The Trustee and the Bank have worked together to agree a change to the Scheme’s rules, following a request by the Bank. This change will make the existing rules clearer on how and when the Scheme’s current assets can be used by the Bank to fund its contributions into members’ Defined Contribution (DC) pots. As part of the process to complete the rule change, the Trustee will be making an application to Court.
This change will not affect your benefits or the amounts which will be paid into your DC pot in the future. You don’t need to do anything.
We explain more about the rule change below. There are also contact details at the end of this page if you have any questions.
What is happening?
The Scheme’s rules were first written when Scheme members were building up Defined Benefit (DB) pensions. This stopped in 2015, with all active members now building up DC pension pots instead. At the time, many of the Scheme’s rules were updated to reflect this change.
The Scheme’s rules allow the Bank’s DC contributions to be met from Scheme assets. This can only be done if certain tests are met – linked to the Scheme having more assets than are expected to be needed to pay all DB benefits (this is called a funding surplus). The Bank has not previously used this rule but would now like to do so. The Trustee has identified a need to clarify this rule before it can be used by the Bank.
The Trustee and the Bank have agreed changes to make it clear how and when the rule will work.
To make sure that we get the change right, the Trustee and the Bank have also agreed to go to Court to confirm that the change can be made. The Bank will not start to use Scheme surplus to meet its DC contributions before the Court confirms this. This is a normal approach to take in these circumstances.
Is there anything else to know?
The main aim of the Trustee and the Bank is to make sure that your Scheme benefits are secure. The Trustee does not believe that the rule change will impact the security of members’ benefits. The Bank’s DC contributions could only be paid from Scheme assets if the Trustee, working with its advisers, is confident that the Scheme is well funded.
The Trustee and the Bank monitor the Scheme’s funding surplus regularly. The Trustee expects that this surplus will keep growing even if the Bank’s DC contributions are paid from Scheme assets.
The Trustee and the Bank will also be discussing the principles as to how any funding surplus would be used if, in the future, they secure all members’ DB benefits with an insurance provider. There are no current plans to do this. However, as the rule changes are about using Scheme assets, the Trustee thinks it is important to at least consider this point alongside the rule changes. If, after four years, the Bank and Trustee haven’t reached agreement on this, the Bank’s DC contributions to the Scheme would no longer be met from the Scheme’s assets. The Trustee and Bank can, however, agree to extend this period.
The Court application
The Trustee and the Bank will be asking the Court to confirm that the change to the rules can properly be made. In doing so, the Court will consider the interests of Scheme members.
Members will be represented in the Court process by a single representative member (the “Representative”). This is common practice because it is not practical to join all members as parties to the Court application. The Representative will speak for all those who share the same interest in the outcome of the case. Stephen Burnell, a DB pensioner member of the Scheme, has kindly agreed to be the Representative. He has not had any involvement in this work to date and is independent. He will have independent legal advice from specialist solicitors and barristers whose costs are paid by the Scheme. His legal team is Gowling WLG (UK) LLP and Fenner Moeran KC.
Where can I find out more information?
We have included some FAQs about the rule change and the Court application below.
Going forward, any further information will be added to this page on futurefocus. We expect the Court hearing to take place in early 2026 and we will publish the details of the hearing and subsequently its outcome on futurefocus when they are available.
Further actions
You don’t need to do anything. If you would like more information you can read the FAQs below. If you have any other questions or comments, you can contact HSBCPensions@eversheds-sutherland.com. Any relevant comments or information that you provide will be passed to the Representative’s legal team.
FAQ
Legally, the Scheme’s Trustee must be able to run the Scheme in line with the Scheme rules. This means the rules need to be clear.
The Bank has informed the Trustee that it would like to fund the Bank’s DC contributions to the Scheme from the Scheme’s funding surplus, using an existing power in the rules for this. However, the rule about when the Bank’s DC contributions can be met from the Scheme’s assets is unclear. The Bank and Trustee have therefore agreed to change the rule – subject to Court approval – to clarify how the power should work. As explained below (see Q7), for now, this change will only be effective for four years.
We believe that this process is important and is the right thing to do, to make sure that we are certain about how the Scheme’s rules should be operated in practice.
Yes. If you have DB benefits in the Scheme, these will not change as a result of the change to the rules. If you have DC benefits, the change to the rules will not affect the value of your DC pension pot, or how much will be paid into it in the future.
The Bank and the Trustee aim to make sure the Scheme remains financially stable. The amount potentially available to the Bank from the HBUK section each year based on current annual DC contributions is around £152 million (based on 2024 figures). The HBUK section’s funding surplus, currently estimated to be over £4 billion, is much higher than this, and is expected to continue to grow (see Q9).
The Bank still supports the Scheme. This means that if there was a shortfall in the future, the Bank would have to agree a funding plan with the Trustee to remove it.
The Trustee is asking the Court to confirm that the Trustee’s decision to clarify the Scheme’s rules in the way proposed is legally appropriate.
The change will not take effect until approved by the Court.
The Court hearing itself is expected to be very short – perhaps lasting just one day. However, it will take a while to get to Court – it’s currently expected that the Court hearing will take place in the early part of next year (January – March 2026). The hearing will be open to the public and the details, once known, will be published on futurefocus.
