Transferring to ReAssure

Transcription

1 Transferring to ReAssure Your questions about the transfer of pensions and winding-up answered Summary of the Scheme to transfer the Pensions Business of HSBC Life UK Limited to ReAssure Ltd

2

3 Contents 1 1. Questions and Answers 2 Section 1 What s happening and why? 2 Section 2 More about the process to wind up the Unit Trust 3 Section 3 More about ReAssure and Admin Re 11 Section 4 More about the Transfer Process 12 Section 5 More about the Independent Expert 15 Section 6 Will there be any changes to the administration of my policy? 16 Section 7 Special Circumstances 18 Section 8 Your ongoing relationship with HSBC 19 Section 9 More about the Guernsey Scheme 20 Section 10 What happens next? Glossary Summary of the Scheme and Independent Expert report Legal Notice HSBC Buy-out Plan Policy terms and conditions Product Information for the Buy-out Plan 54 Product details 55 Questions and answers 56 Important information 58

4 2 Your Questions Answered Section 1 What s happening and why? 1.1. What is the process? HSBC Trust Company (UK) Limited is winding-up its Unit Trust Pension Schemes. As part of this process, the whole value of each customer s pension will be replaced in to a new, insured pension plan that has been selected by the Scheme Administrators. The Scheme Administrators have selected HSBC Life (UK) Limited s Buy-out Policy and unless you transfer out (see section 2.10 below), this conversion is currently due to take place in August HSBC Life has proposed a Scheme to transfer part of its pension and annuity business including the Buy-out Policy to ReAssure Limited (ReAssure). HSBC has decided to cease providing unit trust pensions and insured pensions in the UK. This is part of an on-going programme to simplify HSBC and follows its decision in 2013 to close this product range to new customers in light of increased regulatory change. If approved by the Court of Justice of England and Wales the transfer is scheduled to complete on the Effective Date.

5 Which policies are transferring? The following pension policies are transferring: ``Individual Personal Pensions ``Group Personal Pensions ``Individual Stakeholder Pensions ``Group Stakeholder Pension ``Trustee Investment Plans linked to Executive Pension Plans ``Annuities ``Buy-out Policies (set up as a result of winding-up the HSBC Unit Trust Pension Scheme - please refer to 4.9 of the Summary of the Scheme enclosed). Any other HSBC Life policies you may hold that are not listed above will be unaffected and will continue to be administered by HSBC Life. If you have been written to then it is likely you have, or have an interest in, one of the transferring products Why is HSBC doing this? Following a strategic review, HSBC has decided to cease providing Unit Trust based and insured pensions in the UK. This decision is part of the on-going programme to simplify HSBC and follows our decision in 2013 to close this product range to new customers in light of increased regulatory change. 3 Section 2 More about the process to wind up the Unit Trusts 2.1. Why is HSBC closing its Unit Trust pensions business? HSBC has decided to withdraw from providing insured and Unit Trust Pensions in the UK. This is being achieved through the sale of the business to ReAssure, and it is proposed that most products will move to ReAssure through a court approved transfer process. In order to include the pensions of Unit Trust Pension customers in the proposed transfer to ReAssure, we need to wind up the two separate Unit Trust Pension Schemes and replace them with individual Buy-out Policies, which can be transferred to ReAssure alongside the rest of the transferring pensions business.

6 How will my Unit Trust pension change? Unless you transfer to a product of your own choice, or take the pension benefits (see Option 2 of section 2.10) your Unit Trust pension will be wound up and your benefits will be re-invested in a new Buy-out Policy issued by HSBC Life and this will transfer to ReAssure. A Buy-out Policy is a special type of insured pension policy that is used to replace the pension benefits from a pension scheme that is being formally wound up. It cannot receive any further payments into it. The Buy-out Policy will match the benefits of your Unit Trust pension as closely as possible. However there are a few differences in the structure of the product that we need to tell you about in the rest of this section. If you decide to transfer to a different product, you ll need to compare the benefits it provides against your current Unit Trust pension Are there any changes to the charges that I pay? The charges that are taken will be the same or lower in the Buy-out Policy compared with the Unit Trust pension. The annual management charge will reduce to 1.0% per annum for all funds except the funds that will replace the Money Market Portfolio which will remain at 0.4% and the North American Growth, Japan Growth and Gilt and Fixed Interest Portfolios which will continue to be 0.75%. The additional fund expenses that vary according to the choice of fund may also change. Full information on the funds and charges are contained at HSBC s website, by calling our dedicated HSBC helpline (the cost to call 0345 numbers is the same as calling a normal local or national landline) Are there any changes to the funds that I invest in? The current range of Unit Trust Portfolios will be wound up and the funds transferred to comparable insured pension funds. If you are invested in the North American and/or Japan Growth Portfolios HSBC Global Asset Management (UK) Limited, the Manager of these Portfolios, has recently changed the underlying SICAV Funds held by the Portfolios your pension plan may invest in. The Commission de Surveillance du Secteur Financier (CSSF) confirmed that they have no objection to the Fund changes that were required to be referred to them. For other aspects of the changes to the SICAVs, the CSSF confirmed that they had taken note of them. The change has already been made and the Manager is currently awaiting confirmation that the Financial Conduct Authority has no objection to it. You have not been charged for these changes and the Portfolios have remained invested throughout. The details of the changes to the Portfolios, including the changes in the investment management style, are shown below together with the Buy-out Policy funds that will replace these funds after the pension schemes have been wound up and the transfer is made to the HSBC Life (UK) Buy-out Policies.

