Around half of staff in the sector¡¯s largest pension fund will join a new top-up scheme available from this autumn, a survey indicates.

As part of new arrangements provided by the Universities Superannuation Scheme from October, members will be able to pay an additional 1 per cent of their salary into a defined contribution plan, with that contribution matched by their institution.

Meanwhile, those earning more than ?55,000 a year ¨C some 17 per cent of the USS¡¯ 150,000 active members ¨C can also pay 8 per cent of their income above this threshold, matched by a 12 per cent institution contribution, to supplement the new defined benefit scheme introduced in April.

The chance to take up the top-up pension is the first time that USS members, who are mainly based at pre-1992 universities, can decide how much they can put into their USS pension plan, with thousands set to be asked to make the decision over the next few months.

ÖйúAƬ

A new survey of 9,700 USS members found that 49 per cent of university staff are likely or very likely to take up the opt-in top-up pension.

One fifth of respondents (20 per cent) said that they will definitely take up the matched contribution from employers, while 29 per cent said that they were likely to do so, with 41 per cent reporting that they were undecided, according to the USS report, titled USS Investment Builder: A summary of member research and on 2 June.

ÖйúAƬ

Just one in 10 members said they were unlikely to take up the top-up pension plan, the report adds.

Those who attended an information session on pensions were significantly more likely to opt for the top-up scheme, with 58 of 89 test subjects saying they would go for the matched contribution after hearing about it, compared with 48 out of 89 beforehand.

Only a small number of staff would keep the top-up fund invested on retirement, with most likely to withdraw the pot either in a lump sum or instalments thanks to new pension freedoms introduced by the government, the report also says.

Mel Duffield, head of product strategy at the USS, said the matched contribution element of the top-up plan, allied with the opportunity to withdraw monies tax-free, meant it would be an attractive savings proposition for many staff.

ÖйúAƬ

¡°All USS members will also have a defined benefit pension plan, so we expect most staff to access the defined contribution element as cash,¡± Ms Duffield said, adding that ¡°very few¡± members were likely to buy an annuity or keep the money invested with the USS.

The matched contribution also made it a far superior saving option than the new Lifetime ISA announced in the last Budget, which provides a 25p top-up for every ?1 saved for those now under 40, up to ?4,000 a year, she said.

¡°For every pound you pay, your employer will match this 100 per cent, compared to the 25 per cent matched contribution with Lifetime ISAs,¡± Ms Duffield said.

Tax relief on pensions meant that for every ?80 contributed by staff, an employer paid ?100, she explained.

ÖйúAƬ

jack.grove@tesglobal.com