Governance Statement

Covering the period from 1 January 2023 to 31 December 2023 (the “Scheme Year”) and relates only to DC benefits (including additional voluntary contributions (“AVCs”) and the DC benefits of hybrid members) in the Scheme.

The Trustee of the HSBC Bank (UK) Pension Scheme (the “Scheme”) is required to produce a yearly statement (which is signed by the Chair of the Trustee) to describe how these governance requirements have been met in relation to:

  • the Scheme’s default investment options (including the Flexible Income Strategy and the Lump Sum Strategy in which members are invested, other legacy strategies and funds also classed as default arrangements);
  • the requirements for processing financial transactions;
  • the charges and transaction costs borne by members;
  • an illustration of the cumulative effect of these costs and charges;
  • investment returns;
  • a 'value for members' assessment; and
  • Trustee knowledge and understanding.

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Governance Statement

There are 4 key areas in the  Governance Statement:

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Default investment strategy 

The Trustee has made available a range of investment funds for members.Each member is responsible for specifying one or more funds for the investment of their account, having regard to their attitude to the risks involved.  If a member does not choose an investment option, their account will be invested into the default option applicable to them, which is managed as a “lifecycle” strategy (ie it automatically combines investments in proportions that vary according to the time to retirement age).The lifecycles are 100% invested in equities until twenty years from a member’s target retirement age from which point they transition gradually into less risky assets appropriate to the outcome targeted.

Members Charges 

The Trustee is required to set out the charges incurred by members over the period covered by this statement. As the sponsoring employer pays annual management charges, platform expenses and administration expenses, these charges are limited to the additional fund expenses incurred by the underlying managers in the day-to-day running of the funds

Value for money for members 

The Trustee carried out a full value for members assessment in March 2019, looking back over the Scheme year to 31 December 2018, to assess the extent to which the investment options and the benefits offered by the Scheme represent good value for members, compared to other options available in the market. There is no legal definition of ‘good value’ which means that determining this is subjective. The general policy of the Trustee in relation to value for member considerations is set out below

Illustration of charges and disclosure costs 

The Sponsoring employer currently pays the Annual Management Charge (“AMC”) platform expenses and administration costs. Additional expenses (“AE”) are covered by members and are those costs incurred in the management of the underlying funds which are, by nature, flexible and therefore fall outside of the AMC, for example, custodian, professional adviser fees etc.