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USS Pension "Opt Out" -...
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Hi Majid, that is awful. It might be a result of lacking information, because many fellows do not even know that they have the option to opt out. Can anyone help Majid with this?
Best, Stefan
Hello,
I opted out of the pension scheme and my university at the time (University of the West of England) paid the money to me every month until the end of the contract.
Best,
Elena
Thank you, Elena, for letting us know, many people will be interested to hear this.
Best, Stefan
Hi Elena, a further question: do you refer to your employee's contribution (8%) and/or the employer's contribution (18%)?
Were they both paid out monthly?
Best,
Stefan
Hi there,
I am a PhD ITN Marie Curie fellow at Loughborough University and have opted out as well. They do not reduce my salary for any pension contributions but pay everything monthly.
Cheers,
Jannis
Hi Jannis, a further question: do you refer to the your employer's contribution and/or the employer's contribution? Were both paid out monthly?
Best,
Stefan
Thanks, Jannis
Hi Jannis, a further question: do you refer to the your employee's contribution (8%) and/or the employer's contribution (18%)?
Best,
Stefan
I was an International Outgoing Fellow who went from the UK to the USA. I was given the option of being paid in the USA or the UK; I opted to continue to receive my wage from my home host institution, and therefore was able to continue to pay into my UK-based pension scheme (thereby causing no disruption to it).
Thank you for letting us know, Elizabeth, an interesting case, too!
I am working in a government institute so we are on JSS pension, but I think the policy regarding opting out is the same: you have 2 years from when the policy starts to opt-out and get your money back, so as long as you opt out before your fellowship concludes you should be ok. Beyond that I am not sure, but, as I understand, if you go beyond 2 years then bascially you can't really get this money back unless you continue to pay in for 5 years and the eventually receive the pension when you're eligible.
Also, something to keep in mind is that at least with the JSS, the employer is required to automatically enrol you back in every 3 years, even if you have previously opted out. So if you stay beyond the duration of the fellowship and want to stay opted-out of the scheme, then you will need to continue to opt out every 3 years.
Ryo, thank you for updating us on this rule which states that the opt out has to be done within the first 2 years.
Best, Stefan
Ryo, Stefan, it seems it does not work like that. I asked my university (pensions office) to opt out and how to claim the reimbursement. Their answer:
"Unfortunately it will not be possible for you to claim a refund of your pension contributions from USS as King’s operates a salary sacrifice scheme for paying pension contributions (PensionsPlus) and you have more than 3 months membership in the scheme. The USS rules state that ‘if you have contributed to USS through salary sacrifice, you will not be entitled to a refund of contributions for the period of any sacrifice as these will have been paid for you by your employer as part of the arrangement’."
I don't know what a salary sacrifice is. Will share updates.
A.
Hi Ainoa, salary sacrifice means you pay an additional pension contribution from your salary (like in the USS pension). Does this help (which was communicated to me by our member Ann Giletti): Go to www.uss.co.uk ; in the search field search for 'opt out'; scroll down to 'automatic enrolment' and click on the link; then click on 'I want to opt out of the scheme'. Read the short text there, which says you have three months to opt out, but in fact can opt out later and be refunded. (?)
Best,
Stefan
Morning Stefan!
It doesn't say that (that after 3 months you can be refunded), it says "You can, after the three month retrospective withdrawal period, decide to withdraw from the scheme at any time and opt to choose a refund of contributions (if available), defer your benefits, or transfer out to another scheme." I guess this "if available" means it depends on your employer and how it manages pensions?
A.
Perhaps this means that after three months they've already started investing your money in the pension fund, but I don't know that. Perhaps you can still withdraw it and close your pension fund?
Reading your emails I was wondering whether it's better to opt out or not. I didn't when my fellowship started but since many people prefer to opt out... why?
Dear Ainoa,
the reason why many fellows choose to opt out is because on a Marie Curie contract you have to pay BOTH employee's and employer's pension contributions.
On a normal work contract you only pay 8% (and the employer's adds another 18% to this for you); but on a Marie Curie you pay everything, that is, 26%.
