DCS from 1 July 2015

 

How your DC account works while you’re a member, is that HSBC puts money into in your DC pension pot each month. Plus, it matches any money you decide to put in up to 7% of your DC pensionable salary.

It’s up to you to decide how to invest your DC pension pot and you’ve got five options to choose from.

Also, when you take them, you’ll have to decide how to use your DC pension pot.

While you’re working for HSBC, there’s help for your family and dependants if you die.

How the DC pot works

HSBC puts in 10% of the first £20,100* of your DC pensionable salary (pro-rated if you're a part-time employee) and 9% of your DC pensionable salary that's over £20,100* up to the Scheme Earnings Cap into your DC pension pot.

Plus, if you save up to 7% of your DC pensionable salary, HSBC will match it. 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.

You'll get tax relief on the amount you pay and pay less National Insurance.

You can make, change or stop the amount you decide to put into your DC pension pot (one change a month) through My Choice via the My Benefits website.

If you want to work out how much money you might need when you stop working use the Modeller in My Pension to work out how you can achieve your target.

*The £20,100 threshold may increase each July by the annual rise in the Consumer Prices Index (CPI) unless the Trustee and the Principal Employer decide to increase it in another way

Decide how to invest your DC pension pot

It’s up to you to decide how your money is invested and you have five options to choose from. You can read about each option on pages 6 - 15 of the guide Your DC pension savings – your choice.

Which investment option you choose is likely to depend on what you want to do with your DC pension pot.

Option 1 – Income Lifecycle follows a pre-set strategy and is 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 pot.

If you think you’ll use some or all of your DC pension pot to buy an income (called an annuity) this option might suit you.

Option2 – 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 retirement age. By the time you retire, all of your DC pension pot will be invested in the Cash Fund - active.

If you plan to take your DC pension pot in cash this option my suit you.

If you don’t tell us the option you’d like at My Pension the Trustee will automatically invest your DC pension pot in the Cash Lifecycle option* from 1 July 2015.

*But, if you were paying Additional Voluntary Contributions (AVCs) into the DC fund range on 30 June 2015, all DC contributions starting from 1 July 2015 will go into your existing investment option. If you want to change your investment option you can do this in My Pension.

Option3 – Capital Lifecycle also works in a similar way to Income Lifecycle, but your pot is gradually moved so that by the time you retire, 25% will be invested in the Cash Fund – active and the other 75% in the Diversified Assets Fund – active.

If you still want to invest after you take your DC pension pot and draw down lump sums from it as income, which you can do as a one off or via regular payments, this may suit you. To do this you’ll need to transfer out of the scheme.

Option 4 – Flexicycle is a DIY Lifecycle which lets you decide where to invest your money using a simple framework. Under Flexicycle, you choose which 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 decide you want to take your savings.

If you want to take some control over which funds you invest in and when you switch money between them this may suit you.

Option 5 - Freechoice gives you flexibility to manage your pot 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 also see how the different investment funds are performing in the DC fund factsheets

If you want to review or change your investments, go to My Pension and select ‘Review and change investments’

Using your DC pension pot?

When you decide to take the benefits you’ve built up while working at HSBC you’ll have very important decisions to make about what you want to do with your DC and DB benefits.

You’ll have a number of options for how to take your scheme benefits, one of which is that currently you can take up to 25% (up to the Lifetime Allowance which for the tax year 2017/18 is £1 million) of your combined DC and DB benefits as a tax-free cash sum. If you continue to be an active hybrid member until you take your benefits, you can use your DC pension pot first towards your maximum tax-free cash sum if you want to.

Find out how your DB and DC benefits work together on pages 12 – 16 of your member hybrid guide - click here.

If you want to know about the options you have for your DC pension pot, pages 14 - 17 of the member guide gives your details - click here.

Help for your family and other dependants

There’s help for your family if you die while you’re working at HSBC including:

  • a lump sum, usually 4 times your benefit salary
  • a spouse’s/civil partner’s pension of 30% of your DC pensionable salary, and
  • any dependent children could receive an allowance.

Because you’re a hybrid member, you’ll have DB and DC benefits paid. Pages 18 - 21 of your member hybrid guide gives you more details about this, click here .

It’s important we know who you'd like the Trustee to consider receiving the benefits should you die. To make sure we have your up to date wishes click on My Pension and go to the “My Beneficiaries” page.