Calculation of your final salary
benefits as at 31 March 2016
Table of contents
This factsheet provides further detail on how the benefits in the final salary benefit statement have been
calculated as at 31 March 2016.
The information below should be viewed in conjunction with your 2016 benefits statement and the
frequently asked questions (FAQs) section.
Benefit calculation explained
3
Pensionable service
4
How does this work?
4
What's the difference if I'm part time?
4
Pensionable salary
5
Non-pensionable absence
7
How does this work?
7
Enhanced opt out
8
How does this work?
8
HMRC enhanced protection
9
How does this work?
9
Flexible retirement
How does this work?
Capped salary
How does this work?
Multiple sole variable time employments
How does this work?
Pre/Post October 2011 benefits section explained
How does this work?
10
10
12
12
13
13
15
15
Previous deferred benefits section explained
16
USS deferred benefits
17
How does this work?
17
Deferred merger benefits
18
Your pensionable service at 31 March section explained
19
How does this work if I am concurrent?
19
How does this work if I am a sole VTE
20
Added years additional voluntary contributions section explained
22
How does this work?
22
What's the different if I'm part time
23
IMPORTANT NOTES
Universities Superannuation Scheme February 2017 v2
24
Page 1 of 25
Calculation of your final salary benefits
This factsheet is provided as general guidance only and you should not seek to rely on it. The scheme is governed by a trust deed
and rules and if there is any difference between these examples and the trust deed and rules the latter will prevail. Members are
advised to check with their employer contact for the latest information regarding the scheme, and any changes that may have
occurred to its rules and benefits.
The examples used in this factsheet are for guidance only and members’ benefits will always be calculated in accordance with
the scheme’s trust deed and rules (as amended from time to time).
On page two of the 2016 benefit statement the value of your pension and tax-free cash lump sum figures are shown – see the
your benefits section. Benefits from previous deferred periods of membership (of USS, OUSS, Henley Pension Scheme and EUSA)
are not included in these figures, these are provided separately (where appropriate), in the benefit statement. The figures have
also not been reduced to reflect any deductions that may be applicable to your benefits and have not been increased by late
retirement factors if you are over age 65 at 31 March 2016.
Universities Superannuation Scheme February 2017 v2
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Benefit calculation section explained
In most instances the benefit calculation section of the benefit statement will look similar to the below. The figures used in
the examples below are for illustration purposes only. Each member’s benefits will be calculated in accordance with their own
circumstances and in line with the scheme’s trust deed and rules:
Benefit calculation - this is how we have calculated your benefits
Annual pension - your pensionable service of 20 years and 000 days is divided by the scheme's pre 1 April 2016 accrual rate
of 80 and then multiplied by your pensionable salary at 31 March 2016 of £80,000.
20 + 000
365 x £80,000 = £20,000 pension a year
80
Lump sum - your standard lump sum is three times the amount of your standard pension
£20,000 x 3 = £60,000 lump sum
For further information about pensionable service and pensionable salary please refer to the important notes section. Each
of these terms is defined in the scheme's trust deeds and rules.
As you can see in the example benefit calculation above there are two elements of the benefit formula that are unique to
each member and will determine the pension benefits applicable (coloured figures above). These are pensionable service and
pensionable salary.
Your pensionable service and pensionable salary are calculated in accordance with the scheme’s trust deed and rules, as
amended from time to time. Each of these terms is described in more detail below.
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Pensionable service
Pensionable service is normally the number of years and days you have worked with one or more employer participating in USS
but excludes any breaks in employment and periods of suspended membership. If you have worked part-time your pensionable
service will be lower than the number of years and days worked with participating employers. Alternatively, if you have paid
added years additional voluntary contributions (AVCs) your pensionable service will be higher.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1986 and also paid in to a USS added years monthly
AVC, an example of how the pensionable service at 31 March 2016 would be calculated is as follows:
USS scheme service (1 April 1986 to 31 March 2016)
=
30 years and 000 days
Monthly added years AVC service at 31 March 2016
=
5 years and 000 days
Total pensionable service at 31 March 2016
=
35 years and 000 days
Pensionable salary at 31 March 2016
=
£45,000
Pension at 31 March 2016:
1/80 x 35 years x £45,000 = £19,687.50 pension a year
Plus a tax-free cash lump sum of: 3 x £19,687.50 = £59,062.50
What's the difference if I'm part time?
Your pensionable service will be reduced by your part-time hours, so if you were working 50% hours you would earn half a
year of pensionable service for each full year of USS employment. To offset this reduction in service, we convert your salary to
its full-time equivalent.
So, if a member had 30 years' membership, but worked at the rate of 50% for the last 10 years and with a pensionable salary
of £40,000, an example of how the pension at 31 March 2016 would be calculated is as follows
Pension from 20 years' full time employment:
= 1/80 x 20 years x £40,000 = £10,000 pension a year
Plus pension from 10 years' part-time employment:
= 1/80 x (10 x 50%) x £40,000 = £2,500 pension a year
Total pension at 31 March 2016:
= £12,500 a year
Plus a tax-free cash lump sum of:
3 x £12,500 = £37,500
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Pensionable salary
Pensionable salary is calculated using a formula designed to take into account your salary over the course of your membership,
and make adjustments for price inflation.
To calculate your pensionable salary we determined your salary for each of the 12 months you were a member of the scheme
up to 31 March 2016 (for a maximum of 13 years’ membership). We then increased your salary up to 31 March 2016 for each of
those 12 month periods, except for the last one, to reflect inflation, using the Retail Prices Index (RPI) measure of inflation.
Your pensionable salary is the highest of either:
•
•
the best inflation adjusted 12 months’ salary over the last 36 months’ membership; or
the average of your best consecutive inflation adjusted three years’ salary during the last 13 years.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 2001 an example of how the calculation of
pensionable salary at 31 March 2016 would be calculated is below. Only salaries for the previous 13 years to the calculation
date can be counted and therefore any salaries before 1 April 2003 would be disregarded.
