Important decisions about your retirement savings

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Overview Drawdown Income Annuity All Cash

It’s time to think about your plans for the future

Whether you are about to take your Defined Contribution (DC) pension pot, or your retirement is a long way off, it’s worth understanding more about your benefit options. The decisions you make can have a real impact on your retirement income.

Make sure you are saving enough. It’s essential to think about keeping up your contributions and making the most of matching contributions from your employer, even if your circumstances change.

If you’re getting closer to retirement, you may be thinking about your options for how you can take your Defined Contribution (DC) pension pot from the Scheme. You can currently take your DC pension pot at any age from 55 to 75. Discover the range of ways that you can take your DC pension pot to suit your needs.

Subject to certain requirements, the HSBC Scheme Trustee permits members to take one or more Pension Advice Allowance payments from their DC pension pot. Pension Advice Allowance (PAA) payments can cover the provision of regulated retirement financial advice, or the implementation of such advice. If you would like further information about Pension Advice Allowance payments, please contact the HSBC Administration Team.

 



Your options at a glance

You can use your DC pension pot in the way that best suits your needs. You can buy an annuity, take a flexible income (called drawdown income) or taking all your DC pension pot as cash. You can also take a combination of these options, for example, you can take some cash up front, buy an annuity to cover the basics and drawdown the rest. It’s your choice.

When choosing which option, think about your plans for the future. Do you need flexibility or income certainty? Do you have other sources of income? Are you happy to continue to manage investments into the future?

Explore each of the options below to find the one that suits your needs the best.

Drawdown income

Keep your money invested and take a flexible income from it. Take as much or as little as you need, when you need.
  • You can take a regular income or lump sums when you need them.
  • After you transfer your DC pension pot to a Drawdown Income provider, you can take up to 25% of your DC pension pot tax-free either all at once or take 25% of each withdrawal tax-free. The balance will be subject to income tax.
  • If there is some drawdown pot left over when you die, this can be passed to your loved ones.
  • The value of your drawdown pot will rise and fall with investment performance.
  • You will need to monitor your investments and spending to ensure your money doesn’t run out.
Find out more

Annuity

An annuity is a secure, regular income for life that you buy from an insurance company.
  • Choose the type of annuity that matches your needs.
  • Take up to 25% of your DC pension pot as a tax-free cash lump sum just before you buy an annuity. Your annuity will be subject to income tax.
  • Choose an annuity that will provide an income for your dependants after you die.
  • Once you have purchased your annuity, you can’t change the type of annuity or the insurance company.
Find out more

Tax-free cash

Take all your DC pension pot as one or two cash lump sums (split between two tax years) from the Scheme.
  • Invest your cash lump sums outside of a pension arrangement, and use it as and when you need it.
  • Take 25% of each cash lump sum tax-free.
  • Any remaining cash from your lump sum would be included in your estate after you die.
  • Once you have taken your cash lump sum(s), you can’t change your mind.
  • It may push you into a higher tax bracket as your income is not spread out.
Find out more

Things to think about:

Retirement is no longer a one-off decision and you don’t have to stop working to take some (or all) of your Scheme benefits. If you are still working for the Bank, you may be able to take your Scheme benefits and continue to work, perhaps part time or on reduced hours. You can find out more about flexible retirement in our flexible retirement guides for DC members.

If you start to take money from your DC pension pot, the amount that can be contributed to your DC pension pot while still getting tax relief on might reduce. This is known as the Money Purchase Annual Allowance or MPAA. Taking all your DC pension pot (or any other money purchase savings you have) as cash, opting for flexible drawdown or taking reducing annuities when you’re over the age of 55 will trigger the Money Purchase Annual Allowance for any future DC contributions.

Visit The Money Helper Money Purchase Annual Allowance page for more information.

Don’t forget you’re also likely to get a State Pension in addition to your Scheme benefits. This is a valuable benefit and its worth checking how much you’ll get and when it will come into payment. Visit gov.uk to calculate your State Pension age or check your State Pension Statement to check how much you have built up.

It can be difficult to work out how much you might need in retirement. The Pensions and Lifetime Savings Association has developed the Retirement Living Standards to show what life in retirement might look like at three different income levels, and what a range of common goods and services would cost for each level. It’s a useful tool to help you think about what kind of lifestyle you would like in retirement, and the value of retirement savings you are likely to need to achieve this. Visit Retirement Living Standards for more information.

Additional help to make your choices

Have you attended a retirement seminar or watched a retirement webcast?

Our retirement seminars/webcasts are designed for active and deferred DC members aged 50 and over, to help you understand more about your retirement income options. Look out for your invitation from WEALTH at work. Click to watch the full series of Retirement webcasts for DC members over age 50.

Have you tried our Pension Freedom Planner?

The Pension Freedoms Planner is available when you login to My Pension . It’s an interactive modeller and it can help you to work out when you can afford to retire. It shows you the types of retirement income options available with illustrations of the amounts of income your DC pension pot might provide. There are also helpful videos and a guide on My Pension that show you more about how to use the modeller.

Have you set your Target Retirement Age (TRA)?

By default, we’ll assume you’ll want to take your pension pot at 65. But you can also choose any age from 55 to 75 by logging into My Pensions. The HSBC Administration Team, Willis Towers Watson (WTW), will write to you six months before you reach your TRA to tell you the current value of your DC pension pot, the options available and where to get more help and guidance. You can also request to received this information earlier.



Login to My Pension

Check out the Pensions Feedom Planner and set your Target Retirement Age by logging into My Pension.



You’ll need your username and password to log in. Don’t know yours ? If you’re not on the HSBC network, you can click here .

Login to My Pension

Quick links to external help guides

There's lots of external information to help and guide you through your
options. Here’s some sources worth looking at before deciding:

Pension Wise

Pension Wise is a free government backed service that offers impartial guidance about your DC pension pot. Book an appointment with Pension Wise to get help and guidance before deciding what retirement option is right for you.

Visit Pension Wise

The MoneyHelper

The MoneyHelper also o!ers free and impartial money advice. You can also use this service to find a retirement financial adviser.

Visit The MoneyHelper

GOV.UK

GOV.UK is the best place to find government services and information for citizens and businesses, guidance for professionals, government policy.

Visit GOV.UK

Insuring Women’s Futures

The Trustee would like to bring to your attention some excellent research and guidance about the “moments that matter” in securing your financial future. Visit Insuring Women’s Futures to learn more about how you can make the most of your retirement savings journey.

Visit Insuring Women’s Futures

Explore the Retirement Options

Drawdown Income 

Keep your money invested and take a flexible income from it. Take as much or as little as you need, when you need.

Annuity 

An annuity provides a secure, regular income for life that you buy from an insurance company.

All Cash 

Take all your DC pension pot as one or two cash lump sums (split between two tax years) from the Scheme.

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