7 5 Details Current Personal Pension and FSAVC Portfolios New Personal Pension and FSAVC Portfolios Future Buy-Out Policy Funds Portfolio/Fund HSBC North American Portfolio HSBC North American Portfolio HSBC Life North American Equity index Tracker Fund Charges AMC 1.35% Additional Fund Expenses: PP 0.33%, FSAVC 0.32% AMC 0.75% Additional Fund Expenses: PP 0.33%, FSAVC 0.32% AMC 0.75% Additional Fund Expenses: Projected 0.01% Aim of the Portfolios and Fund Objective The aim of the Portfolio is to provide capital growth from diversified share investments in the US and Canada. The aim of the Portfolio is to track the HSBC Economic Scale Index United States (the US Index ) by investing in securities that are included in the US Index. This Fund Objective is before charges, to offer investors the opportunity to grow their money in line with the performance of the S&P 500 Index, which consists of the shares of US companies Management Style Active Passive Passive Portfolio/Fund HSBC Japan Growth Portfolio Charges AMC 1.35% Additional Fund Expenses: PP 0.33%, FSAVC 0.55% HSBC Japan Growth Portfolio AMC 0.75% Additional Fund Expenses: PP 0.33%, FSAVC 0.55% HSBC Life Japanese Equity Index Tracker Fund AMC 0.75% Additional Fund Expenses: projected 0.01% Aim of the Portfolio and Fund Objective The aim of the Portfolio is to provide capital growth from investment in the Japanese share market. The aim of the Portfolio is to track the HSBC Economic Scale Index Japan (the Japan Index ) by investing in securities that are included in the Japan Index. The Fund Objective is, before charges, to offer investors the opportunity to grow their money in line with the performance of the FTSE World Japan Index, which consists of the shares of Japanese companies Management Style Active Passive Passive The table below shows the current range of all of the other Portfolios and the pension funds that will replace them. A comprehensive comparison of all of the features of the Portfolios and pension funds can be found at or by calling (the cost to call 0345 numbers is the same as calling a normal local or national landline).

8 6 Current Unit Trust Personal Pension and FSAVC Portfolios HSBC Managed Portfolio Annual Management Charge ( AMC ) 1.5% Additional Fund Expenses ( AFE ), currently, Personal Pension ( PP ) 0.21% Freestanding AVC ( FSAVC ) 0.27% Management Style- Active Aim of Fund To obtain capital growth in the longer term together with income. HSBC British Portfolio AMC 1.5% AFE, currently, PP 0.17% FSAVC 0.23% Management Style- Active Aim of Fund This fund is designed to achieve capital and income growth by investing mainly in the UK. HSBC European Growth Portfolio AMC 1.5% AFE, currently, PP 0.4% FSAVC 0.46% Management Style- Active Aim of Fund This fund is designed to provide capital growth from investment in the share markets of Europe. HSBC Gilt and Fixed Interest Portfolio AMC 0.75% AFE, currently, PP 0.33%, FSAVC 0.33% Management Style- Active Aim of Fund To provide a regular and competitive level of income from an underlying portfolio of gilts and other highly rated fixed interest securities. Future Buy Out Policy Funds HSBC Life Managed Fund AMC 1% AFE, projected 0.21% Management Style- Active Fund Objective To obtain capital growth in the longer term together with income. HSBC Life UK Equity Fund AMC 1% AFE, projected 0.01% Management Style- Active Fund Objective To provide long-term capital growth by investing in a concentrated portfolio of predominantly UK company shares. HSBC Life European (ex-uk) Equity Fund AMC 1% AFE, projected 0.018% Management Style- Active Fund Objective To provide a total return consistent with that of European stock markets through direct and indirect investment in the shares of companies listed in Europe (but not the UK). HSBC Life Fixed Interest AMC 0.75% AFE, projected 0.01% Management Style- Active Fund Objective To provide a return consistent with that of the UK fixed interest securities market through direct and indirect investment in UK gilts and UK corporate bonds.

9 7 Current Unit Trust Personal Pension and FSAVC Portfolios HSBC Income Portfolio AMC 1.5% AFE, currently, PP 0.21%, FSAVC 0.28% Management Style-Active Aim of Fund To provide an above average yield together with capital growth by investing predominantly in the UK. HSBC Money Market Portfolio AMC 0.4% AFE, currently, PP 0.01%, FSAVC 0.07% Management Style- Active Aim of Fund This fund is designed to provide investors with a high degree of capital security and an investment return that is consistent with investing in a diversified portfolio of short-term high quality money market instruments. The value of the investment fund can go down as well as up. Additionally when the interest added to the fund is lower than the deductions made for the annual management charge the value of the fund may also go down. Future Buy Out Policy Funds HSBC Life UK Equity Fund AMC 1% AFE, projected 0.01% Management Style-Active Fund Objective To provide long-term capital growth by investing in a concentrated portfolio of predominantly UK company shares. HSBC Life Money Market Fund AMC 0.4% AFE, projected 0.01% Management Style- Active Fund Objective To provide investors with a high degree of capital security and an investment return that is consistent with investing in a diversified portfolio of short-term high quality money market instruments.