1 April 2015
=
£46,890
1 April 2014
=
£46,174
1 April 2013
=
£45,503
1 April 2012
=
£44,607
1 April 2011
=
£44,016
1 April 2010
=
£43,840
1 April 2009
=
£43,622
1 April 2008
=
£40,335
1 April 2007
=
£39,160
1 April 2006
=
£37,643
1 April 2005
=
£34,448
1 April 2004
=
£31,715
1 April 2003
=
£29,621
The first part of the calculation is to determine the best inflation adjusted 12 months’ salary over the last 36 months’
membership, i.e. the best period from 1 April 2013 to 31 March 2016.
In this example the best 12 month period falls just outside the final 12 months – the final 12 months to calculation date being
1 April 2015 to 31 March 2016. The best period is calculated from 1 March 2015 to 29 February 2016. The reason this period
is higher than the final 12 months’ salary is due to the application of inflation (RPI), which is applied to the salary from 29
February 2016 to 31 March 2016 (as this period ends outside of the final 12 months):
1 March 2015 - 31 March 2015 (1 month)
=
(£46,174/12) x 1 = £3,847.83
1 April 2015 - 29 February 2016 (11 months)
=
(£46,890/12) x 11 = £42,982.50
Total 12 month salary to 29 February 2016
=
£46,830
Published RPI at 31 March 2016
=
260
Published RPI at 29 February 2016
=
258.8
Best inflation adjusted 12 months' salary over last 36 months
=
£46,830 x 260/258.8 = £47,047
continued
Universities Superannuation Scheme February 2017 v2
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continued
The second part of the calculation is to determine the average of the best consecutive inflation adjusted 3 years’ salary during
the last 13 years, i.e. the best inflation adjusted 3 year period from 1 April 2003 to 31 March 2016.
In this example the best consecutive 3 year period is calculated from 1 March 2008 to 28 February 2011. Inflation is applied
to each 12 month period within the selected 3 years to 31 March 2016 as follows:
1 March 2010 to 28 February 2011:
1 March 2010 - 31 March 2010 (1 month)
=
(£43,622/12) x 1 = 3,635.17
1 April 2010 - 28 February 2011 (11 months)
=
(£43,840/12) x 11 = £40,186.67
Total 12 month salary to 28 February 2011
=
£43,822
Published RPI at 31 March 2016
=
260
Pubished RPI at 28 February 2011
=
229
Best 12 months' salary to 28 February 2011 (plus inflation)
=
£43,822 x 260/229 = £49,754
1 March 2009 to 28 February 2010:
1 March 2009 - 31 March 2009 (1 month)
=
(£40,335/12) x 1 = £3,361.25
1 April 2009 - 28 February 2010 (11 months)
=
(£43,622/12) x 11 = £39,986.83
Total 12 month salary to 28 February 2010
=
£43,348
Published RPI at 31 March 2016
=
260
Published RPI at 28 February 2010
=
217.9
Best 12 months' salary to 28 February 2010 (plus inflation)
=
£43,348 x 260/217.9 = £51,723
1 March 2008 - 31 March 2008 (1 month)
=
(£39,160/12) x 1 = £3,263.33
1 April 2008 - 28 February 2009 (11 months)
=
(£40,335/12) x 11 = £36,973.75
Total 12 month salary to 28 February 2009
=
£40,237
Published RPI at 31 March 2016
=
260
Published RPI at 28 February 2009
=
210.1
Best 12 months' salary to 28 February 2009 (plus inflation)
=
£40,237 x 260/210.1 = £49,794
Average of best inflation adjusted 3 year salaries
=
(£49,754 + £51,723 + £49,794) / 3
=
£50,424
1 March 2008 to 28 February 2009:
The pensionable salary at 31 March 2016 is the highest of the two calculations:
•
the best inflation adjusted 12 months’ salary over the last 36 months’ membership = £47,047
OR
•
the average of the best consecutive inflation adjusted three years’ salary during the last 13 years = £50,424
The pensionable salary used to calculate a member’s pension benefits in this example would be £50,424
If your benefit calculation section does not show the benefit formula this will be because our records indicate you are affected by
one or more of the categories below:
•
•
•
•
•
•
you were on a period of non-pensionable absence at 31 March 2016;
you elected for enhanced opt out prior to 31 March 2016;
you have HMRC enhanced protection with a USS ‘enhanced protection’ election;
you have flexibly retired from the scheme;
some of your benefits are subject to a capped salary; or
you are employed in more than one sole variable time post.
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Non-pensionable absence
If you were absent at 31 March 2016, and you elected not to contribute to the scheme during your absence, your benefit
calculation section will look as follows:
Benefit calculation
Our records indicate you are currently on a period of non-pensionable absence and not contributing to the scheme. Your
benefits have been calculated as at the day before your absence started and where appropriate, subsequently been
increased in line with increases to official pensions (currently based on the Consumer Prices Index), subject to certain limits
to 31 March 2016. Please see the important notes section for more details. Further information can be found in the for
members section of www.uss.co.uk
As advised above your pensionable service and pensionable salary have been calculated as at the day before your absence
commenced. The scheme’s benefit formula of pensionable service divided by the scheme’s pre 1 April 2016 accrual rate of 80
and then multiplied by your pensionable salary has then been used to determine your pension at the day before your absence.