Best
Stefan
Thank you. I was advised NOT to opt out by HR at my university; will ask again why because I don't understand either what could be their benefit.
I would like to add that anonther reason might be that you do not intend to stay in the UK until pension age and the pension is not automatically transfered to your home country. Although I should say that I think it is possible to transfer to some countries - maybe someone else has experience?
Best, Jannis
Hi Stefan, hi all,
Just in these days I am facing an incredible situation. I contacted the Human Resources office in my institute to explore the possibility of a renegotiation of my salary on the basis of the fall of the exchange rate Euro/Pounds. The HR office said me that this is possible, but only at the end of the fellowship when they make all the calculation, BUT, according to them, I was overpaid because they only calculated the withdrawal of the 8% due by the employee, but not the 18% due by the employer. In other words, according to them, I should pay, directly from my salary, both the components of the pension scheme: for the employee and for the employer.
Recalculating the pension plus the difference in the exchange rate, the result is that there is no money for the last month of my fellowship and that I shall finish one month before! This is absolutely incredible, it is not right and seems also a bit illegal to me. For this reason I will decide to opt-out, but given all that Idon't know what to expect.
What do you think?
All the best,
Vincenzo
Hi Vincenzo,
Sounds a horrid and avoidable (by HR) situation!
Does your department have a member of staff who is a designated union representative (I'm part of the Universities and College's union, along with nearly all the unionised staff in our dept)? I would contact them informally whether you are a member of the union or not to get advice on the legalities of the overpayment issue (you will probably have to join the union to do anything formally, but it is definitely less per month than the employer's pension contribution!), as well as someone to have your back in general in dealings with HR.
I think UK Employment law is pretty clear on overpayments (employers can adjust future salaries to recoup them) but I'm not sure how this works if you were quoted a salary in your offer of employment letter, and have already signed a contract for two year's employment at that salary. So you'll need to check with someone who knows more about the law (and our lovely 92-page grant agreements...).
Also another port of call is the staff member who represents postdocs in your department, as an ally and point of reference - they may know less about employment law but permanent staff seem to have more sway sometimes, and the more people on your side the better!
Good luck!
Robyn
To clarify, I mean avoidable if they had not made the mistake in the first place! :)
Dear Vincenzo,
what a terrible situation! Yes, you have to pay the 18%, that's why many fellows decide to opt out. Regarding late opt out please see the points raised by Ainoa and my answers.
Obviously nobody ever explained to you how the pension opt out works, that's why discussions threads like this one can be helpful (I hope).
All the best,
Stefan
Dear All,
as much as sharing these personal experiences is informative, I think that it would be much more helpful if we could directly contact REA regarding this issue and ask for their support. Granted that universities have probably quite a lot of independence in the matter, there must be at least some strict general guidelines that are supposed to be followed. Can someone reach out to them and ask for clarifications? Maybe Stefan?
Best,
Giacomo
Dear Giacomo,
I might try this but the universities are not really guided by the REA in these things. They look at what other universities do (that's why our survey is so important) and what is the usual practice in the UK and obviously what is UK employment and tax law. However, I think we have established that the 18% employer's contribution is paid out monthly in ALL of the places we have heard from. Also you can opt out in the first three months but not necessarily after three months (are there any other experiences regarding this point?)
Stefan
Dear all,
In Germany, there is a similar occupational pension fund for universities and other public-service type institutions administered by VBL. The model contracts for MSCA fellows in Germany contain a clause saying that MSCA fellows do not pay into this occupational scheme. Could the UK chapter find out if there are model contracts for the UK and suggest adding a similar clause about USS to them? The MSCA NCP for the UK or even Euraxess UK might know about this. It seems some people like Elizabeth might want to continue their payments but for most fellows it would simplify matters enormously if the default contract eliminated the problem.
I have asked findyourpension.eu and RESAVER to present a joint session at the GA and am waiting on a final response from RESAVER. The people from VBL behind findyourpension.eu asked me to setup something like this.
