HSBC fights back in £450M pension row
HSBC faces a shareholder vote at next month’s annual meeting over an old pension fund for thousands of UK staff which campaigners argue is “unfair”.
The long-running dispute relates to “clawback” applied to the pension payout when a member reaches retirement age and also receives a state pension.
Britain’s biggest bank said it would cost £450m to stop the practice for members yet to retire.
It is urging its shareholders not to vote for the resolution on 12 April. The detail of the shareholder vote is set out in the notice for the bank’s annual general meeting which is to be held in Birmingham, where it has opened a new headquarters for its UK bank.
Requisitioned by the Midland Clawback Campaign Shareholder Group, the resolution calls for the bank to “abolish, or effectively remedy, the unfair discriminatory practice” – also known as “state deduction” – from the pensions paid to members of the now closed 1974 Midland Bank defined benefit pension scheme.
HSBC took over Midland in the 1990s and the scheme has 52,000 members who would have been eligible to join between 31 December 1974 and 1 July 1996. Until June 2009, it was a final salary, non-contributory scheme.
The clawback “penalises the lowest paid, creating financial hardship” and creates “indirect discrimination” as the majority of lower-paid staff are women, the campaign group says.
Mark Tucker, the bank’s chairman, tells shareholders not to back the resolution.
The bank said the scheme is not “unfair, disproportionate or discriminatory” and argues that describing it as “clawback” is not justified as the sums are not withheld or clawed-back.
The bank said it applies a “downward adjustment” when members hit state pension age, so that the pension sum received is “broadly maintained”. It is legal and HSBC said that a statement by the pensions minister in November 2017 showed that the government does not support withdrawal of the practice.
HSBC said if it made changes for future pension payments it would cost £450m and that if did so on a retrospective basis it would cost “considerably more”.
Frank Field, Labour MP, has previously said it could cost of in the region of £400m to £500m.
The bank also said that pension scheme members had been told about the deductions in a “transparent manner”.