Your pension and tax-free cash lump sum figures calculated at this date have, where appropriate, subsequently been increased
in line with increases to official pensions, subject to certain limits, to 31 March 2016. For further information regarding pensions
increases please refer to how will my pension be increased in the FAQs.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1986 and commenced a period of non-pensionable
absence on 1 April 2015 (and didn’t return before 1 April 2016), an example of how the benefits earned at 31 March 2016
would be calculated is as follows:
Pre 2011 service (1 April 1986 to 30 September 2011)
=
25 years and 183 days
Post 2011 service (1 October 2011 to 31 March 2015)
=
4 years and 182 days
Total pensionable service at 31 March 2015
=
30 years and 000 days
Pensionable salary at 31 March 2015
=
£45,000
Pre 2011 pension at 31 March 2015
=
£14,344.52
Post 2011 pension at 31 March 2015
=
£2,530.48
Total pension at 31 March 2015
=
£16,875 a year
Plus a tax-free cash lump sum of: 3 x £16,875
=
£50,625
The pension values (pre and post October 2011) are then increased from 1 April 2015 to 31 March 2016.
Pre 2011 Pensions Increase factor
=
1.052*
Post 2011 Pensions Increase factor
=
1.051*
Pre 2011 pension = £14,344 x 1.052
=
£15,090.44
Post 2011 pension = £2,530.48 x 1.051
=
£2,659.53
Total pension at 31 March 2016
=
£17,749.97 a year
Plus a tax-free cash lump sum of: 3 x £17,749.97
=
£53,249.91
*the pension increase factors used are for illustration purposes only. Factors will be applied in accordance with the scheme's trust deed and rules (as
amended from time to time).
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Enhanced opt out
If you made an enhanced opt out election prior to 31 March 2016 your benefit calculation section will look as follows:
Benefit calculation
Our records indicate you elected for enhanced opt out and are therefore not currently accruing pensionable service in USS.
Your benefits have been calculated as at the day before your opt out election and where appropriate, subsequently been
increased in line with increases to official pensions (currently based on the Consumer Prices Index), subject to certain limits
to 31 March 2016. Please see the important notes section for more details. Further information can be found in the for
members section of www.uss.co.uk
Your main USS contributions ceased on the day before your opt out date but you will have continued to pay a special rate of
contribution to the scheme each month to protect your benefits if you died or retired due to incapacity. You did however cease
to accrue pensionable service.
As advised above your pensionable service and pensionable salary have been calculated as at the day before your enhanced opt
out election date. The scheme’s benefit formula of pensionable service divided by the scheme’s pre 1 April 2016 accrual rate of
80 and then multiplied by your pensionable salary has then been used to determine your pension at the day before you opted
out of the scheme.
The pension and tax-free cash lump sum figures calculated at this date have, where appropriate, subsequently been increased in
line with increases to official pensions, subject to certain limits, to 31 March 2016. For further information regarding pensions
increases please refer to how will my pension be increased in the FAQs.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1986 and made an enhanced opt out election from
1 April 2015, an example of how the benefits earned at 31 March 2016 would be calculated is as follows:
Pre 2011 service (1 April 1986 to 30 September 2011)
=
25 years and 183 days
Post 2011 service (1 October 2011 to 31 March 2015)
=
4 years and 182 days
Total pensionable service at 31 March 2015
=
30 years and 000 days
Pensionable salary at 31 March 2015
=
£150,000
Pre 2011 pension at 31 March 2015
=
£47,815.07
Post 2011 pension at 31 March 2015
=
£8,434.93
Total pension at 31 March 2015
=
£56,250 a year
Plus a tax-free cash lump sum of: 3 x £56,250
=
£168,750
The pension values (pre and post October 2011) are then increased from 1 April 2015 to 31 March 2016.
Pre 2011 Pensions Increase factor
=
1.052*
Post 2011 Pensions Increase factor
=
1.051*
Pre 2011 pension = £47,815.07 x 1.052
=
£50,301.45
Post 2011 pension = £8,434.93 x 1.051
=
£8,865.11
Total pension at 31 March 2016
=
£59,166.56 a year
Plus a tax-free cash lump sum of: 3 x £59,166.56
=
£177,499.68
*the pension increase factors used are for illustration purposes only. Factors will be applied in accordance with the scheme's trust deed and rules (as
amended from time to time)
Universities Superannuation Scheme February 2017 v2
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HMRC enhanced protection
If you have HMRC enhanced protection, in conjunction with USS ‘enhanced protection’ and are therefore not currently accruing
pensionable service in USS, your benefit calculation section will look as follows:
Benefit calculation
Our records indicate you have HMRC enhanced protection and are therefore not currently accruing pensionable service in
USS. Your benefits have been calculated as at the day before your enhanced protection election and where appropriate,
subsequently been increased in line with increases to official pensions (currently based on the Consumer Prices Index),
subject to certain limits to 31 March 2016. Please see the important notes section for more details. Further information can
be found in the for members section of www.uss.co.uk
Your USS contributions ceased on the day before your election date and therefore you ceased to accrue pensionable service in
USS.
As advised above your pensionable service and pensionable salary have been calculated as at the day before your enhanced
protection election date. The scheme’s benefit formula of pensionable service divided by the scheme’s pre 1 April 2016 accrual
rate of 80 and then multiplied by your pensionable salary has then been used to determine your pension at the day before your
election date.
The pension and tax-free cash lump sum figures calculated at this date have, where appropriate, subsequently been increased in
line with increases to official pensions, subject to certain limits, to 31 March 2016. For further information regarding pensions
increases please refer to how will my pension be increased in the final salary benefit statement FAQs.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1976 and elected for enhanced protection at 5 April
2006, an example of how the benefits earned at 31 March 2016 would be calculated is as follows:
Pre 2011 service (1 April 1976 to 5 April 2006)
=
30 years and 005 days
Transfer in service from previous pension scheme
=
4 years and 360 days
Total pensionable service at 5 April 2006
=
35 years and 000 days
Pensionable salary at 5 April 2006
=
£95,000
Pre 2011 pension at 5 April 2006
=
£41,562.50
Total pension at 5 April 2006
=
£41,562.50 a year
Plus a tax-free cash lump sum of: 3 x £41,562.50
=
£124,687.50
The pension value is the increased from 6 April 2006 to 31 March 2016.
