Designing systems is typically uncertain and ambiguous at the early stages. Set-based design (SBD) supports alternative exploration and gradual uncertainty reduction during the early lifecycle, making it practical for complex system design. In parallel, functional requirements decomposition helps to advance the design incrementally. However, current literature on SBD lacks formal guidance on how to decompose functional requirements. To bridge this gap, we introduce a four-step method to decompose functional requirements for SBD hierarchically. We systematically define, reason and narrow the sets, breaking down the functional requirements into formal sub-requirements. This method allows parallel abstraction, ensuring the resulting system satisfies the top-level functional requirements.