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Universities Superannuation Scheme

Universities Superannuation Scheme. Presentation for USS members Colin Busby Eifion Morris APMI. (this presentation may be recorded for training and audit purposes). Funding levels. % funded. 0% real return. Funding levels. % funded. 0% real return. 1.5% real return. Agenda.

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Universities Superannuation Scheme

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  1. Universities Superannuation Scheme Presentation for USS members Colin Busby Eifion Morris APMI (this presentation may be recorded for training and audit purposes)

  2. Funding levels % funded 0% real return

  3. Funding levels % funded 0% real return 1.5% real return

  4. Agenda • the basics • life events • planning for the expected • open question & answer session

  5. Full-time pension calculation =1/80th X Years & Days X Pensionable Salary % of salary

  6. Part-time calculation • total service = 10+3+10+5 • total pension = 28 years X 1/80th X full-time salary 40 Salary 30 20 £,000 10 100% 30% 100% 50% 10 20 30 40 Years

  7. Benefit Modeller

  8. Calculating your tax-free cash The USS ‘standard’ package Pension = 1/80th X service X salary Cash = 3 X Pension e.g. Pension = 20/80 X £40,000 Pension = £10,000.00 pa Cash = 3 X £10,000.00 Cash = £30,000.00

  9. Varying the cash and pension • you can draw any value of cash between NIL and the maximum set by HM Revenue & Customs • maximum tax-free cash • work out capital value ((20 X pension) + cash) • you can take 25% of capital value as cash • rough guide = 5.75 times ‘standard’ pension

  10. Male 65 = 15.24 60 = 17.86 55 = 20.33 Female 65 = 16.89 60 = 19.34 55 = 21.69 Cash conversion factors • eg. using factor of 15.24 (male aged 65): • £1 pension gives extra £15.24 cash, or • £15.24 of cash would provide extra £1 pension

  11. Benefit Conversion Modeller

  12. Lump sum v additional pension

  13. Crystal ball modeller

  14. Retirement Options • early retirement between 50 & 60 due to redundancy or at request of employer • pension not reduced for longer payment • based on service at that date unless compensation available • employer pays ‘funding charge’ • from age 60 in accordance with contract or with employer’s consent • minimum retirement age 55 from 6 April 2010 • incapacity retirement • total incapacity or partial incapacity benefits • more information in Factsheet ten

  15. Pension Increases _________________________________ maximum paid by most schemes

  16. Things to do sooner, not later Update your beneficiary details • life assurance of 3 X salary • income protection for those closest to you • spouse/dependant/civil partner • children • MO1 – for lump sum death benefits (3 X salary) • MO3 – register a dependant (dependant’s pension) Investigate a transfer to USS • MO16 – transfer request form • (2 year time limit on transfers from the Public Sector) Consider if you’re saving enough towards retirement

  17. Increasing your benefits Pension not enough? Thinking of retiring early? Two USS options for increasing your benefits 1 Added years AVC and/or 2 Money Purchase AVC (Prudential) Tax relief on both options All extra payments must go through payroll Other savings/investments available

  18. Added years AVC • final salary benefit • secures extra years and days USS service • final benefits dependent on pensionable salary at retirement and service purchased • maximum additional 15% of salary contribution to added years • changes to payment amount requires new contract

  19. Added Years Modeller

  20. Money Purchase AVC facility-Prudential • retirement benefits dependent on • amount invested • investment choice/performance • cost to buy retirement benefits at retirement • contributions up to 100% of gross taxable pay • tax-free cash (25% of fund and possibly 100% at retirement) • fund can be used at retirement to buy years and days service from USS • flexible contributions

  21. Additional Voluntary Contributions • AVCs are not the only way to save for retirement • AVC funds must be used to secure retirement benefits only • USS cannot advise you which option to choose

  22. More information • Pensions TV • Joining • Leaving • AVCs • Overseas • Transfers-in • Maternity leave • Absence • website - www.usshq.co.uk • member guides • service statements

  23. Contacts • Pensions office contacts • USS website – www.usshq.co.uk • slides available here • list of financial advisers under ‘Planning’ section • Prudential • Website www.pru.co.uk/universitiesavc • Helpline 0845 070 0007 Every effort has been made to present accurate information and members are advised to check with their employer and/or the USS guides to re-affirm their understanding before acting on any information given. D P

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