Pre 2011 Pensions Increase factor
=
1.2915*
Pre 2011 pension = £41,562.50 x 1.2915
=
£53,678
Total pension at 31 March 2016
=
£53,678 a year
Plus a tax-free cash lump sum of: 3 x £53,678
=
£161,034
*the pension increase factors used are for illustration purposes only. Factors will be applied in accordance with the scheme's trust deed and rules (as
amended from time to time)
Universities Superannuation Scheme February 2017 v2
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Flexible Retirement
If you have flexibly retired from the scheme your benefit calculation section will look as follows (but the relevant percentage of
your benefits you have already accessed will be detailed):
Benefit calculation
Our records indicate you have flexibly retired and are currently in receipt of 80% of your pension. The figures above are
in respect of the benefits you have remaining in the scheme that you have yet to access. Please refer to your retirement
statement(s) for details of your benefits in payment and see the important notes section for more details. Further
information can be found in the for members section of www.uss.co.uk
Flexible retirement means you have partly accessed your USS benefits whilst continuing to work, albeit with reduced hours and
salary.
As a proportion of your benefits are in payment, the pension and tax-free cash lump sum figures provided on page two of the
benefit statement are in respect of the benefits you have remaining in the scheme that you have yet to access.
As you can see above, the proportion of benefits you have already accessed will be detailed in percentage terms in the benefit
calculation section. The number of times you have flexibly retired can also be found on page three of the benefit statement in
the your pensionable service at 31 March 2016 section. Your pension in payment will remain unchanged until you flexibly retire
again or retire.
An example of how a benefit is calculated for a member who has flexibly retired once prior to 31 March 2016 is below. If you had
flexibly retired twice, and were still contributing to the scheme at 31 March 2016, the method for calculating your benefits would
be similar to the method laid out below. At your second flexible retirement event you will have accessed a further percentage of
your benefits and also continued to accrue pensionable service to 31 March 2016. The calculation would therefore incorporate
the relevant percentages to the “unflexed” portion of your benefits (from flex 1 and flex 2). For further information and a
calculation example please see the flexible retirement factsheet in the for members section.
How does this work?
1st flexible retirement event = 31 March 2012
Pre 2011 service (2 April 1985 to 30 September 2011
=
26 years and 182 days
Post 2011 service (1 October 2011 to 31 March 2012
=
0 years and 183 days
Total pensionable service at 31 March 2012
=
27 years and 000 days
Pensionable salary at 31 March 2012
=
£60,000
Pre 2011 pension at 31 March 2012
=
£19,873.97
Post 2011 pension at 31 March 2012
=
£376.03
Total pension at 31 March 2012
=
£20,250 a year
Plus a tax-free cash lump sum of: 3 x £20,250
=
£60,750
At 31 March 2012, the member flexes 80% of the benefits above, which entitles him to a pension of £16,200 a year and a
standard tax-free cash lump sum of £48,600.
continued
Universities Superannuation Scheme February 2017 v2
Page 10 of 25
Continued . . .
The member continues to work on a part-time basis of 50% of full time hours from 1 April 2012. At 31 March 2016 his
benefits are calculated as follows:
Pre 2011 service (2 April 1985 to 30 September 2011)
=
26 years and 182 days
Post 2011 service (1 October 2011 to 31 March 2012)
=
0 years and 183 days
Post flex 1 service (1 April 2012 - 31 March 2016 at 50%)
=
2 years and 000 days
Total pensionable service at 31 March 2016
=
29 years and 000 days
Pensionable salary at 31 March 2016
=
£65,000
The member has already accessed 80% of the benefits he earned to 31 March 2012 but there is still 20% of these benefits
remaining in the scheme. The pensionable salary at 31 March 2016 of £65,000 is used to calculate this remaining unflexed
pension.
Unflexed pension at 31 March 2016: 1/80 x 27 years x
£65,000 x 20%
=
£4,387.50 pension a year
Pension earned from 1 April 2013 to 31 March 2016 (post
flex 1): 1/80 x 2 years x £65,000
=
£1,625 pension a year
Total pension at 31 March 2016
=
6,012.50 a year
Plus a tax-free cash lump sum
=
£18,037.50
Plus
Universities Superannuation Scheme February 2017 v2
Page 11 of 25
Capped Salary
If you have benefits that are subject to capped salary your benefit calculation section will look as follows:
Benefit calculation
Our records indicate some of your benefits are subject to a capped pensionable salary. Please see the important notes
section for more details about how this has affected your benefit calculation. Further information can be found in the for
members section of www.uss.co.uk
If you earned over the statutory earnings cap prior to 6 April 2006, depending on your date of joining USS, part of your benefits
built up before this date may be subject to a salary restriction.
This means a proportion of your pensionable service earned to 5 April 2006, referred to as capped service, is subject to a salary
restriction as determined by HMRC limits. Pensionable service earned from 6 April 2006, referred to as uncapped service, is
calculated using your full pensionable salary at 31 March 2016, without any restrictions.
