Important News – USS Changes Explained
One of the positives from the recent pensions victory is that joining the USS Pension should be more affordable, notwithstanding that we are still in a cost-of-living crisis. From 1 January, contribution rates should lower for employees from the current 9.8% to 6.1%. This means that a person on £30,000 salary should save £1,110 per year in contributions.
£215 Payback Payment
To qualify for the £215 pension payment, a scheme member must have active service in the scheme before 1 April 2024. Members need to earn £16,125p.a. to get £215 of pension. This will increase with inflation until retirement and be paid each year in retirement. This means the value of the payment for a person aged 50 now, who retires at 66 and claims their pension for 25 years, is around £13,000 if we estimate average inflation at 3%. However, if a person waits until after 31 March 2024 to join the scheme, they will not be entitled to this payment.
Accrual Rate & Inflation Cap
From 1 April 2024, the change in accrual rate from 1/85 to 1/75 will mean that the amount of money going into your pension pot each year will be higher, so your pension will be worth more. Also, the changes to inflation protection from the current max of 2.5% to the soft cap max of 10% means your pension will grow more. The change in threshold for DB/DC means that more money goes to DB meaning members get a better return when they retire.