RETIREMENT PLANS HIGHLIGHT NEED FOR REGULAR INCOME FROM INVESTMENTS
- Advisers estimate 43% of clients will work past standard retirement age and 29% of clients may retire overseas.
The changing face of retirement is highlighting the need for advisers and their clients to make investments work harder for them, research* from HSBC Life (UK) Limited (“HSBC Life (UK)”) shows.
HSBC Life’s nationwide study with advisers found that on average they expect 43% of their clients to work past standard retirement ages and 29% of their clients to retire overseas underlining how advice and the use of investable capital must adapt to help support clients with achieving their plans.
Allied research with clients of advisers for HSBC Life (UK)’s report, The Three I’s of Investable Capital, in association with consultancy Technical Connection, found the trend of retiring later and potentially retiring abroad is set to grow in prominence.
Around 44% of clients working with advisers expect to work and generate income beyond standard retirement ages rising to 64% among those aged 35 to 45. Around 24% expect to or plan to retire abroad.
Research for the report underlines the pressing need for income from investments. Advisers estimate that around 45% of their clients have a current need to generate an income from their investments. They estimate that around 42% of them however are drawing on capital rather than on natural income.
Mark Lambert, Head of Onshore Bond Distribution, HSBC Life (UK), said: “The idea of a standard retirement age linking in with state pension age still resonates. It is a reasonable point in time to be used in financial planning where an adviser’s client is not ready to confirm exactly when they wish to stop working, but clearly the landscape is changing and will continue to change as will views on retiring overseas.
“The growing shift in retirement attitudes is part of the evolving way that people plan for retirement and how they use investments vehicles other than pension products in that process. Being able to generate a tax-efficient income, for example, through tax effective wrappers like onshore bonds could well contribute to the answer.”
HSBC Life (UK’s) report analyses the full range of investable capital assets including equities, collective investments such as unit trusts and OEICs as well as ISAs, onshore and offshore bonds, defined contribution, and defined benefit pensions, VCTs, EIS, SEIS, structured investments, and crypto investments.
It highlights how capital investments can be structured to achieve intergenerational and estate planning, as well as the role of initial and ongoing advice in ensuring an optimal outcome from the investment of capital and the potential future tax treatment of capital investments.
Onshore bonds offer zero tax on cash dividends at a policyholder level while non-dividend income is taxed at 20%. Gains within the Bond are subject to UK life fund taxation which means that the policyholder is treated as having paid basic rate tax on these gains. Top slicing relief and 5%p.a. tax deferred rules on withdrawals remain.
Lifetime transfers by way of assignment where there is no exchange of money or money’s worth are not taxable events and basic rate tax credit in determining policyholder tax on realised chargeable gains continue.
The HSBC Onshore Investment Bond, a tax effective medium to long term lump sum investment wrapper, can be accessed with a minimum investment of £15,000 providing the potential for capital growth while still allowing clients to make withdrawals from their investment. It offers clients access to around 3,800 funds via open architecture.
HSBC Life (UK) does not replicate funds offered by external fund managers. It enables investment in the funds directly, ensuring that consistency of approach across the investment solutions that advisers recommend to their clients.
Please click here to download the report: https://www.life.hsbc.co.uk/three-i-report/
Ends
Notes to Editors:
* Independent research conducted among a geographically representative sample of 200 advisers across the UK representing 200 companies who were interviewed on the phone. The sample was weighted to be representative for assets under management and number of RIs. Consumer research was conducted online with a sample of 1,000 clients with a minimum of £25,000 investable assets who currently have a financial adviser or saw one within the last three years. The sample was weighted to be geographically representative.
Media enquiries to:
HSBC Life
Ellis Ford +44(0) 738 479 1611 ellis.ford@hsbc.com
Citigate Dewe Rogerson
Seb Zickus +44 (0)20 7025 6494 seb.zickus@citigatedewerogerson.com
About HSBC Life (UK) Limited
HSBC Life (UK) Limited is part of the HSBC Group, one of the world’s largest banking and financial services organisations. HSBC Group serve more than 40 million customers worldwide through a network that covers 64 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. We aim to be present where the growth is, enabling businesses to thrive and economies to prosper, and, ultimately, helping people to fulfil their hopes and realise their ambitions.
HSBC Life (UK) Limited was founded in the UK in 1988 and offers insurance services to meet protection and investment management needs. Our services and solutions are available through HSBC banking channels and selected third parties, including advisers and aggregators. For more information on HSBC Life (UK) Limited range of services go to https://www.life.hsbc.co.uk/ and for more information on HSBC please go to https://www.hsbc.com
About HSBC Life
HSBC Life is the insurance business of the HSBC Group. We manufacture life and health insurance products in Hong Kong, mainland China, Singapore, India*, France, UK, Malta, Mexico, and Argentina. HSBC Life offers a range of insurance products to meet the protection, education, retirement, wealth growth and legacy planning needs of our customers. Our services and products are available through HSBC banking channels, selected third parties, including financial advisers and aggregators. *Through our joint venture, Canara HSBC OBC Life Insurance.
About HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of $3,021bn at 30 September 2023, HSBC is one of the world’s largest banking and financial services organisations.