In order to calculate your benefits two separate calculations are performed using the scheme’s benefit formula of your
pensionable service figure (capped or uncapped) divided by the scheme’s pre 1 April 2016 accrual rate of 80 and then multiplied
by your pensionable salary (capped or uncapped) at 31 March 2016.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1991 an example of how the benefits at 31 March
2016 would be calculated is as follows:
Capped service at 5 April 2006
=
3 years and 000 days
Uncapped service to 31 March 2016
=
22 years and 000 days
Total pensionable service at 31 March 2016
=
25 years and 000 days
Capped pensionable salary at 31 March 2016
=
£145,000*
Uncapped pensionable salary at 31 March 2016
=
£195,000
=
£5,437.50 pension a year
=
£16,312.50
=
£53,625 pension a year
=
£160,875
=
£59,062.50
=
£177,187.50
Capped pension at 31 March 2016:
1/80 x 3 years x £145,000
Plus a tax-free cash lump sum of: 3 x £5,437.50
Uncapped pension at 31 March 2016:
1/80 x 22 years x £195,000
Plus a tax-free cash lump sum of: 3 x £53,625
Total pension at 31 March 2016:
Total pension
Plus tax-free cash lump sum
*the capped salary figure is for illustration purposes only. All pensionable salaries will be calculated in accordance with the scheme's trust deed and rules (as
amended from time to time).
Universities Superannuation Scheme February 2017 v2
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Multiple sole variable time employments
If you are, or have been, employed in more than one variable time employment at the same or another USS employer, with no
corresponding regular post, your benefit calculation section will look as follows:
Benefit calculation
Our records indicate you are employed in more than one variable time post. The benefits for each post are calculated using
the scheme’s benefit formula of pensionable service divided by the scheme’s pre 1 April 2016 accrual rate of 80 and then
multiplied by your pensionable salary. The result from each post is combined to give the figures above. Please refer to the
important notes section for more details and your pensionable service section (page three) for your combined service totals.
A variable time employee (VTE) is an individual who is paid on a basis which is not calculated either by reference to a fixed
annual salary, or in such a way that it would not be reasonably practicable to identify a part-time working percentage.
In order to calculate your benefits, for each financial year we establish a notional part time working percentage using your
actual earnings compared against a notional default salary for variable time employees at your relevant employer. A credit of
pensionable service can then be derived.
Each period is calculated separately if you are employed at more than one USS employer as the pensionable salary figure could
differ if your employer(s) defines an individual notional default salary for your post(s) or you commenced one post earlier than
another.
How does this work?
So, if a member had joined the scheme in two VTE employments on 1 April 2013 an example of how the benefits at 31 March
2016 would be calculated is as follows:
Start date of employment one: 1 April 2013
Start date of employment two: 1 April 2013
Pensionable earnings in year one: £5,000
Pensionable earnings in year one: £15,500
Pensionable earnings in year two: £3,000
Pensionable earnings in year two: £26,700
Pensionable earnings in year three: £35,000
Pensionable earnings in year three: £6,000
Year one - employment one (1 April 2013 to 31 March 2014):
Calculation of notional part-time service fraction (PTSF):
Variable time earnings
notional
x 100
=
£5,000
PTSF
notional default salary *
x 100
=
13.94%
£35,860
The period of pensionable service credited to the member for year one (employment one) is therefore:
365 days x notional PTSF = pensionable service
365 x 13.94% = 51 days
Year one - employment two (1 April 2013 to 31 March 2014):
£15,500
x 100 = 41.32%
365 x 41.32% = 151 days
£37,510
continued.
Universities Superannuation Scheme February 2017 v2
Page 13 of 25
Continued..
Year two - employment one (1 April 2014 to 31 March 2015):
£3,000
x 100 = 7.49%
365 x 7.49% = 27 days
£40,055
Year two - employment two (1 April 2014 to 31 March 2015):
£26,700
x 100 = 64.97%
365 x 64.97% = 237 days
£41,096
Year three - employment one (1 April 2015 to 31 March 2016):
£35,000
x 100 = 82.53%
365 x 82.53% = 301 days
£42,411
Year three - employment two (1 April 2015 to 31 March 2016):
£6,000
x 100 = 15.25%
365 x 15.25% = 56 days
£39,342
Employment one:
Total pensionable service at 31 March 2016
=
1 year and 14 days
Pensionable salary at 31 March 2016
=
£42,100
Employment one pension at 31 March 2016: 1/80
x 1 year 14 days x £42,100
=
£546.43 pension a year
Plus a tax-free cash lump sum of:
=
£1,639.29
Employment two:
Total pensionable service at 31 March 2016
=
1 year and 79 days
Pensionable salary at 31 March 2016
=
£41,211
Employment two pension at 31 March 2016: 1/80 x 1
year and 79 days x £41,211
=
£626.63 pension a year
Plus a tax-free cash lump sum of:
=
£1,879.89
Total pension at 31 March 2016:
Total pension
=
£1,173.06 a year
Plus a tax-free cash lump sum
=
£3,516.18
*the notional default salary is defined by the Trustee each year. It is also possible for your employer(s) to define the notional default salary for employees in a
VTE role.
Universities Superannuation Scheme February 2017 v2
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Pre/Post October 2011 benefits section explained
The figures in this section of the benefit statement are your total annual pension and tax-free cash lump sum figures, as shown in
your benefits, separated between benefits earned before 1 October 2011 and benefits earned from 1 October 2011. The figures
shown are for illustration purposes only.
Pre/Post October 2011 benefits - the figures below show the pre/post October 2011 split in your benefits
Pre-October 2011 pension: £30,000
Pre-October 2011 lump sum: £90,000
Post-October 2011 pension: £10,000
Post-October 2011 lump sum: £30,000
Benefits you built up before 1 October 2011 are increased differently to those built up from 1 October 2011. Please see the
important notes section for an explanation of pension increases.
The reason we have separated your benefits here is because benefits earned before 1 October 2011 are increased in line with
official pensions, currently linked to increases in the Consumer Prices Index, but benefits earned from 1 October 2011 are
increased in line with official pensions on a capped basis.
This means the maximum increase in any year for post 1 October 2011 benefits will be 10%. The capped basis is applied as
follows: the rate of increase in official pensions will be applied in full, so long as it is up to 5% a year. If such increase in official
pensions is more than 5% in a year, the increase would also include one half of that year’s increase above 5%, up to an overall
maximum of 10%.
