The valuation results show that all three sections of the Scheme remain in a very strong funding position:

HBUK section

• The HBUK section’s funding level has improved to 121% as at 31 December 2022, compared to 109% at the previous valuation in 2019. The HBUK section had a surplus of £3.65 billion as at 31 December 2022.
• The improvement in the HBUK section’s funding position since the 2019 valuation is mainly due to investment performance, contributions made by the Bank and updates to assumptions (such as for future life expectancy).
• The Trustee has also agreed with the Bank an additional, more prudent, funding measure for the HBUK section, known as the Low Risk Funding Measure (LRFM). The LRFM is designed to show the level of assets which the HBUK section would need to pay all future benefits due to members if actual experience was worse than expected, with a low dependence on HSBC for future support. The HBUK section had a surplus of £2.61 billion and a funding level of 114% on this measure as at 31 December 2022.
• The Trustee and Bank have agreed to use the LRFM as part of a risk management framework which will govern the HBUK section’s funding and investment strategy on a low risk basis going forward, aiming to ensure that members’ benefits remain secure even if the environment changes. More information on the LRFM is included in the valuation report.

HGSU and Bank plc sections

• The funding levels of the HGSU and Bank plc sections have also improved since the 2019 valuation (to 134% and 193% respectively), and both sections now have a significant surplus (of £25 million for the HGSU section and £13 million for the Bank plc section).
• The improvements in the funding positions for these sections are mainly due to levels of inflation and salary increases having been different to the assumptions made in 2019.
• The 2022 valuations have also shown that these sections are rapidly reducing in size, as the Trustee and the Bank move members’ benefits back into the HBUK section once members have left HSBC employment.

The valuation headlines, along with details of the differences between the three sections of the Scheme, are shown in the 2024 Summary Funding Statements, which can be found in the information centre.

Keeping your benefits secure in the future

The Trustee is pleased that the 2022 valuation continues to show a strong funding position but we also recognise that the valuation is a snapshot based on the specific circumstances of the Scheme, and the wider financial environment, at the valuation date. The Trustee will need to pay benefits to members for many years to come, and over that time the value of the Scheme’s investments, along with the funding level, will vary reflecting changes in economic conditions and other factors such as life expectancy.

The Trustee works together with the Bank to manage and refine the Scheme’s funding and investment strategy so that it is robust to these changes.  This helps to maintain the strong funding position providing security for your benefits.   The Trustee considers and aims to mitigate emerging risks such as higher interest rates and the impact of climate change.

The next valuations are due at 31 December 2025. The Trustee will continue to monitor the Scheme’s funding positions to make sure that all members’ benefits remain secure. This monitoring includes an annual funding update, which the Scheme Actuary prepares each year that a formal valuation is not carried out.

Finally, the Trustee would like to thank Colin Singer of WTW for his many years supporting the Scheme. Colin is retiring as Scheme Actuary in 2024 having advised the Scheme for over 30 years. Colin will be replaced as Scheme Actuary by Tim Panter, also from WTW.