It’s time to think about your plans for the future
As a hybrid member you have both Defined Benefit (DB) and Defined Contribution (DC) benefits. The two work in different ways and you have choices about what you want to do with the benefits you’ve built up. The good news is there’s a range of ways you can access your money – and you don’t need to stop working to do it.
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. From 06 May 2028 the earliest age at which pension savings can be taken will increase from age 55 to 57. Discover the range of ways that you can take your DC pension pot to suit your needs.
Your DB pensions at a glance
As an active hybrid member, when you decide you want to take your benefits, your DB pension will be calculated using two methods and you’ll receive whichever one produces the highest pension. Either:
1. A pension based on your DB pensionable service up to 30 June 2015 and your DB pensionable salary at date of retirement (which will include any salary increases from 1 July 2015);
2. Or, a pension based on your DB pensionable service and DB pensionable salary as at 30 June 2015, revalued in line with the Scheme rules as if you left service (to help protect your pension against the impact of inflation) from 1 July 2015 up to your retirement date.
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 take 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 it.
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.
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 hybrid flexible retirement guide.
Taking all your DC pension pot (or any other money purchase savings you have) as cash, opting for ‘drawdown income’ or taking reducing annuities may trigger a reduced Annual Allowance, the MPAA, for any future DC contributions. The MPAA limit for the 2022/23 tax year is currently £10,000 and, if triggered, any contributions to the Scheme (or contributions to other DC schemes) you or your employer make that are over the £10,000 limit are subject to a tax charge
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.
As a hybrid member, you can choose whether you want to take your DB pension and DC pension pot together or separately. If you take them at the same time, you may be able to use your DC pension pot towards your overall tax-free cash lump sum. If you want to know more about how much tax-free cash you could take, there’s an easy way to estimate it. Why not watch this video today and find out more.
The DB Normal Retirement Age (NRA) under the pension scheme is 65, although you can choose to take your benefits at any age from 55 to 75. In some cases, the Trustee and/or HSBC need to agree to you taking your benefits early (see your section guide and if applicable, 2009 change leaflet in the Information centre). If you take your DB benefits early or late, then your pension will be adjusted accordingly. If you had an NRA under 65 before the 2009 changes and you paid the additional 3% contribution from 1 April 2010 up to 30 June 2015, you'll be able to receive an unreduced pension from an earlier age, generally age 60 (or an earlier age which applied to you before 1 April 2010).
You don’t have to take your DB and DC benefits at the same time but you’ll need to if you want to take your tax-free cash lump sum from your DC pension pot. If you take your DC benefits without your DB benefits, you’ll lose the salary linkage on your DB benefits.
If you don’t take your DB and DC benefits at the same time, or you have some of your DC pension pot left after taking your tax-free cash, you can use these your DC pension pot in other ways. You’ll be told about your options when you decide to take your benefits.
Your DC pension pot will have a Target Retirement Age (TRA) of 65 unless you choose a different age in My Pension. However, if you paid Additional Voluntary Contributions (AVCs), made bonus sacrifice payments or were still paying AVCs into the DC investment funds as at 30 June 2015 you’ll already have a TRA and your DC pension pot from 1 July 2015 will target the same TRA (unless you decide to change it in My Pension).
You may want to think about what age you want to take your DB and DC benefits so that you can target your DC investment choices to that age. If you want to view or change your TRA to any age between 55 to 75 for your DC pension pot, simply log on to My Pension.
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.
Additional help to make your choices
Have you watched a retirement webcast?
Our retirement webcasts are designed for members aged 50 and over, to help you understand more about your retirement income options. Click to watch the full series of Retirement webcasts for 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.
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
.
There's lots of external information to help and guide you through your options. Here’s some sources worth looking at before deciding:
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.
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.