Below is an example of how a member’s pre and post October 2011 benefits could be increased from 31 March 2016 to their
date of retirement.
How does this work?
So, if a member was age 55 at 31 March 2016 and retired from the scheme 10 years later at 31 March 2026 an example of
how the benefits earned in the final salary section of the scheme would be increased is as follows:
Benefits at 31 March 2016:
Pre-October 2011 pension
£30,000 pension a year
Post-October 2011 pension
£10,000 pension a year
Pre 2011 Pensions Increase factor
=
1.2888*
Post 2011 Pension Increase factor
=
1.2744*
Pre 2011 pension = £30,000 x 1.2888
=
£38,664
Post 2011 pension = £10,000 x 1.2744
=
£12,744
Total pension at 31 March 2016
=
£51,408 pension a year
Plus a tax free cash lump sum of 3 x £51,408
=
£154,224
*the pension increase factors used are for illustration purposes only. Factors will be applied in accordance with the scheme's trust deed and rules (as amended
from time to time).
The example above does not take in to account any early retirement reductions that may apply to the member’s benefits if retirement is prior to the scheme’s
normal pension age. Benefits will be calculated in accordance with the scheme’s trust deed and rules (as amended from time to time).
Universities Superannuation Scheme February 2017 v2
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Previous deferred benefits section explained
This section will be visible on your benefit statement if you have previously ceased a period of membership in USS which is
deferred and separate from your active employment(s). An example of how the section will look is below (but will show your
standard annual pension and tax-free cash lump sum):
Previous deferred benefits - in addition to the above figures
Our records indicate you have previously ceased membership of the scheme and were entitled to a separate deferred
benefit(s). Please refer to your leaver statement(s) for details of how these benefit(s) were calculated.
Your benefits have, where appropriate, subsequently been increased in line with increases to official pensions (currently
based on the Consumer Prices Index), subject to certain limits to 31 March 2016. Please see the important notes section for
further details.
£10,000
£30,000
Total annual pension
Total lump sum
Alternatively, this section will also be visible if you have deferred benefits, in addition to your USS benefits, from the Open
University Superannuation Scheme, Edinburgh University Students Association or the Henley Pension Scheme. An example of
how the section will look if you have deferred benefits in the Open University Superannuation Scheme is below (but will show
your standard annual pension):
Previous deferred benefits - in addition to the above figures
Our records indicate you have deferred benefits from your membership of The Open University Superannuation Scheme.
Please refer to your leaver statement(s) for details of how these benefit(s) were calculated. Your benefits have, where
appropriate, subsequently been increased in line with the rules of your previous scheme to 31 March 2016. Please see the
important notes section for further details.
£10,000
Total annual pension
Universities Superannuation Scheme February 2017 v2
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USS deferred benefits
At the date you ceased membership(s) your pensionable service and pensionable salary were used to secure a pension and taxfree cash lump sum. This pension and tax-free cash lump sum is fixed (deferred) at the point you ceased membership and will be
increased from the date of leaving this employment(s), where appropriate, in line with increases to official pensions (currently
based on the Consumer Prices Index), subject to certain limits, to your date of retirement.
The value of the pension and tax-free cash lump sum on the benefit statement is the total current value of your USS deferred
benefit(s). The value(s) have been increased in line with increases to official pensions, subject to certain limits from your date of
leaving to 31 March 2016. For further information regarding pensions increases please refer to how will my pension be increased
in the final salary benefit statement FAQs.
How does this work?
So, if a member had worked full-time since joining the scheme on 1 April 1986 and ceased membership on 30 March 2012 an
example of how these benefits would be increased to 31 March 2016 is as follows:
Pre 2011 service (1 April 1986 to 30 September 2011)
=
25 years and 183 days
Post 2011 service (1 October 2011 to 30 March 2012
=
0 years and 182 days
Total pensionable service at 30 March 2012
=
26 years and 000 days
Pensionable salary at 30 March 2012
=
£45,000
Pre 2011 pension at 31 March 2012
=
£14,344.52
Post 2011 pension at 31 March 2012
=
£280.48
Total pension at 31 March 2012
=
£14,625 pension a year
Plus a tax-free cash lump sum of: 3 x £14,625
=
£43,875
The pension values (pre and post October 2011) are then increased from 31 March 2012 to 31 March 2016.
Pre 2011 Pensions Increase factor
=
1.052*
Post 2011 Pension Increase factor
=
1.0496*
Pre 2011 pension = £14,344.52 x 1.052
=
£15,090.44
Post 2011 pension = £280.48 x 1.0496
=
£294.39
Total pension at 31 March 2016
=
£15,384.83 pension a year
Plus a lump sum of 3 x £15,384.83
=
£46,154.49
*the pension increase factors used are for illustration purposes only. Factors will be applied in accordance with the schemes' trust deed and rules (as amended
from time to time).
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Deferred merger benefits
USS now administers the Open University Superannuation Scheme (OUSS), Edinburgh University Students Association (EUSA) and
the Henley Pension Scheme. If you have a deferred benefit with either of these schemes (i.e. you did not receive a service credit
within USS) the current value of this benefit will be shown on the benefit statement in this section.
The pension from your date of leaving the previous scheme has been revalued in accordance with your previous scheme’s rules
to 31 March 2016.
How does this work?
So, if a member had ceased membership of the Henley Pension Scheme on 30 April 2000 an example of how these benefits
would be increased to 31 March 2016 is as follows:
Total Guaranteed Minimum Pension (GMP)
=
£1,240
Total excess pension
=
£6,760
Total pension at 30 April 2000
=
£8,000
The GMP and the excess pension elements need to be increased separately.