10 8 Definitions Active Management A style of investment management that makes specific investment decisions which aim to outperform an index or benchmark. This approach can be associated with a higher degree of volatility than passive management but it also has the potential for greater returns. Additional Fund Expenses (AFE) Other costs incurred in running a fund, such as custodian, auditor and regulatory, and which are paid directly out of the fund. Annual Management Charge (AMC) A charge made to cover the expenses associated with the management of a fund and the administration of your pension policy. Passive Management A passive approach to investment management is where a Fund tracks a specific index or set of indices, such as the FTSE All-Share Index. This approach can be less volatile than actively managed funds that invest in shares in the same index. However, passive funds are not free of risks and still exhibit the return and risk characteristics of investing in a large number of company shares What happens if I m still paying into my FSAVC? Buy-out Policies can only accept the initial transfer payment and cannot accept any further payments. We will automatically stop collecting payments for the FSAVC scheme at the end of July If you want to continue to save in a pension plan then you ll have to take out a new pension policy. Alternatively, you may be able to increase or start contributing to an existing pension, for example if you have an HSBC Life policy or are a member of a workplace pension scheme. It may also be possible to transfer from your Unit Trust Pension into a type of pension that will accept future contributions How will my pension benefits change? The regulations governing your pension benefit under the Unit Trust Pension are the same as they will be for the Buy-out Policy. You ll be able to take your pension fund as a lump sum, up to 25% of which is normally free of income tax. The residual fund can be used to buy an annuity or can be withdrawn in one go or over a period of time. Income tax is due on income you receive from the remaining part of your plan. Please see Option 2 in paragraph 2.10 below. Full information about the range of pension benefits can be found at HSBC s website, by calling our dedicated HSBC helpline (the cost to call 0345 numbers is the same as calling a normal local or national landline).

11 2.7. What if I don t want my Unit Trust to be wound up? The decision to wind up the Unit Trust Schemes was taken by the Scheme Administrator, so it is not possible for individual members to opt out of the winding up process and keep their Unit Trust pension. If you don t want to be provided with a Buy-out Policy, then you must transfer your benefits to another pension product of your choice which you can do before the end of August 2015, without incurring any penalties. Additionally, if you re over age 55 you may be able to start taking your pension benefits. If you choose to follow either of these courses of action, then please let us know by 1st July so that we can let you know what to do next. If you re not sure what to do then you may want to consult with an independent financial adviser. You can find an adviser near you by looking on or by calling You may have to pay for advice. If you don t transfer to another pension plan before the pension scheme is wound up you ll get a Buy-out Policy, which will then be transferred to ReAssure. You may transfer out from this plan at any time without incurring any penalties What would happen to my Unit Trust Pension if the transfer does not take place as planned? The transfer is scheduled to complete on the Effective Date. If the transfer is approved by the Court but delayed for some reason, then we will delay the wind-up of the Pension Schemes until immediately before the revised Part VII transfer date. If the transfer is rejected, we will write to affected policyholders to let them know when the Unit Trust Pension Scheme will be wound up and transferred to the HSBC Life (UK) Buy-out Policies What documentation do I need? This depends on what you want to do. If you decide to transfer to a different product, you must let us know by 1 July 2015 and we will tell you what we need from you. If your benefits are re-invested into the Buy-out Policy, shortly after the winding up is complete we will send you a closing balance for your Unit Trust Pension. ReAssure will send you a welcome pack and the opening balance for your Buy-out Policy within 2 weeks of this date What are my options? You may choose: Option 1: Do nothing. If you re happy with the proposed changes you don t have to do anything. Your Unit Trust pension will become a Buy-out Policy (see explanation below)

12 10 and will move to ReAssure if the transfer is approved, or stay with HSBC Life if the transfer is rejected. Option 2: Transfer your policy or take your benefits. If you don t want your Unit Trust pension to become a Buy-out Policy you may elect to transfer it to another product of your choosing provided either by HSBC or a third party. If you re over 55 you can also consider taking your pension benefits (see 2.7 above). If you choose either of these options, you must let us know by 1 July You can call us on our dedicated helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline) or write to us at PO Box 6176 Coventry CV3 9HN Can I object to the winding up? No, it is the Scheme Administrator s right to wind up the Unit Trust Schemes and the Scheme Administrator has decided to do so When did HSBC make the decision to wind up the UTPP (the HSBC Unit Trust Personal Pension Scheme )? A decision was made in 2001 to wind up the HSBC Unit Trust Personal Pension Scheme. However, until recently HSBC had been unable to finalise this process due to legislative restrictions that applied to Protected Rights. Protected Rights were the rebates payable by the Government to people who had contracted out of the earnings related state pension. As these restrictions have now been lifted, the process can now be completed When did HSBC make the final decision to wind up the FSAVC (the HSBC Unit Trust Free-Standing Additional Voluntary Contribution )? This was made on 14th April How are my interests protected during the winding-up process? The winding up of the Unit Trust pensions has been carefully considered by HSBC Trust Company (UK) Limited, who is responsible as the Scheme Administrator for safeguarding the interests of all unit trust customers. HSBC Trust Company (UK) Limited has considered the interests of unit trust customers when deciding upon the choice of the Buy-out Policy to replace the existing Schemes and the range of funds that will be available Will I be asked to pay for the Unit Trust winding-up? You ll not be asked to bear the costs of the winding up. HSBC will pay for the costs of the winding up of the pension schemes.

