Adviser > Technical Central > Pre simplification > Occupational > The Universities Superannuation Scheme (USS)
The Universities Superannuation Scheme (USS)
The content of this page is based on our understanding of how pensions worked before A-Day, the 6 April 2006, and is provided for reference only.
The Trustees of the USS are currently considering the implications of the Finance Act 2004 and the Pensions Bill and how they will affect the pension scheme. The current scheme information is provided below:
Administrator
Universities Superannuation Scheme Limited
2nd Floor
Royal Liver Building
Liverpool
L3 1PY
Tel: (0151) 227 4711
Website
University Pension Scheme Website
Contracted-out
Yes
Eligibility
The scheme is open to all employees under age 60 (may vary by institution)
Contribution basis
AVC scheme available - Yes
Stakeholder scheme available - There is no designated scheme, however members are free to have a stakeholder plan (subject to normal restrictions)
Member contribution - 6.35% p.a. of pensionable salary
Employer contribution - Currently 14% of pensionable salary
Added years permitted? - Yes, the scheme may accept a transfer payment from a previous pension scheme
Salary definition
Pensionable salary - The greater of :
- the highest salary the member has received in any 1 year out of the last 3 years, increased in line with RPI, or
- the highest averaged salary over any 3 consecutive years out of the last 13 years, increased in line with RPI
Pensionable service - Number of years and days of membership of the scheme
Normal retirement benefits
Normal retirement age - 65
Pension accrual - 1/80th of pensionable salary for each year of pensionable service
Retirement lump sum - 3/80ths of pensionable salary for each year of pensionable service
Early retirement on the grounds of ill-health
Members who have more than 2 years service and who are under age 65 are entitled to retire on the grounds of ill-heath (subject to medical evidence)
An unreduced pension and lump sum based on the potential service the member would have completed by age 65. The benefits will be calculated using the member’s current salary
If the member dies prior to reaching age 65 a lump sum is payable. The amount payable depends on the period of time from when the member retired to the date of death
Early retirement
If member is aged 50 or over and has completed 5 or more years pensionable service, an unreduced pension and lump sum are payable on:
- redundancy, or
- member retires at the request of the employer
If member is aged 60 or over and the employer’s consent is given, then an unreduced pension and lump sum may be payable
If employer’s consent is not given and member retires prior to age 63 years and 6 months, then part of the pension will be reduced by an early retirement factor
Late retirement
If allowed by the employer
If contributions cease at age 65 - benefits are based on pensionable salary at age 65 and increased by an actuarial factor
If contributions continue after age 65 - service can continue to be built up to a maximum of 40 years. The pension accrued prior to age 65 is calculated in the same way as normal retirement and a late retirement factor is applied to the benefit. The pension accrued after age 65 is based on the pensionable salary at age 65 increased by RPI to date of actual retirement
Death before retirement benefits
Lump sum - 3 times annual salary
Dependant's pension - An initial pension of 1/12th of pensionable salary is payable for the first 3 months after death (as long as member has completed 5 years service)
After 3 months a dependant's pension of 50% of member's prospective pension at age 65, based on current pensionable salary
Childrens' pensions may also be payable
Deferred members
Lump sum - The deferred lump sum increased in line with RPI from date of leaving to date of death
Dependant's pension - 50% of deferred pension
Childrens' pensions may also be payable
Death after retirement benefits
Lump sum - If member dies within 5 years of retiring a lump sum amounting to the lesser of:
- The greater of 3 times salary at retirement date or age 65 if earlier, or
The amount member would have received if they retired due to ill-health, less the lump sum received on retirement date, less the pension instalments received, and
- The balance of the pension member would have received in the first 5 years of retirement
Dependant's pension - 100% of member's pension for the first 3 months then 50% of member's pension thereafter
Childrens' pensions may also be payable
Pension increases
In line with RPI, however not payable until age 55 (exceptions ill-health retirement and dependants' benefits)
Early leavers options
Transfer value available on request
Preserved pension - Member is entitled to a preserved pension at any time
Refund of contributions - If the member has less than 2 years service, then a refund of member's contributions can be paid
Treatment of pension rights on divorce
Pension sharing on divorce - The accrued pension rights are reduced by a percentage confirmed by the court. The former spouse is given rights in the scheme equal in value to the amount of reduction - known as the pension credit rights. There is no option to transfer pension credit rights out of the scheme
Earmarking - The court can order the scheme to pay all or part of the pension and lump sum at retirement to the former spouse. The scheme will only make payments to the former spouse when a court order has specifically instructed them to do so. If the former spouse remarries, he or she will not receive payments in respect of the pension after date of remarriage, however this normally does not affect the lump sum
Offsetting - The pension rights are valued along with any other matrimonial assets to enable a financial settlement to be made
Any research and analysis included has been provided by us for our own purposes and the results of it are being made available only incidentally.
Published 05 November 2004
For professional advisers only
