The Lifetime Allowance (LTA) was the maximum amount that someone could save in their pension without incurring additional tax. The LTA has now been abolished and has been replaced by two new lump sum allowances. From 6 April 2024, the total amount of your pension savings (across all your pension schemes) that can be paid as tax-free lump sums will be limited by the Lump Sum Allowance and the Lump Sum and Death Benefit Allowance. 

The Lump Sum Allowance is a limit on the total amount of tax-free cash you can take at retirement. It is currently set at £268,275 for most people, although you may have a higher allowance (for example, if you hold an LTA protection). 

This limit applies if you take a one-off tax-free cash lump sum when you start taking your pension pot. It will also apply to the total amount that you receive tax-free if you decide to take multiple lump sums over a period of time (part of which are tax-free). If the total amount of tax-free cash lump sum(s) across all your pension schemes (including from defined benefit schemes) exceeds your available Lump Sum Allowance, you will pay income tax on the excess amount at your marginal rate. 

The Lump Sum and Death Benefit Allowance is a limit on the total amount of tax-free lump sums payable at retirement, on your death or in cases of serious ill health. It is currently set at £1,073,100, for most people, although you may have a higher allowance (for example, if you hold an LTA protection).
If the total tax-free lump sums or death benefits paid out exceeds your available Lump Sum and Death Benefit Allowance, the recipient will pay income tax on the excess amount at their marginal rate. 

The amount of these allowances that you have available when your benefits are paid from the Scheme may be reduced if you have already received a tax-free cash lump sum from one of your pension schemes or if you started to receive benefits from one of your pension schemes before 6 April 2024.
If you have received any benefits before 6 April 2024 we are required to calculate your available allowances on the assumption you took the maximum amount of tax-free cash that you could when you took your benefits. If you took less tax-free cash than this, you may benefit from applying for a Transitional Tax-Free Amount certificate. In order to do so, you will need to provide us with evidence of the benefits you have previously received, including the amount that was paid to you tax-free.

If you get a certificate this will mean that the adjustment to your Lump Sum Allowance and  Lump Sum and Death Benefit Allowance will reflect the actual amount of tax-free cash you have received. This may lead to a better or worse outcome, so you should consider carefully whether or not to apply for a certificate. 
If you are unsure about whether or not you would benefit from applying for a Transitional Tax-Free Amount Certificate we recommend you speak to an independent financial adviser.

Please note that if you want to apply for a certificate you need to do this before you take a tax-free lump sum for the first time after 5 April 2024. If you do not get a certificate before this you will lose your right to apply for one. This could mean you may end up paying more tax than you need to when you receive your benefits from the Scheme and from other pension schemes of which you are a member.

Please also note that the information in this section (Your new lump sum allowances) may not apply to Guernsey, Jersey or Isle of Man members.

For more information, please contact the HSBC Administration Team.

You can find out more here

One of the choices you have as a deferred member is to transfer out the value of your benefits to another pension scheme.

You can transfer your DB pension to a new employer's pension scheme, or a registered pension arrangement that will accept it. If you choose this option you need to complete a Transfer-out Request form (0.1MB, PDF) which you can find in the Information Centre. 

If you die, what happens to your DB pension savings will depend on your original scheme. You can find your Scheme booklets in the Information Centre. Even as a deferred member, it’s important to make sure you keep your beneficiaries’ details up to date.

You can log on to Member Self Service to adjust your beneficiaries’ details on the nominations and dependants page. You’ll need your username and password to log in. Don’t know yours?

Any consideration of a divorcing couple’s assets usually includes pension rights. Our HSBC Administration Team can help if you want more information. Remember to update your personal details if you’re getting divorced or dissolving your civil partnership. You should also make sure all of your details are up to date on the Nominations and dependants page in Member Self Service.

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