13 11 Section 3 More about ReAssure and Admin Re 3.1. What type of company is ReAssure? ReAssure is a UK life assurance and pensions company, which was incorporated in You can find out more about it by visiting or by calling ReAssure is part of Admin Re, a company that specialises in providing services for the management of insurance companies, often bringing the business of these companies together under one roof. Admin Re is owned by the global insurer and reinsurer Swiss Re Do ReAssure and Admin Re have extensive operations in the UK? ``ReAssure has nearly 1.7 million policies (as at 31 December 2014). ``ReAssure looks after investments of over 26 billion on behalf of its customers (as at 31 December 2014). ``ReAssure policies are administered from Admin Re service centres in Shropshire and Hertfordshire. ``Admin Re employs over 1,900 staff in the UK in 4 locations. ``Admin Re administers the policies of over 3 million customers (as at 31 December 2014), on behalf of a number of insurance companies Why did HSBC choose ReAssure for this? ReAssure is a part of Admin Re, a subsidiary of the Swiss Re group. Admin Re specialises in acquiring and running books of life and pensions policies from other providers who are no longer actively writing new business. As this is a core part of its future operation, Admin Re is committed to adapting its computer systems to the changing UK pensions landscape, and to developing ReAssure s ongoing pensions proposition. Admin Re also has extensive experience of carrying out systems migrations and transfers of business, and is well-suited to ensuring these complex processes are carried out smoothly.

14 12 Section 4 More about the Transfer Process 4.1. What s the transfer? It is a process under Part VII of the Financial Services and Markets Act 2000 that enables groups of insurance policies to be moved between two insurers. The insurers involved can either be in the same insurance group or from different corporate groups. An application must be approved by the Court before the transfer can go ahead. The applicable regulations require the companies to appoint an Independent Expert, approved by the Regulators, who looks at the impact of the proposed transfer on the various groups of affected policyholders, and submits a report to the Court. Policyholders (including Buy-out Policyholders) must be notified and given time to consider the proposals, and they have a right to object or raise concerns if they feel they would be adversely affected Is there an opportunity to vote on these proposals? For a Part VII transfer process, there is no vote on the proposals. However, if you think you may be adversely affected by the proposals, then you can express an objection or raise your concern. See question 4.6 below for more on this Where and when will the Court Hearing take place? The Court Hearing will be at the High Court of Justice, 7 Rolls Building, Fetter Lane, London, EC4A 1NL, due on 23 July You ll be able to check on the ReAssure and HSBC websites ( and or by calling , (the cost to call 0345 numbers is the same as calling a normal local or national landline) after this date for information about the outcome of the hearing What will happen at the Court Hearing? The Court will consider whether the transfer adversely affects policyholders and whether it is appropriate to allow this transfer. The judge will review the witness statements and evidence presented by the companies, and consider the reports of the Independent Expert and the Regulators. Time will be allocated to hear any objections or concerns put forward (whether in writing, by telephone, or in person) by affected policyholders including Buy-out Policyholders or any other person who believes that they would be adversely affected by the proposals. The judge must decide whether or not it is appropriate to approve the transfer, taking all of the evidence into account. If the judge does approve the transfer, then a Court Order is made which allows the transfer to come into effect at a time specified in the Court Order. The judge s role will be to consider the transfer to ReAssure of the Buy-out Policies which result from the Unit Trust winding up process rather than that process itself.

15 4.5. I m a Guernsey resident. How will the proposed transfer affect me? If you re a Guernsey resident a separate court hearing relating to the proposed transfer will be held. The Guernsey hearing will take place at the Royal Court Of Guernsey at 09:30 BST on 27 July The process at this hearing will be similar to the hearing at the Court but will only relate to HSBC s insurance business carried on in Guernsey. Further details are included in section 9 below. Please also see the Guernsey supplement What happens if I don t want my pension to transfer to ReAssure Limited? If you believe you may be adversely affected as a result of the transfer, then you re entitled to object or raise your concerns either in writing or by telephone in advance, or in person at the Court Hearing. You may choose to appoint legal counsel to attend the Court Hearing on your behalf. We would encourage you to set out your objections or concerns to us in writing at HSBC Life (PartVII Transfer) Selectapost 54, Sheffield, S97 3GG. Alternatively, if you have concerns about the transfer, or objections to the transfer, or you intend to appear or to be represented at the Court Hearing, you should notify Norton Rose Fulbright LLP, the solicitors acting for HSBC, of your intention and the reasons. You should contact them by writing to 3 More London Riverside, London, SE1 2AQ, (Ref:OROS/LN63354), as soon as possible, and in any event before 23 July Alternatively, any objections or concerns relating to the transfer notified to us by telephone to our helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline), or in writing, will also be included in the information supplied to the Court. If you don t want your Unit Trust pension to become a Buy-out Policy you may elect to transfer it to another product of your choosing provided either by HSBC or a third party. If you re over 55 you can also consider taking your pension benefits (see 2.7 above). If you choose either of these options, you must let us know by 1 July You can call us on our dedicated helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline) or write to us at HSBC PO Box 6176 CV3 9HN.

