What are the advantages and costs of USS membership compared to other pension schemes ?
Your employer provides you with a pension based on your salary close to retirement. This type of scheme is called a final salary scheme. The pensions built up are financed by a fund to which all employers participating in USS contribute. Final salary schemes like USS are regarded as the best type of pension you can get. Every month your employer pays the most towards your retirement – a sum currently equal to 16% of your salary. You pay 6.35%, but get tax relief on this amount, reducing the real cost by at least 20%. In addition, you pay lower compulsory National Insurance contributions because you are not paying into the State Second Pension Scheme, and you don’t pay any tax on the cash benefit of your employer’s contribution. Other company pensions, known as “Money Purchase” or “Defined Contribution” schemes are different. While employers and employees also both usually pay into these plans, the pitfall is that you take the risk that there will finally be sufficient money in it for a
