Over the last few days and weeks there has been some global investment market uncertainty and we understand that some members may be concerned about the impact on their pension savings.
From 06 April 2024 there will be some changes to the lifetime allowance.
The HSBC Bank (UK) Pension Scheme (the “Scheme”), one of the largest corporate pension schemes in the UK, has today announced its commitment to incorporate private markets into its DC default investment strategies.
As a deferred member of the Scheme, you can transfer the total value of your DC pension pot to another registered pension scheme, such as your new employer’s pension scheme or a personal pension.
If you choose this option, you need to complete and return the Transfer-out Request form. You can ask the HSBC Administration Team for one transfer value quotation each year without incurring any charge. A transfer can take up to three months (and occasionally longer) to be completed. If you do transfer, no further benefits will be paid to you from the Scheme.
Once the Transfer-out Request form has been received and processed by the HSBC Administration Team, you’ll be sent the transfer value quotation. This will give you all the information you need to progress your transfer.
For more information on transferring see the ‘Leaving the DC’ guide (240KB, PDF) in our Library.
If you die If you dieIf you die as a deferred member of the Scheme (after leaving HSBC but before you’ve retired), the total value of your DC pension pot (including the value of HSBC’s contributions) will be paid as a lump sum at the Trustee’s discretion. Even as a deferred member, it’s important to make sure you keep your beneficiaries’ details up to date.
For more information about protection benefits, visit our 'Choose your beneficiaries' page. Or see the DC member guide, ‘Knowing your DC pension pot’ (2.6MB, PDF) in our Information Centre.
Limits on tax relief - lump sum allowances Limits on tax relief - lump sum allowancesThe 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 The LTA has now been abolished and has been replaced by two new lump sum allowances.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.
If you get divorced If you get divorcedAny 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 your details are up to date on the My Beneficiaries page in My Pension. (If you're on the HSBC network you can click here and you won't need your username and password)