16 What do you mean by adversely affected? Any types of effect on policyholders may be considered by the Court. This includes changes to expected benefits, the financial security of the companies involved, or changes to the administration of the transferring policies. For any group of policyholders affected by a transfer, there may be some changes for the better and some for the worse. If there are some changes for the worse, this does not necessarily mean that the transfer is unfair or unreasonable, as they might be outweighed by other benefits, or they might be extremely small, or they may only occur infrequently. The Independent Expert considers the materiality of any adverse changes based on their size or likelihood of occurring and provides his conclusions in his report. 4.8 What will happen if the Court does not approve the transfer? If the proposed transfer is rejected, your policy will remain with HSBC. If the transfer is delayed for any reason then we will inform policyholders of this via the HSBC and ReAssure websites. If there is expected to be a protracted delay, or the transfer is rejected, we will also write to affected policyholders to let them know. If the transfer is rejected, the Unit Trust Pension Schemes will be wound up and transferred to the HSBC Life (UK) Buy-out Policy. 4.9 Will I be asked to pay for the transfer? No, you ll not be asked to bear the costs of the transfer. HSBC and ReAssure will meet the costs and fees of carrying out the transfer.

17 15 Section 5 More about the Independent Expert 5.1 Who is the Independent Expert? The Independent Expert is Dr David Hare of Deloitte, an international firm which provides auditing, consulting, financial advisory, risk management, tax, and related services. Dr Hare is a UK-qualified actuary (1988) with over 28 years of experience in life insurance, actuarial, management and strategic development roles. He joined Deloitte as a partner in May 2012 and is now head of the part of Deloitte s actuarial practice that is responsible for Independent Expert engagements, with-profits, and regulatory services. 5.2 What s his role? Dr Hare has been appointed to report his opinion on the likely effect of the proposals on insured policyholders. His appointment has been approved by the Regulators. His report must be impartial, based on a thorough scrutiny of the proposals and the businesses of HSBC Life and ReAssure, but not the Unit Trust pension schemes. Both companies have provided him with access to key staff and any information he has requested, both private and public. Dr Hare won t comment on the impact of the winding up process. But he will comment on the impact of the transfer on the Buy-out Policies. 5.3 How do I know he is independent? The Independent Expert s appointment has been approved by the Prudential Regulation Authority following consultation with the Financial Conduct Authority, and independence is one of the criteria that they use to assess his suitability. Neither Dr Hare nor any of his immediate family hold any policies, investments, shareholdings or have any other financial interests with either HSBC or any group company or SwissRe or any group company. Dr Hare s overriding duty of responsibility is to the Court, and not to HSBC Life or ReAssure. His report must be impartial. We have included a summary of his report with this pack, but you can download a full copy of the Independent Expert s report on the HSBC website, or the Reassure website, If you would like a paper copy posting to you then please contact us on (the cost to call 0345 numbers is the same as calling a normal local or national landline).

18 16 Section 6 Will there be any changes to the administration of my policy? 6.1 Who do I contact after the transfer for a query on my product or to make changes? You can contact ReAssure on , between 8.30am to 5.30pm, Monday to Friday, not including bank holidays. Alternatively you can write to them at ReAssure, Windsor House, Telford Centre, Shropshire, TF3 4NB. 6.2 Will there be any changes to the payments I make into my pension? Buy-out Policies can only accept the initial transfer payment and cannot accept any further payments. We will automatically stop collecting payments for the FSAVC scheme at the end of July If you want to continue to save in a pension plan then you ll have to take out a new pension policy. Alternatively, you may be able to increase or start contributing to an existing pension, for example if you have an HSBC Life policy or are a member of a workplace pension scheme. It may also be possible to transfer from your Unit Trust pension into a type of pension that will accept future contributions. Please see 2.10 for more detail. 6.3 When will I receive annual statements? Following the wind up of the Unit Trust Pension and the transfer to ReAssure, they will send regular annual statements on your birthday until you reach age 55. If you re over 54 then you ll be sent annual statements including information about your retirement options approximately six months before your birthday. 6.4 Are there any changes to the terms and conditions of my policy? Most of your terms and conditions of the transferring policies will be entirely unaffected. The only exceptions to this relate to (i) certain unit linked policies which specify different times of day at which the funds are priced. The daily cut-off point for policyholder instructions and valuations will change so that they are aligned to ReAssure s existing unit linked business; and (ii) the price of units in the Personal Pension Portfolios is set each working day using a dual price basis and currently there is no difference between the price set to buy and sell units. The price of units in the FSAVC Portfolios also uses a dual price basis and there is a difference between the price used to buy and sell units. This is known as the bid-offer spread and is currently 6%. When the transfer is made to the Buy-out Policy with ReAssure units will continue to be priced using a dual price basis but there is no bid offer spread.