The GMP is increased by a fixed rate. The rate in this example = 6.25% (1.0625 (6.25 ÷ 100 + 1))
Number of complete tax years from 1 May 2000 to 31 March 2016
=
15 (6 April 2001 - 5 April 2015)
GMP = £1,240 x 2.4827 (1.0625 )
=
£3,078.55
Number of complete years from 1 May 2000 to 31 March 2016
=
15
LPI rate for 15 years
=
44.4% (1.444 (44.4 ÷100 + 1))
Excess pension = £6,760 x 1.444
=
£9,761.44
=
£12,839.99
^15
The excess pension is increased by the Limited Price Index (LPI)
Total pension at 31 March 2016
Total pension = £3,078.55 + £9,761.44
The rules of the merger schemes do not provide an automatic cash lump sum.
Universities Superannuation Scheme February 2017 v2
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Your pensionable service at 31 March 2016 section explained
This section of the benefit statement divides all of your service in the scheme in to the different categories of service. It also
provides details of the number of transfers, the number of deductions, the number of flexible retirement events and additional
voluntary contribution arrangements applicable to you.
This section is personal to your circumstances and therefore your benefit statement may not contain some of the data in the
example below. Only service categories and additional data will show where relevant. Your pensionable salary at 31 March 2016
is also shown, along with the date(s) you reach your contractual pension age – see what is my contractual pension age (CPA) in
the FAQs for more information on CPA.
Your pensionable service at 31 March 2016
Service credited on joining:
1
years 35
days
Total number of monthly AVC arrangements:
2
Service accrued in USS:
15
years 154
days
Total number of deductions:
3
Total transferred-in service:
6
years 110
days
Total number of transfers-in:
1
Total USS monthly added years AVC
service:
4
years 8
days
Pensionable salary at 31/03/2016:
Total variable time service credit:
0
years 53
days
Date of CPA*:
Total pensionable service:
26
years 360
days
£42,000
16/09/2019
* This is the date you will reach contractual pension age (CPA) in respect of some/all of your benefits earned up to 30 September 2011. Please see the
important notes section for an explanation of CPA.
In the example above there is an amount of variable time service credit service. For more information on variable time
employees (VTE) please refer to the FAQ section, I am a variable time employee, how has this affected my pension.
If you are, or have been, employed in a regular employment alongside your VTE employment you are referred to as a concurrent
employee. When calculating benefits the earnings from the VTE employment are converted in to a service credit for the period
of concurrent employment and combined with your regular employment.
How does this work if I am concurrent?
So, if a member had joined the scheme on 1 October 1995 in a regular employment and then began a VTE employment on 1
April 2014 an example of how the benefits at 31 March 2016 would be calculated is as follows:
Regular employment:
Variable time employment
Start date of USS membership
1 October 1995
Start date of USS membership
1 April 2014
Pensionable earnings in year one
£30,000
Pensionable earnings in year one
£5,000
Pensionable earnings in year two
£32,000
Pensionable earnings in year two
£6,000
Part-time service fraction:
100%
Year one (1 April 2014 to 31 March 2015):
Calculation of credit from variable-time employment after first year of concurrent employment:
variable time earnings
credit from variable
x 1 year =
£5,000
time employment
regular time earnings
x 365 days = 0 years and 61 days
£30,000
continued
Universities Superannuation Scheme February 2017 v2
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Continued . .
Year two (1 April 2015 to 31 March 2016):
Calculation of credit from variable-time employment after second year of concurrent employment:
£6,000
x 365 days = 0 years and 68 days
£32,000
Calculation of USS benefits at 31 March 2016:
Pensionable service in regular employment
=
20 years and 183 days
Credit from variable time employment: year one
=
0 years and 61 days
Credit from variable time employment: year two
=
0 years and 68 days
Total pensionable service
=
20 years and 312 days
1/80 x 20 years 312 days x £32,000
=
£8,341.92 a year
Plus a tax-free cash lump sum
=
£25,025.76
If you are, or have been, employed in VTE employment with no corresponding regular employment you are referred to as a sole
VTE. In order to calculate your benefits, for each financial year we establish a notional part time working percentage using your
actual earnings compared against a notional default salary for variable time employees at your relevant employer. A credit of
pensionable service can then be derived. The pensionable service built up in your VTE employment is shown as service accrued
in USS.
How does this work if I am a sole VTE?
So, if a member had joined the scheme in a sole VTE employment on 1 April 2010 an example of how the benefits at 31
March 2016 would be calculated is as follows:
Start date of USS membership: 1 April 2010
Pensionable earnings in year one: £5,000
Pensionable earnings in year two: £15,500
Pensionable earnings in year three: £3,000
Pensionable earnings in year four: £26,700
Pensionable earnings in year five: £35,000
Pensionable earnings in year six: £6,000
Year one (1 April 2010 to 31 March 2011):
Calculation of notional part-time service fraction (PTSF)
Variable time earnings
notional
x 100
PTSF
£5,000
notional default salary*
£35,860
x 100 = 13.94%
The period of pensionable service credited to the member for the year is therefore:
365 days x notional PTSF = pensionable service
365 x 13.94% = 51 days
Year two (1 April 2011 to 31 March 2012):
£15,500
x 100 = 41.32%
£37,510
Universities Superannuation Scheme February 2017 v2
365 x 41.32% = 151 days
continued/
Page 20 of 25
Continued . .
