Flexible Retirement under USS
Scheme changes within USS were implemented with effect from 1 October 2011 and, as part of these changes, flexible retirement arrangements were introduced. The flexible retirement arrangements allow active members of the scheme to remain in employment at Swansea University and continue to build up pension benefits in the scheme, whilst drawing some of their accrued pension benefits. Scheme members will be required to provide USS with formal notice of their intention to flexibly retire at least two months prior to their selected retirement date.
Eligibility for flexible retirement
Active, eligible members of the scheme will be able to apply to their employer to flexibly retire under these provisions. Flexible retirement will not be available to deferred members or in respect of any variable time employment.
At present, members of staff who hold two or more separate employments which are pensionable within USS will not be eligible for flexible retirement. However USS will undertake a review of this in due course.
Requirements/features of flexible retirement
There are a number of requirements which must be met within the USS rules for flexible retirement:
- the USS member must be aged 55 or above;
- they must have ‘qualifying service’. This is normally a period of at least two years' pensionable service;
- the prior written consent of the employer is required;
- a USS member must reduce their working hours by a minimum of 20% and also reduce their salary by a minimum of 20% on a long term basis (and in any event for no less than 12 months);
- the proportion of benefits to be drawn is a minimum of 20% and a maximum of 80%of the USS member’s total pension and lump sum at the date of flexible retirement;
- benefits will be actuarially reduced to the extent that they are payable before the USS member’s normal pension age;
- a USS member may elect to flexibly retire on a maximum of two occasions, following which the member must draw further benefits only by retiring in full. When a member takes a second flexible retirement, the maximum proportion of benefits he/she may receive on the second flex is 80% of the the accrued benefits less the percentage of benefits drawn on the first flex.
If a USS member wishes to explore the possibility of flexible retirement, he/she is advised to visit the USS website (at https://www.uss.co.uk/members/members-home) to use the benefit modeller (inputting information from the member’s last service statement) to find out in broad terms the amount of benefits to which he/she is entitled. A USS member factsheet on flexible retirement is available on the USS website.
Members of staff must apply to for consent to reduce working hours and salary and for flexible retirement using the form available for this purpose. Consent must be obtained from the Head of College/Director in the first instance followed by authorisation by the Human Resources and Finance Departments.
Following submission of the form, a formal provisional quotation of benefits on flexible retirement, a ‘request for a flexible retirement quotation’ form will be completed by the Pensionssection of the Finance Department.
A quotation prepared by the trustee company will be provided to the employer, along with a copy for the employer to provide to the member.
If the member of staff accepts the quotation, a decision on consent will then be made by the Director of Finance. Where consent is given, the member of staff may then make an election to USS through the Pensions Section of the Finance Department to flexibly retire.
USS requires that a minimum of two months' notice of the intended flexible retirement date must be given. The Pensions section will submit a ‘notification of a member’s flexible retirement’ form to USS to confirm the intended flexible retirement date and the percentage of benefits to be drawn together with a declaration regarding the reduction in working hours and salary.
USS will then arrange for payment of benefits to the USS member.
Upon flexibly retiring, the USS member – who will then be referred to as a ‘flexible retirer’ - will be a pensioner member in respect of benefits that have been flexed, and also an active member in respect of benefits that have not been drawn (and also in respect of pensionable service accrued or credited after flexible retirement).