HSBC matches your contributions up to 7%. Find out more with our 3 step plan.
The DCS is a great way to help you save for the future however, like most things in life, what you get out will only be as good as what you put in – how much you save and how your DCS pension savings grow in value. This simple 3 step plan will help you make your choices.
Do you know how much money you’ll need in the future to live on when you retire? It’s good to have a target in mind so you can plan how to get there. The Modeller available in My Pension shows you how to get to your target. Don’t forget your DC pension pot is likely to be just one source of income; there’s the State pension and you may have income from other jobs or savings. You may have a pension from previous employment. You may even want to carry on working.
The more money you save now the more you're likely to have when you decide to stop working. If you put in between 1% and 7% of your salary, HSBC will match it.
If you put in the maximum 7%, you could be getting a total of 23% of your DC pensionable salary (plus the extra 1% on the first £20,100*) going into your DC pension pot for you to take how you like later on.
It won’t cost as much as you think because your contributions are deducted before tax and you get tax relief on them at your highest rate. And you don’t pay National Insurance on your contributions either as they are generally made through salary sacrifice.
You can make, stop or change the amount you decide to put into your DC pension pot (one change a month) through My Choice via the My Benefits website.
There's an Annual Allowance (AA) limit on how much you can save tax-efficiently towards your retirement income each year. The standard limit is currently £40,000 but this is reduced for people with total taxable income and pension savings of £150,000 per annum (subject to an income floor of £110,000). If you think this might affect you there’s more information on the Know You website.
*The £20,100 threshold may increase each July by the annual rise in the Consumer Price Index (CPI), unless the Principal Employer and the Trustee decide to increase it in another way.
HSBC puts money into your DC pension pot each month, plus it matches any money you pay up to a maximum of 7% of your DC pensionable salary.
It's up to you to decide how that money is invested and you have five options to choose from.
Which investment option you choose is likely to depend on what you want to do with your DC pension pot.
Option 1 - Income Lifecycle is a pre-set strategy designed to manage some of the investment risks for you. It aims to give your DC pension pot the opportunity to grow as much as possible the younger you are and limit the risks as you get closer to the age you want to take your DC pension pot.
If you think you'll use some or all of your DC pension pot to buy an income (called an annuity) then this option might suit you.
If you don't tell us the option you'd like, we'll automatically invest your DC pension pot in the Income Lifecycle option with a default target retirement age of 65.
Option 2 - Cash Lifecycle works in a similar way to Income Lifecycle, but your money is gradually moved into a cash fund as you get closer to the age you want to take your DC pension pot. By the time you take your DC pension pot it will all be invested in the Cash Fund - active.
The main advantage of this option is that if you plan to take as much cash as possible, the Cash Lifecycle aims to reduce the risk of your DC pension pot dropping in value just before your take them.
Option 3 - Capital Lifecycle also works in a similar way to Income Lifecycle, but your money is gradually moved so that by the time you take your DC pension pot, 25% will be invested in the Cash Fund – active and the other 75% in the Diversified Assets Fund – active.
This option might suit you if you still want to invest after you take your DC pension pot to draw down lump sums from it as an income, which you can do as a one off or via regular payments. To do this you'll need to transfer out of the Scheme to a provider who offers this facility.
Option 4 - Flexicycle is a DIY Lifecycle which lets you decide where to invest your money using a simple framework. Under Flexicycle, you choose from a selection of funds to invest in to grow your DC pension pot and which lower risk funds to move your money into as you get closer to when you want to take your DC pension pot.
If you want to take some control over which funds you invest in and when you switch money between them, this option might suit you.
Option 5 - Freechoice gives you the flexibility to manage your money and allows you to choose from 13 funds to invest in and move your money between them as your plans and circumstances change. You can make up to 12 changes to your investment choices in a year without paying any fees or charges for moving your money.
Is now the right time to check how your DC pension pot is invested and think about whether another option might be better for you? Go to My Pension and select 'Review and change investments' to take any action.
To help you understand what the different options are and whether they're right for you, pages 6 - 15 of the guide 'Your DC pension savings – your choice' gives more details.
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