Your USS Journey Every effort has been made to present accurate information. Members are advised to check with their employer and/or the USS guides to confirm their understanding before acting on any information given. This presentation may be recorded for training and audit purposes. Presentation for USS members Colin Busby and Eifion Morris APMI

The journey Travel safety Starting out and benefits Connections Upgrade Unscheduled events Reaching your destination Future plans Your questions

Is it safe to travel?

What about USS? Extreme volatility of financial markets has an effect on USS investments Long-term investor Positive cash flow Strong employer covenant Last man standing Pension Protection Fund

In the future Joint Review Group formed by employers and UCU “To determine what changes should be made to ensure USS remains an attractive and affordable defined benefit pension scheme”

Joint Review Group Agreed principles (risks) in October 2009 –Longevity –Salary increase risk –Investment flexibility

Joint Review Group Possible ways to address risks –Later retirement age and/or higher member contributions –Calculate benefits on ‘career average’ basis –De-risk investments –Introduce flexible retirement Career average outcome not inevitable Accrued benefits protected

The basics

The calculation

Part-time calculation 100%30%50%100% Years Salary £000s 10 years 3 years 10 years 5 years

Part-time calculation

Transfers in to USS Transfer previous benefits to USS Beneficial Club transfers –Two year time limit on transfers from the Public Sector Transfer request form See factsheet 2

Increasing your benefits Pension not enough? –Break in service, like maternity –Thinking of retiring early? Save more

Options in USS Two USS options for increasing your pension and/or tax-free cash 1.Added years AVC and/or 2.Money Purchase AVC (Prudential) Other savings/investments available

Comparison Added years Money purchase Up to 100% £Tax reliefFlexibilityTax-free cash15% maximum £Tax reliefCertaintyTax-free cash

Example – before added years

Example – with 5 added years

Added years modeller

Prudential AVC calculator Website

How to pay AVCs – Added Years Added Years Use modeller on Contact Pensions Office Money Purchase Contact Prudential directly Face-2-face

Remember… AVCs are not the only way to save for retirement AVC funds cannot be accessed before retirement USS cannot advise you which option to choose More information in factsheet 1 High earners – Budget note 2009

Benefits for your dependants Life assurance of 3 x salary Income protection –Spouse/dependant/civil partner –Children Update your beneficiary details –Death benefit nomination form (3 x salary) –Registration of financial dependant form (dependant’s pension)

Retirement options Pension & cash options Incapacity retirement Early retirement Normal retirement

In accordance with the contractual retirement age stipulated in your contract of employment

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 with employer consent Minimum retirement age 55 from 6 April 2010

Incapacity retirement Total incapacity or partial incapacity benefits Factsheet 10

Varying pension and cash Vary the cash –No cash and higher pension –Higher cash and lower pension Maximum 25% of capital value –Multiply your pension by 20 –Add on tax-free cash –Add on any Prudential AVCs

Conversion example Capital value= £460,000 (20 times AP+TFC) Maximum TFC= £115,000 (25% of pension pot) Less standard cash= £ 60,000 Potential extra cash= £ 55,000 Annual Pension (AP) = £20,000 pa Standard tax-free cash (TFC) = £60,000 Annual Pension (AP) = £20,000 pa Standard tax-free cash (TFC) = £60,000 Your choices -Exchange pension for extra cash Your choices -Exchange pension for extra cash Pension= £ 16,391 pa Tax-free cash= £115,000

Conversion example Capital value= £515,000 (20 times AP+TFC+PRU) Maximum cash= £128,750 (25% of pension pot) Less standard cash= £ 60,000 Potential extra cash= £ 68,750 Annual Pension (AP) = £20,000 Standard tax-free cash (TFC)= £60,000 Pru AVC fund (PRU)= £55,000 Annual Pension (AP) = £20,000 Standard tax-free cash (TFC)= £60,000 Pru AVC fund (PRU)= £55,000 Your choices Use Prudential AVC as extra tax-free cash and receive full pension Your choices Use Prudential AVC as extra tax-free cash and receive full pension Pension= £ 20,000 pa Tax-free cash= £ 115,000

Where next? Keep your ticket Pensions office contacts Prudential – USS website – –Slides available here –Pensions TV