HSBC’s new Protected Retirement Fund option

HSBC is launching (20 May) an innovative new Protected Retirement Fund option into its group defined contribution (DC) pension proposition, offering businesses and their employees 100% capital protection on pension investments, while maximising potential growth by locking in 100% of the gains achieved from global stock markets.

HSBC's global resources uniquely enables it to manufacture this protected fund - a first for the UK - giving cautious investors the comfort to plan for their retirement safe in the knowledge their capital is completely protected and their investment gains are ‘locked in' at their highest point. This protection is dependent on investors holding their fund until its maturity.

How does the fund work?

Contributions to the Protected Retirement Funds are allocated between performance assets (utilising a Global Equity Index Tracker) and protection assets, respectively tasked with ensuring savings grow and hold their value. The percentage of the fund held in either performance and protection assets is reviewed each day with the aim of providing on maturity at least the highest value the fund reached whilst it had exposure to performance assets.

The new low-risk protected fund is available to all sizes of business, and will especially appeal to those keen to offer their employees a high level of protection for their retirement savings, which is of increasing relevance in the current economic turbulence.

Ian Martin, head of retirement & life investments, HSBC Insurance UK, commented: "To be able to bring this unique product to market at a time such as this is very exciting. The concept of a fully protected, long term pension fund for regular as well as lump sum contributions resonates powerfully amongst cautious investors and will help people to save knowing their money is safe."

Jonathan Moore, head of insurance and investments for commercial banking, HSBC, added: "Pensions have suffered massively in the wake of the current economic downturn, so it is important that we provide our customers with a safe harbour to be able to plan confidently and proactively for their retirement.

"Offering a fund that maintains at maturity its highest investment gain achieved will provide some much-needed reassurance to a huge part of the workforce in the UK, helping them traverse what has been a turbulent and often fraught pensions market and act as a catalyst to save more."