The USS is a hybrid scheme, meaning that it is partly a Defined Benefit scheme and partly a Defined Contribution scheme. Members currently earn a Defined Benefit pension on salary up to £70,296 pa and Defined Contribution benefits on salaries above this threshold at a cost of 6.1% of salary to members and 14.5% for employers. The USS is one of the largest private pension schemes in the UK that currently still allows new Defined Benefits to be built up.

Defined Benefit Scheme

• In a Defined Benefit Scheme, the employer agrees to provide a specified, fixed, annual pension payment and/or lump sum at retirement, which is calculated through a formula based on a member’s salary and length of service. The amount usually increases with inflation and is guaranteed until death.

Defined Contribution Scheme

• In a Defined Contribution scheme, members have individual saving pots that both they and their employer pay into. At retirement, members draw their pension savings from this fund, which consists of all the employer and employee contributions paid in over the years, plus investment returns that have been earned by investing the scheme in, for example, stocks and shares. In this kind of scheme, employees can choose whether they wish to take out all their retirement savings as a lump sum, or to opt for alternative options such as an annuity or drawdown. An annuity is a fixed sum of money paid to someone each year, typically for the rest of his or her life. The annuity option provides a guaranteed regular retirement income from your individual saving pot. Drawdown involves keeping your individual saving pot invested but regularly drawing an income from it rather than purchasing an annuity.

Contributions and how much it costs

Defined Benefits Scheme

• In the Defined Benefit section of USS you build up your pension via the Retirement Income Builder. In this section you will build up a pension based on 1/75 of your earnings each year, up to a threshold, currently £70,296 pa or £5858 per month.
• You also build up a tax-free lump sum of 3/75 of your earnings up to the same limit.
• At the end of each year the pension you have earned is added to any previous pension earned in earlier years. It is then increased in line with the growth in the Consumer Price Index (CPI), up to a maximum of 10%.

Defined Contributions Scheme

• In the Defined Contribution section of USS you build up your pension via the Investment Builder. If you earn over the salary threshold of £70,296 pa, you will automatically join this section as well as the Income Builder section above.
• Contributions in excess of the threshold go into the investment fund. 6.1% of your contributions above the threshold and 13.9% of employer contributions above the threshold are invested each month you are paid.
• You choose where your contributions are invested by making your choices in My USS. The Investment Builder offers flexibility in drawing from this fund at retirement and you can either: - secure a regular income; leave your savings invested and make withdrawals when you need to; or a combination of any of the options above.

My USS

My USS is the online service for managing your USS savings and benefits. Once you have registered you will be able to: -

• Nominate who you would like to receive the lump sum benefit in the event of your death
• View the defined benefit pension you have built up in USS Retirement Income Builder
• Review your USS Investment Builder fund choices
• View your Investment Builder contributions and see your fund value (note this is only the Investment Builder contributions, not Income Builder)
• Review and amend your Target Retirement Age from the default position of your Normal Pension Age
• Top up your pension saving with additional contributions
• You may also wish to consider transferring any pension you have earned before joining USS into your Investment Builder account.
• View your digital Annual Member Statements

For direct updates on the changes, please visit Imperial's update page and USS's website.