Regards,
Brian
Dear Brian,
thank you very much for your message. You are touching a sensitive point: There are no model contracts that I know of, and every university does what they think is best, with very haphazard and confusing results. This is especially true for what concerns their dealings with exchange rates and pensions. If there can be a session at the GA that could be really helpful.
Best,
Stefan
Why not contact the USS, and ask them what to do? They surely never thought of our circumstances, and would not be happy that the arrangement is being misunderstood. HR departments might be able to respond better if there were clarification from the USS. Under normal circumstances, universities are not supposed to encourage employees to opt out of the scheme, I imagine because of the potential conflict of interest (there is arguably an interest for the employer to avoid its contributions to the scheme). But when the employee has to pay both contributions, ideally any guidelines HR may have about advising employees should be different, and the employee should be shown the options in order to make an informed decision. Here is where a statement from the USS could help HR departments going forward, and could perhaps positively influence the cases of the people posting in this discussion string. I suppose there are three scenarios to ask the USS to comment on: HR insistence that Marie Curie fellows take up the scheme; HR permission to fellows to opt out within three months, yet nevertheless withholding contributions until the end of the fellowship (which presumably does not happen to employees with open-ended contracts); and cases of completed fellowships where the fellow was required to take part in the scheme, opted out late, and was never refunded.
For the university survey in the discussion thread: I just began my fellowship at Oxford University, and was given a clear explanation of the choices and how to opt out. I was automatically enrolled in the scheme (in keeping with USS procedures), have now opted out, and will not be paying contributions.
There is document prepared by Ms. Kate Butler (Personnel Officer at University of Oxford) which clearly explain the choice of opting out of the voluntary pension scheme (USS) and its side effects on the salary.
http://www.admin.ox.ac.uk/media/global/wwwadminoxacuk/localsites/personnel/documents/recruitingstaff/contracts2013/Marie_Curie_fellow_pensions_costs_letter_August_2013.docx.
Salary sacrifice schemes benefit both the employee and the employer.
A decrease in amount of the taxable salary reduces the national insurance costs for both and reduction in income tax.
If the pension scheme is implemented as a salary sacrifice (e.g. Pensions Choice) it is better to opt in.
These conclusions hold for standard employment contracts, cf. Kate Butler's document.
If the procedure of fund transfer between USS and an alternate pension fund (say in a different country where you might have already contributed to pension) is clear and lossless then its better to opt-in to the USS. Else opt-out. However, keep in mind that a salary hike due to opt-out also means a hike in the income tax.
I have opted out because the fund transfer from USS (UK) to Spain (have contributed to pension here) is not clear.
On the use of exhange rate in salary computations... the following blog might be interesting: http://hertourage.com/?p=4106
Thanks, Prashanth, for these explanations!
Very well explained Prashanth, I would not have explained any better, that is right on the spot.
Agreements about retirement between the UK and Europe will no longer be valid due to the Brexit, everything will be renegociated. People currently 'opting in' have no clue what they will get in return. There is no way to know about future Brexit agreements, yet many Europe countries are in favor of an extra harsh deal with the UK in order to set an example for countries willing to leave the EU. It leads to lots of uncertainties that are directly affecting Marie Curie research fellows retirement rights in that sense.
If one takes an example of country with common points with the UK, in Australia people pay superannuation then when their contrats end, one third of the money automatically goes into taxes (disappears) and they give back the remaining money and no right for retirement. It is forbidden to keep the supernnuation running when one leaves the country. It is very good business for Australia. The more one pay, the more one loses, I know it for a fact as I worked there for 5 years and lost lots.
Opting out means one get taxed a lot more on salary, it does even push some people into a higher taxation rate. Then one can contact the european country of origin to pay retirement riights there but it costs a lot more money than simply working in the country of origin. So it is a loss in any case, that is my view of the moment, happy to hear other points of views agreeing or disagreeing.
Hi Stefan - thank you for your comments on the USS Pension.
I would like to share my past experience iregarding the USS Pension. I didn't opt out and paid the employee contribution for two years. At the end of my IIF fellowship, I applied a form to get back my contribution but unfortunately received a negative response, mentioning that I am not eligable.
Any help will be greatly appreciated.
Majid