Year three (1 April 2012 to 31 March 2013):
£3,000
x 100 = 7.49%
365 x 7.49% = 27 days
£40,055
Year four (1 April 2013 to 31 March 2014):
£26,700
x 100 = 64.97%
365 x 64.97% = 237 days
£41,096
Year five (1 April 2014 to 31 March 2015):
£35,000
x 100 = 82.53%
365 x 82.53% = 301 days
£42,411
Year six (1 April 2015 to 31 March 2016):
£6,000
x 100 = 15.25%
365 x 15.25% = 56 days
£39,342
Total pensionable service at 31 March 2016
=
2 years and 93 days
Pensionable salary at 31 March 2016
=
£42,500
Total pension at 31 March: 1/80 x 2 years 93 days x £42,500
=
£1,197.86 pension a year
Plus a tax-free cash lump sum of
=
£3,593.58
*the national default salary is defined by the Trustee each year. It is also possible for your employer(s) to define the national
default salary for employees in a VTE role.
Universities Superannuation Scheme February 2017 v2
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Added years additional voluntary contributions section explained
This section of the benefit statement will be visible if you have made additional voluntary contributions (AVC) through the USS
added years arrangements prior to 31 March 2016, either through monthly payments or a lump sum.
The total number of all of your arrangements will be listed in this section but only the latest three for each type of arrangement,
where applicable, will be shown. An example of the format of this section is below.
Added years additional voluntary contributions - most recent arrangements are below
Please note that the service for all of your AVC arrangements is included in the total pensionable service figures on page two and above.
Monthly added years AVC arrangements - total number of monthly AVCs: 4
Date
commenced
Date
ceased
01/04/2011
Date due
to cease
Service
purchased to date
Contracted
amount of service
Percentage
contribution
18/04/2020
0 years 266 days
1 years 116 days
3.87%
01/04/2008
30/09/2010
18/04/2015
1 years 315 days
5 years 91 days
4.00%
01/05/1999
18/04/2015
18/04/2015
8 years 350 days
8 years 350 days
3.96%
Please note that if the 'Date ceased' field above is blank, the you were still paying in to this AVC as at 31 March 2016. See important notes for more details.
Lump sum added years AVC arrangements - total number of lump sum AVCs: 1
Date
Commenced
Expected
end date
Service
purchased
31/03/1988
18/04/2015
0 years 100 days
How does this work?
So, if a member had commenced an added years AVC on 1 April 2011, and not ceased the arrangement prior to 31 March
2016, an example of how the pensionable service for this arrangement would be calculated at 31 March 2016 is as follows:
Date added years arrangement commenced
=
1 April 2011
Date arrangement is due to cease
=
18 April 2020
Service to be purchased
=
1 year 116 days
The amount of service that will be purchased if the member continues to pay in to the arrangement until 18 April 2020 is 1
year and 116 days. Therefore, only a proportion of this service has been purchased at 31 March 2016. In this example the
member has worked full-time since the commencement of the added years arrangement. If you are part-time the service
purchased will be adjusted based on your part-time hours – an example of how part-time hours affects added years AVCs is
below.
Date arrangement commenced to calculation date
x service to be purchased = service purchased to date
Date arrangement commenced to due to cease date
1 April 2011 to 31 March 2016 (5 years 0 days)
x 1 year 116 days = 0 years 266 days
1 April 2011 to 18 April 2020 (9 years 18 days)
The pensionable service purchased through this arrangement at 31 March 2016 is 0 years and 266 days
Universities Superannuation Scheme February 2017 v2
Page 22 of 25
What's the difference if I'm part-time?
So, if a member worked 80% of full-time and commenced an added years AVC on 1 April 2011, and had not ceased the
arrangement prior to 31 March 2016, an example of how the pensionable service for this arrangement would be calculated at
31 March 2016 is as follows:
Date added years arrangement commenced
=
1 April 2011
Date arrangement is due to cease
=
18 April 2020
Service to be purchased
=
1 year 116 days (full time service)
The amount of service that will be purchased if the member continues to pay in to the arrangement until 18 April 2020 is 1
year and 116 days (assuming the member was full-time). Therefore, only a proportion of this service has been purchased at
31 March 2016. In this example the member has worked at 80% since the commencement of the added years arrangement
and therefore the amount of service bought is reduced by the part-time hours percentage.
Date arrangement commenced to calculation date
x service to be purchased = service purchased to date
Date arrangement commenced to due to cease date
1 April 2011 to 31 March 2016 (5 years 0 days)
x 1 year 116 days x 80% = 0 years 213 days
1 April 2011 to 18 April 2020 (9 years 18 days)
The pensionable service purchased through this arrangement at 31 March 2016 is 0 years and 213 days.
If you have continued an added years arrangement(s) after 31 March 2016 please refer to the FAQ, I pay USS added years
monthly AVCs, have these been included in this statement for further information on the calculation of your pensionable
service after 31 March 2016.
Universities Superannuation Scheme February 2017 v2
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Important Notes
Please note the final salary benefit statement and the data therein has been provided as guidance only and should not be relied
upon by you to make a decision in relation to your USS benefits. We strongly recommend that you speak to an independent
financial adviser (IFA) before making a decision or refraining from making a decision in relation to your USS benefits. You can find
an IFA through the following website: www.unbiased.co.uk. Please be aware that you may be charged a fee for any advice.
The scheme is governed by a trust deed and rules and if there is any difference between the benefit statement, this factsheet
and/or the trust deed and rules as amended from time to time the latter will prevail. You are advised to check with your
employer’s USS pension’s contact for the latest information regarding your benefits, the scheme, and any changes that may have
occurred to its rules and benefits.
You should carefully check the information contained in your benefit statement and contact your employer if you believe any
information in the statement is, or may be, incorrect, who is listed on page one of your benefit statement.
This publication is for general guidance only. It is not a legal document and does not explain all situations or eventualities. USS is governed by a
trust deed and rules and if there is any difference between this publication and the trust deed and rules the latter prevail. Members are advised to
check with their employer contact for latest information regarding the scheme, and any changes that may have occurred to its rules and benefits.
Universities Superannuation Scheme February 2017 v2
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