19 17 If the Part VII is not approved by the Court we will write and explain any affect this may have when it is transferred to HSBC Life (UK) Buy-out Policies. In addition, the proposed transfer will result in a number of minor changes to allow policies to be administered on the administration system used by ReAssure. The minor changes refer to the amended contact details in section 6.1 and the timing of annual statements in 6.3. Please note that these changes are being made under the terms of the proposed transfer and not pursuant to any terms or conditions that may be contained in your policy which relate to the ability of HSBC to vary or change the terms and conditions of your policy. As such, these changes, along with the other terms of the proposed transfer, will need to be approved by the Court before they take effect. As noted above, these changes are necessary to align the terms and conditions of your policy and the way it is administered with the existing practices and administration system of ReAssure s unit linked business. 6.5 Can I still switch between the range of funds on offer? Yes. HSBC allows unlimited free switching between funds and ReAssure will continue this policy. 6.6 Will my policy have the same tax status after the transfer? Yes, the tax status will be unaffected by the transfer.

20 18 Section 7 Special Circumstances 7.1 What should I do if I m bankrupt or about to be declared bankrupt? You should also show this pack to the trustee in bankruptcy, receiver or administrative receiver. 7.2 I have a Power of Attorney in respect of a transferring policy. What should I do? There will be no change. The Power of Attorney will be recorded by ReAssure and will continue according to its terms. As potentially affected parties, both you and the unit trust customer are entitled to object to, or raise concerns about, the proposed transfer. 7.3 My pension funds are earmarked under divorce proceedings. Are there any specific actions I need to take as a result? No, you just need to ensure you keep ReAssure updated with any changes to your details or personal circumstances. If you re able to, please show a copy of this pack to the beneficiary of the earmarking order. As potentially affected parties, you re both entitled to object to, or raise concerns about, the proposed transfer.

21 19 Section 8 Your ongoing relationship with HSBC 8.1 How will this change affect my other products with HSBC, e.g. my current account or credit card? Your other HSBC products that don t relate to your pension will be unaffected by this transfer. 8.2 I have other HSBC policies. Which ones are covered by this letter pack? The cover letter shows the number(s) of the Unit Trust Pensions that we are writing to you about. If you have more than one policy of the same type, they will all be covered by this letter pack. We will send a separate letter pack for any other policy type you have with us that will be affected by the transfer to ReAssure. If you think you may be adversely affected by the proposals in relation to any of your policies, then you can express an objection or raise your concern. Section sets out how you can do so. We are not writing to holders of policies that are not scheduled to transfer. Please refer to sections of the enclosed summary of the Independent Expert s report for further detail on the likely impact on non-transferring policies. 8.3 I have a Small Self-Administered Scheme ( SASS ) or a Self-Invested Personal Pensions ( SIPP ) policy with HSBC. Will my policy benefits be affected? SASS and SIPP policies are not transferring and will be unaffected by this transfer. 8.4 Will I still be able to get advice on my plan from a HSBC adviser? No, HSBC advisers are only able to discuss products offered by HSBC and therefore they won t be able to provide you with advice about your policy after the transfer. You can find an advisor near you by looking on choosing-a-financial-adviser or by calling You may have to pay for advice.

22 20 Section 9 More About the Guernsey Scheme 9.1 How does the Guernsey transfer differ from the UK Scheme? In Guernsey the proposed transfer will be carried out pursuant to the Insurance Business (Bailiwick of Guernsey) Law A separate application will be made for the approval of the Guernsey transfer by the Royal Court Of Guernsey. The summary of the transfer in this booklet applies equally to the Guernsey scheme as it does to the UK scheme because each of the schemes are being effected on the same terms. The summary of the Independent Expert s report and his full report also applies equally to the Guernsey transfer as to the UK transfer (approved by the High Court). If you believe that you ll be adversely affected by the Guernsey transfer, you re entitled to be heard by and raise your objection or concern to the Royal Court Of Guernsey at the relevant hearing. If you do wish to object, or raise your concern, at the Guernsey hearing, you should notify Natasha Kapp of your intention to do so and your reasons for doing so. You can contact Natasha Kapp by writing to Carey Olsen, Carey House, Les Banques, St Peter Port, Guernsey, GY1 4BZ or by calling This should be done as soon as possible and in any event before 27th July By informing us, we will be able to let you know about any changes that may be made in relation to the Royal Court hearing, for example a change of date. We may also be able to deal directly with any concerns you have. The final court hearing for the approval of the Guernsey transfer is expected to take place as follows: 09:30 BST on 27 July 2015 at the Royal Court Of Guernsey, The Royal Court House, St Peter Port, Guernsey, GY1 2PB. Alternatively any objections or concerns in relation to the Guernsey transfer notified to us by telephone to our helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline), or in writing, will also be included in the information supplied to the Royal Court Of Guernsey. Please read the Guernsey Supplement enclosed if you re a Guernsey resident.