Yes. The Trustee has had independent legal and actuarial advice on the rule changes, including advice from a leading King’s Counsel.
There is a recognised procedure for Court applications in relation to pension schemes. This ensures that all parties, including potentially affected members, are properly represented and that the outcome covers and is binding on all interested parties.
Members’ interests must be separately represented during the court process, with independent legal advice. This ensures the Court hears and considers member views before it comes to its decision.
One member who is called a Representative Beneficiary (or “Representative”) is appointed to act on behalf of all the Scheme’s members. This ensures that the Court has considered any reasons why the Rule Change should not be made. This member is also a party to the Court Application.
The Representative is advised by specialist solicitors, Gowling WLG (UK) LLP, and a leading barrister, a King’s Counsel. This advice is paid for by the Scheme.
The Representative and their legal team must review, test and, where reasonable, challenge the Court Application and the evidence and arguments put forward in support of it.
Stephen Burnell, a DB pensioner member of the Scheme, has kindly agreed to be the Representative. The Court will be asked to formally appoint Mr Burnell as the Representative
If the Court approves the rule change, the Bank would be able to use the Scheme’s funding surplus to meet the cost of its DC contributions. This would be subject to the Scheme Actuary carrying out a funding assessment as well as regular funding checks (see Q10). The Trustee has agreed that, for now, if the Court approves, this change will only be effective for four years.
The Scheme has a large funding surplus, which is expected to keep growing in the future. The idea is that the four-year period gives the Trustee time to work with the Bank to agree the principles that would apply to the division of the Scheme’s surplus if the Trustee and the Bank were to secure members’ benefits with an insurance company at some stage in the future.
If the Trustee and the Bank have not agreed these principles after four years, the Bank could no longer use the funding surplus to pay its DC contributions. The Trustee and the Bank can agree to extend the four-year period or make the change permanent in the future.
The Trustee regularly looks at the options for running the Scheme in the future. It also discusses these options with the Bank. At the moment, the Trustee has no plans to secure members’ benefits with an insurance company.
The Scheme Actuary has calculated the funding position for each section of the Scheme at the end of 2024.
HBUK Section
HSBC Global Services Section
HSBC Bank plc Section
DB assets
£18.8 billion
£87 million
£26 million
Surplus
£4.4 billion
£42 million
£17 million
Funding Level
130%
192%
284%
Every three years, a formal Scheme valuation process (called an Actuarial Valuation) is carried out by the Scheme Actuary for each of the three sections. The last Actuarial Valuation was carried out as at 31 December 2022. As part of that process, the Trustee and the Bank agreed to use a more cautious way to look at the Scheme’s funding in relation to the HBUK section. This is called the “Low Risk Funding Measure”, and assumes very low levels of risk. It helps show how much money the HBUK section would need to pay all future benefits to members, even if things don’t go as well as expected, without needing too much future help from HSBC. The HBUK section had a surplus of £2.8 billion and a funding level of 118% on this measure as at 31 December 2024.
The Trustee checks the funding regularly. Since the end of 2024, the funding is thought to have got even better for all three sections of the Scheme. The next Actuarial Valuation will be done by the Scheme Actuary, based on the position on 31 December 2025.
Firstly, the Scheme Actuary will check that there is enough funding surplus to pay the Bank’s DC contributions for the period requested by the Bank.
The Scheme Actuary will start by making an estimate of how much money the Scheme needs to pay DB members’ benefits in full as they fall due. They will need to make forecasts like:
how long members will live,
how much the Scheme’s investments will grow, and
how inflation might change.
They would typically use similar estimates to those used in the most recent Actuarial Valuation of the Scheme. We expect, for the HBUK Section, the forecasts would be the same as those used for the Low-Risk Funding Measure (see Q9).
As well as the first check, the Scheme Actuary will keep doing regular checks on the Scheme’s funding. This is to make sure there is still enough surplus over the whole period. If the funding gets worse and the Scheme Actuary advises that there will no longer be enough surplus, the Bank will restart paying DC contributions.
The rule change affects all three sections of the Scheme in the same way. The surplus from one section can only be used for that section. However, the DB assets in the HSBC Global Services and HSBC Bank plc sections are much smaller than those in the HBUK section. They are also small in comparison to the DC contributions paid into these sections each year.
For this reason, there are currently no plans for DC contributions to be paid from surplus assets for these sections. If the Bank wishes to do this in the future, the Trustee and Scheme Actuary would need to do similar checks as for the HBUK section.
The Trustee’s key role is to make sure the Scheme can pay the benefits to members that have been promised under the Scheme’s rules. The rules do allow the Trustee to improve members’ benefits, but this must also be agreed by the Bank.
In recent years the Trustee has asked the Bank to agree improvements to pension increases for DB pensioner members. Whilst the Bank has reviewed and thought about these requests in detail, it has decided each time not to agree to them. Each decision is subject to the particular circumstances relevant at the time and is subject to future review.
Yes. In June 2025 the Government announced some changes in the Pension Schemes Bill. It hopes these will allow trustees and employers to “safely release some surplus to invest back into their businesses and unlock more money for pension scheme members”.
The Trustee and the Bank are carefully looking at these changes and thinking about what they might mean for the Scheme. The new legislation is not expected to take effect until 2028 at the earliest.
