. 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. 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. Unless I'm mistaken, the next 30 years would have to be unprecedentedly bad to leave me significantly worse off. The other pension is very good but its final salary scheme closed to new entrants in 2015, so it's defined benefits. There is practically no period in history when real returns where less than 4 percent over a stretch of 30-40 years. 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. Let's say I'm 35 and have a nice round 30 years till 65. Honestly, they're just better off making it DC at this point. 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'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. 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. It does seem silly though to base this on a valuation report done with depressed values due to Covid. Would you like to learn more about the changes to the Universities Superannuation pension scheme (USS)? Universities Superannuation Scheme (USS) is one of the largest private pension schemes in the UK with £60 billion in assets. Threat to the defined benefit pension scheme. It's not totally clear to me where next 30 years' growth will come from. We use cookies on our websites for a number of purposes, including analytics and performance, functionality and advertising. 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. means the USS Plan for Employee Pension Benefits (Revision of 1950), as amended. Oxford have just shared this with staff (note, one outcome is contributions of 56% of salary!! The modeller should be used in conjunction with other available information when making decisions about your pension arrangements. Older threads typically suggest transfer is not worth the loss of guaranteed income. Advice- seems I might have underestimated this hurdle (both in cost and persuading an advisor that I understand the risk and will gamble). 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? The number I get is 1.2% annual real returns. I pay as much as I can, or the scheme limits will let me. USS and Thames Water. I'd also have the option of taking some at age 55 (although rules may change by then..). 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. With more than £60 billion ($78 billion) in assets, the USS is the largest private sector pension scheme in the United Kingdom. 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. Perhaps I am missing something truly obvious... but I don’t see it. 11% for a 1/75th accrual scheme is criminal. 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. Unless my salary is going to somehow increase to cover the rise I'm really not sure what to do. Nothing in the current proposals changes anything that USS members have already accrued as pension rights. 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. I’ve been in a similar situation and doing similar calculations as OP. That’s quite a challenge year in year out. I am in good health (non-smoker, active, not a big drinker etc) so from that perspective the lifetime income guarantee is reassuring. Define USS Pension Plan. Find more subreddits like r/Pension -- Eventually this will hopefully be a resource for pensions and other retirement advice. 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. Am I missing something obvious? 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! The USS pension scheme has proposed a change from the defined benefits (DB) model to the defined contributions (DC) model. Given the IFA requirement (looks like £3k for non-dodgy options) and advice below I'm discarding this option. USS DB offers inflation proofing and general security. The valuation is a joke and the employers seemingly think so as well. 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 … I was only a postdoc and my CETV is ~£50k. It's making our already underpaid sector even less attractive of a place to work. 23 Responses to “USS changes — don’t be fooled” Chris Says: March 12, 2015 at 11:39 pm | Reply. The long term (~30 year) investment risk is a struggle to evaluate TBH. The CETV would definitely be over £30k and I've learned financial advice is actually compulsory for that... and it won't be cheap! We have been surprised and disappointed that the USS report is even more challenging than we had expected. USS - For the future Welcome to the Benefit Illustrator, designed to provide you with an estimate of your USS benefits at retirement. 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. 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. Click for printable PDF. It's a really tough call. Thanks. The pension fund issue was a big factor in Carillion going bust. 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. USS pension presentations. Every three years, USS carries out a valuation – a detailed analysis of the factors that influence the scheme’s funding position. Honestly they've lost their minds. My colleagues overseas have transferred to SIPPs and have received high transfer values. I think it’s worth getting a transfer value from USS each year to explore options as this problem persists. 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. We hope that all USS eligible staff will engage with the consultation. USS need an investment strategy that will meet liabilities with almost certainty. True. General wisdom is to advise AGAINST transfers out of DB on the basis they are guaranteed inflation linked values paid in annuity. 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. The current valuation (2018) of the USS pension scheme is ongoing. … https://forums.moneysavingexpert.com/discussion/6045374/another-cetv-thread. 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. 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 am thoroughly pissed off about this, even if it is entirely unsurprising and we all could've seen it coming a mile off. Given the IFA requirement (£3k for non-dodgy options) it's not worth it. Hopefully things have picked up this year. 1001127. This is a USSbrief, published on 23 August 2018, that belongs to the OpenUPP (Open USS Pension Panel) series. It is a monstrously inefficient bureaucracy run by over paid administrators. It’s changing to aged 57 in 2028, and will be likely be later by the time you get there. 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. 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. To leave, the university has to pay its entire liability so that's not affordable either. This app provides some projections that shows the likely impact on future performance for these different models. The USS is a multi-employer pension scheme for around 350 organisations, of which the University of Sussex is one. You’ll have your own view on whether you wish to take the CETV and take the investment risk. 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. Share on Reddit. tax, ni, student loan relief), Income withdrawn from it will be entirely tax free (if in an ISA). Finance. I can't afford for my take home to take a hit. 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. 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). You should get your quote and come back with what they say. 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. Too young and trying to save for a house. Both doesn't look like an option. Basically, assuming the CETV is really 30x I am considering ignoring conventional wisdom and rolling the dice. 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 has been submitted to … Miss out on salary sacrifice (e.g. Since then they've risen considerably, so it seems to me that the valuation paints a gloomier picture than necessary. The scheme is funded by contributions from employers and scheme members, and returns on investments made by the Trustee. 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). Press question mark to learn the rest of the keyboard shortcuts. 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. I have a DB pension (USS). Older threads typically suggest transfer is not worth the loss of guaranteed income. I am an economist and have been staring at historical (200-300 years+) interest rate data from around the world for a long time. Appendix: technical details USS is a very healthy pension scheme. 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. Just to add, you definitely won’t be able to take it at 55. 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? 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. 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 … The valuation was done using market data from March 31st 2020, when asset prices were still down after the coronavirus crash. It will be hard to judge how much better it will be. Update: Friday 13 April 2018Statement from the University and College Union:The USS consultation closed at 2pm today. If you can beat that you can beat the benefits of the USS. Getting an IFA to do a review however is both costly and difficult (not to mention anti pension freedom). In 2008 the scheme … I am still based in the UK and would probably only live abroad temporarily for work. 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. 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). ): As you may have seen, we have now heard from USS about the outcome of the 2020 valuation. USS membership. Furthermore, the OSPS and OUP pension schemes at Oxford already operate on the basis of defined contributions. Higher asset prices means lower expected returns. 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. 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. 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. Universities now make a contribution of 18% of salary, up from 16%, for each scheme member and will continue to do so.
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