23 21 Section 10 What Happens Next? 10.1 I can t find the answer to my question in this booklet. Where can I find out more? We hope that the information we have provided has helped you to understand the proposals. Both HSBC and ReAssure have published further information on their websites, and or by calling There you can download a full version of the legal terms of the transfer, the full Report of the Independent Expert, and copies of these materials being sent out to policyholders. HSBC has set up a dedicated helpline for customers who have questions related to the proposed transfer or the winding up of the Unit Trust Schemes on (the cost to call 0345 numbers is the same as calling a normal local or national landline). We will also publish on the websites copies of any Supplementary Reports that the Independent Expert writes before the Court Hearing date How will I know if the transfer has been approved? We will announce the outcome of the Court application on the ReAssure and HSBC websites ( and following the Court Hearing due on 23 July However it is possible that further preparation and systems testing is necessary before the transfer takes place, which will mean the transfer may take place after 31 August. In that case the transfer should take place no later than 2 November. Any changes or information on the progress of the transfer will be announced on ( and You should check these websites for any changes or updates, or by calling our dedicated HSBC helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline). If the application is successful then the transfer should take place on the Effective Date. ReAssure will send you a welcome pack and the opening balance for your Buy-out Policy within 2 weeks of this date. You ll see the ReAssure brand on communications after this date, and you should contact ReAssure after this date for any enquiries about your policy What is the cost of calling an 0345 number? The cost to call 0345 numbers is the same as calling a normal local or national landline. If your tariff or call package offers free or inclusive calls to landlines, numbers starting with 03 will be included in the exact same way.

24 22 Glossary Buy-out Policy is a special type of insured pension policy that is used to replicate the pension benefits from a Scheme that is being formally wound up. It cannot receive any further payments into the holder s pension fund. Companies mean HSBC Life and ReAssure. Court is the High Court of Justice in England and Wales. Court Hearing is the hearing at the High Court of Justice of England and Wales at which the final decision to approve or disapprove the Scheme is made. Effective Date is 31 August 2015, the date on which the Scheme is expected to become effective (subject to the approval of the Court). HSBC Life and ReAssure can agree to defer the transfer until after 31 August In that case, the transfer should take place no later than 2 November Any change to the date of the transfer will be announced on the ReAssure and HSBC Life websites. The parties would need to obtain Court approval to extend the date the transfer becomes effective beyond 2 November 2015 if they want the Scheme to become effective after GMT on that date. Existing ReAssure Policies are the policies in the ReAssure long-term insurance fund prior to the Effective Date. FCA is the Financial Conduct Authority which replaced the FSA on 1 April 2013 and has an objective to protect consumers of financial services, protect and enhance the integrity of the UK financial system and promote effective competition in the interests of consumers. FSA is the Financial Services Authority, which was the independent, non-governmental body that regulated the UK insurance industry which was replaced by the FCA and PRA from 1 April FSMA is the Financial Services and Markets Act Guernsey Scheme is an application being made to the Royal Court of Guernsey under the Insurance Business (Bailiwick of Guernsey) Law 2002 to transfer to ReAssure any of the pensions business of HSBC Life that falls under Guernsey jurisdiction. HMRC is HM Revenue and Customs, the government department responsible for collecting and administering taxes.

25 23 Independent Expert refers to David Hare of Deloitte MCS Limited whose appointment, which has been approved by the Regulator, involves producing a scheme report under the requirements of the FSMA, reflecting the guidance provided by SUP 18.2 of the Regulators Handbooks. Non-Transferring Policies are all the policies currently in HSBC Life that are not transferring under the Scheme. PRA is the Prudential Regulation Authority which replaced the FSA on 1 April The PRA is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms. Regulator(s) means, the applicable regulator(s) of the UK insurance industry. Prior to April 2013, this refers to the FSA and from April 2013 this refers to, as the context requires, the PRA, the FCA or both. Supplementary Report is a report produced in advance of the Court Hearing, to consider the impact of the Independent Expert s conclusions of events that have happened subsequent to the release of the initial Report. Treating Customers Fairly (TCF) is the framework under which the Regulator will assess whether financial services firms treat their retail customers fairly. Transfer means the legal transfer of the Transferring Policies from HSBC Life to ReAssure Limited Transferring Policies are all transferring HSBC Life Policies. Unit Trust Schemes means the HSBC Unit Trust Personal Pension scheme and the HSBC Unit Trust Free-Standing Additional Voluntary Contribution Pension scheme. Winding-up refers to the process by which the Unit Trust Schemes will be terminated, resulting in the unit holders receiving buy-out policies to replace their unit trust holdings.

