Calculating the pensions pay-off

May 12, 2000

I am surprised that there appears to be so much misunderstanding as to USS pension benefits. I would indeed have been delighted on retirement 18 months ago to have received a tax-free, six-figure lump sum based on "three times salary" (Letters, THES, April 28).

Even the chief executive of the USS is not accurate when he refers to a tax-free lump sum of 1.5 times final salary (Soapbox, THES, April 28). This is true only of a member who retires after 40 years' service. The lump sum is calculated on the basis of 3/80ths of pensionable salary, which is determined by the length of pensionable service. This is not the same as final salary. The difference can be significant.

I suspect that most USS members will not be entirely convinced by his argument in support of the 80ths accrual rate. While the lump sum is tax-free, it is unlikely, even when well invested, to produce sufficient annual income to make up the difference between a pension based on a 60ths accrual rate and one based on the lower 80ths rates.

D. G. Barnsley. Emeritus professor, faculty of law University of Leicester.

You've reached your article limit.

Register to continue

Registration is free and only takes a moment. Once registered you can read a total of 3 articles each month, plus:

  • Sign up for the editor's highlights
  • Receive World University Rankings news first
  • Get job alerts, shortlist jobs and save job searches
  • Participate in reader discussions and post comments
Register

Have your say

Log in or register to post comments