Some of the content on this page was generated with the help of ChatGPT – and carefully reviewed by the Internal Communications team for accuracy and appropriateness.
Thank you to everyone who took the time to respond. One of the actions we’ve identified, in response to your feedback, is to run a series of short articles. Each article will aim to simplify a different aspect of the Universities Superannuation Scheme (USS).
A common theme in the survey feedback was confusion around the terms 'defined benefits' and 'defined contributions'. Many people said they aren't sure what they mean or how they differ.
Here’s a way to think about them that may help.
Defined benefits
When you join USS, you automatically become a member of the Retirement Income Builder – the defined benefit part of the scheme.
This part of USS provides a guaranteed income for life when you retire, plus a one-off, tax-free lump sum (up to a limit).
The benefits you build in this part of the scheme are based on your salary (up to the salary threshold, currently £71,484 – which is subject to change by USS) and how long you’ve been paying in.
When you retire, the amount you receive from this part depends mainly on:
- how long you’ve been a member and actively contributing to the scheme
- your pensionable pay during that time
Pension investment performance is based on a set formula and is more predictable.
Defined contributions
If you earn above the salary threshold (currently £71,484 – which is subject to change by USS), you’ll also start building a flexible savings pot in the Investment Builder – the defined contribution part of USS.
This works more like a savings account, where your contributions are invested.
When you retire, the amount available from this pot depends on:
- how much has been paid in
- how well the investments have performed
You have a few options for using this money, you can:
- take some or all of it as cash (some of it will be subject to tax)
- use it to buy a regular income for life (called an annuity)
- leave it invested and take money out as and when you need it
You can also grow this part of your pension by transferring in other pension savings or paying in additional contributions – this is applicable to all members. This means your USS pension can include both:
- a guaranteed income for life, and
- a flexible pot of savings you can use in a way that suits your retirement plans.
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Useful USS resources