26 24 Summary of the Scheme and Independent Expert report In the High Court of Justice Chancery Division Companies Court In the matter of HSBC Life (UK) Limited and In the matter of ReAssure Limited and In the matter of Part VII of the Financial Services and Markets Act 2000 Summary of the Schemes and the report

27 1. Introduction HSBC Life (UK) Limited (HLUK) is proposing to transfer all of its group and individual pensions policies to ReAssure Limited (ReAssure) through two insurance business transfer schemes (the Schemes). (a) The Main Scheme will be carried out through the High Court of Justice in England (the High Court). This will transfer all of the individual and group pensions policies of HLUK to ReAssure, except where a policy is held by a customer who resides in Guernsey. (b) The Guernsey Scheme will be carried out through the Guernsey Royal Court (the Guernsey Court). This will transfer the group and individual pensions policies of policyholders who reside in Guernsey to ReAssure. 1.2 This document sets out a summary of the effect of the Schemes and of the report prepared by the independent expert (see paragraph 5.1 below) on the Schemes (the Report). 1.3 This document is only a summary. Full details of both the Schemes and the Report can be found in the complete versions which are available free of charge online at or by telephoning our dedicated helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline) or by writing to HSBC Life (Part VII Transfer) Selectapost 54, Sheffield, S97 3GG. 2. Background of HLUK and ReAssure 2.1 HLUK is a member of the HSBC group of companies which includes HSBC Bank. As part of that group, HLUK sold life assurance, pensions, annuities and other long term products through the HSBC group network and through third party distributors. HLUK has ceased to write new pensions business, but it does still take on new customers who are joining existing group pension schemes run by HLUK. 2.2 The individual and group pensions business includes: (a) Individual Retail Pensions; (b) Unit Trust Pensions; (c) Group Pensions; (d) Annuities; and (e) Executive Pension Policies.

28 ReAssure is a member of the Swiss Re group of companies. ReAssure acquires individual closed books of long term, life and pensions business, either through reinsurance or acquisitions (like the one taking place through the Schemes). 2.4 ReAssure and HLUK are both authorised and regulated by the Prudential Regulation Authority (PRA) and they are also regulated by the Financial Conduct Authority (FCA). Before 1 April 2013 they were authorised and regulated by the FCA and PRA s predecessor, the Financial Services Authority (FSA). 2.5 On 11 June 2014, HLUK agreed to sell and ReAssure agreed to buy HLUK s pension business. Since that date, ReAssure has provided reinsurance to HLUK in respect of this business. As the sale is of an insurance portfolio, the transfer has to be effected by way of the Schemes. 3. Process and timings of the Schemes 3.1 The proposed timings for the Schemes are. Main Scheme Guernsey Scheme High Court hearing 23 July July 2015 Proposed Effective Date (when the policies will transfer to ReAssure) 31 August 2015* 31 August 2015 * It is proposed the Effective Date will be on 31 August 2015 at BST or such other date thereafter as the boards of HLUK and ReAssure shall agree, up to GMT on 2 November If the Main Scheme has not become effective by 2 November 2015 the parties would need to obtain Court approval to extend the Effective Date beyond that. 3.2 The Main Scheme will not go ahead unless the High Court approves it on 23 July The Guernsey Scheme will not go ahead unless the Guernsey Court approves it and the Main Scheme is approved by the High Court. 3.3 If the High Court imposes any change or conditions to the proposed Scheme, the Scheme will not take effect unless HLUK and ReAssure consent.

29 27 4. Summary of the Schemes 4.1 The following is a summary of the main points of the Schemes. The full version of the scheme document is available free of charge online at or by telephoning our dedicated helpline on (the cost to call 0345 numbers is the same as calling a normal local or national landline) or by writing to HSBC Life (Part VII Transfer) Selectapost 54, Sheffield, S97 3GG. 4.2 In addition, HLUK has prepared a series of policyholder communications which are available at The Effect of the Schemes 4.3 As stated above, the Schemes are intended to transfer all of the group and individual pensions business written by HLUK, from HLUK to ReAssure. Benefits and claims paid by ReAssure after the Effective Date 4.4 It is intended that from the Effective Date, all the rights and obligations arising from HLUK s group and individual pensions business will automatically transfer to ReAssure and will no longer rest with HLUK. This means that ReAssure will be responsible for paying all benefits and meeting all the other obligations which were previously HLUK s in relation to the group and individual pensions business. Exceptions 4.5 Despite the intention explained in 4.4 above, there may be a small number of policies which fall outside the Scheme. These would be Excluded Policies or Residual Policies, as described in more detail in the full version of the Scheme. We do not expect there to be any Excluded Policies and any Residual Policies will transfer as soon as they can. Changes to Policy Terms and Conditions 4.6 The Main Scheme allows ReAssure to make certain changes to the terms and conditions of the transferring policies. Some of these changes relate to the way the price of units in the linked funds is calculated (which will move from a single price for a unit to separate prices for the same unit depending on whether the fund is expanding or contracting). Other changes relate to the cut-off times for transactions (e.g. for buying, selling or switching units), which will move to 5pm on each business day. This change ensures that the cut-off times of the policies which transfer will be consistent with those of ReAssure s existing policies.