USS is now under attack

  • The employers want to end guaranteed pension benefits.
  • They say your final pension should depend on how your 'investments' perform and not on your contributions.
  • We say it's wrong to risk our members' futures.

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Ill-health & commutation

Members suffering from persistent ill-health are sometimes asked to reduce their work commitment (eg, moving from full-time to a part-time contract).

Members suffering from persistent ill-health are sometimes asked to reduce their work commitment (eg, moving from full-time to a part-time contract).

Anyone who receives such a request should consider the pension implications carefully and preferably take advice on them. If on health grounds a member does become part-time, or reduce his or her part-time service fraction, the position will be protected somewhat if the reasons for the change are promptly notified to USS Ltd. and Teachers Pensions.

Members of either scheme can apply for retirement on grounds of ill-health after two years' service. A person with deferred pension rights in either scheme can also request the scheme to release the accrued pension benefits, but no service enhancement would generally be applied, and it would be expected that the person had also retired from the current employment due to ill-health. In some cases ongoing medical reports might be requested. An ill-health retirement pension is payable without actuarial reduction.

TPS

From TPS the pension is 1/80 of salary for each year of pensionable service to date, except for new entrants when it will be 1/60, if they are awarded Partial Incapacity Benefit or, if awarded Total Incapacity Benefit, 1/2 year service for every year short of the normal retirement age, plus any years being bought by AVCs. If an ill-health pensioner is able to teach their pension will be suspended, at least until normal retirement age.

USS

Partial incapacity is awarded where the individual is unable in the long term to perform their own job or any similar job but may be able to undertake some other level of employment. Where a member is found to be suffering from partial incapacity he or she will be entitled to a non-enhanced incapacity pension based on the full salary earned without actuarial reduction.

To be awarded a total incapacity pension you are deemed in the long term to be unable to discharge the duties of any employment although with the permission of USS Ltd you may perform limited work (earning up to 10% of previous salary). A total ill-health retirement pension from USS will be based on the full salary of the member, and enhanced as if they continued in the scheme until age 65 years of age.

Note that incapacity is based on a member's full salary and will disregard the salary cap. This means that in the early years any payments into the USS Investment Builder benefits above the salary cap will be discounted and used to pay towards the incapacity benefits.

If a member who retired on partial incapacity benefits subsequently became eligible for total incapacity through deterioration of their health the pension would be recalculated, enhanced and the higher pension paid from the original retirement date. Conversely if the person's health improved following the award of total incapacity the trustee company may reduce the pension to non enhanced benefits from the date that the partial incapacity was established

Commutation

When a member is terminally ill with a life expectancy of less than one year the ill-health pension may be commuted to a lump sum payment. A request for commutation must be made at the time of application for ill-health benefits as the pension cannot be commuted once it has come into payment. The additional lump sum payment is approximately five times the annual pension and must become payable to the member in his or her lifetime. It is the commutation of the guarantee to pay five years to a member. This ends the pension payments to the individual.

Further information

Last updated: 27 April 2016