‘I don’t know if I can put the heating on’: Ex-HSBC employees angry over ‘unfair’ pension scheme ‘I’m angry, sad and disappointed that an employer I trusted so much and worked so hard for can do this’

When Anne Johnson looks back at nearly 40 years of service at HSBC, she says she had a “lovely career” and made “wonderful friends”. But despite the happy memories, there’s some bitterness.

She is one of more than 50,000 former and current employees who are facing a significant cut to their company pension each year because of a now-defunct scheme.



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Workers who joined Midland Bank (which later became part of HSBC) between 1975 and 1996, and who were signed up to the defined benefit pension scheme, will not get the full company pension as expected. When they reach retirement age and begin receiving the state pension, a portion of their company pension will be cut in a process referred to as “clawback”.

There is a dispute between employees and HSBC about whether this practice was communicated. Anne says employees like her were never informed until much later, leaving them no time to prepare for retirement. The 62-year-old faces losing up to £1,400 a year from her £5,400 company pension but some of her peers will lose up to £2,500.

Pension clawback Pension “clawback” was introduced in 1948, when the state pension launched. Money was deducted from company pensions to take into account the state pension, avoiding a duplication of benefits. Such practices were also described as pension integration, a bridging pension or state deduction. A number of companies including Midland Bank had such schemes but very few still apply clawback. The public sector removed clawback in 1980 as the practice was considered out of date. The majority of private pension schemes have phased out clawback.

HSBC shareholder vote

HSBC argues the pension scheme is not unfair and that money is not being “clawed back”. It refers to the practice as “state deduction” and says it is a method of maintaining the pension scheme’s level of income for members in retirement.

Next month, HSBC could hold a shareholder vote on the issue at the Annual General Meeting (AGM). The Midland Clawback Campaign Shareholder group has put forward a resolution which states the clawback practice is “creating financial hardship” and that it was not communicated “clearly and consistently”.

The bank’s board “unanimously recommends that shareholders vote against the resolution” at the 12 April meeting. HSBC refutes that communication about the state deduction feature was unclear and says it would cost £450m to stop the practice for people yet to retire.

But Anne thinks this is a small price for the bank to pay, given the impact the clawback will have on her life.

“Council tax is going to go up. Gas and electricity is going up. So yes [the clawback] will have quite an impact.

“I have a partner. We are independent but he will always be there to help me. Without him I would have had to sold my house and use the equity to buy a smaller property and possibly even move out the area. I live in a very expensive area near London,” says Anne, who resides in Hertfordshire. “I would probably have to move up North, somewhere the properties would be cheaper.”

‘Really upsetting’

Anne joined Midland Bank in 1973 – before the pension scheme launched. A break for maternity leave meant that when Anne returned in 1983, she was moved to the defined benefit pension scheme. Its benefits were repeatedly communicated, she says.

“We were always on quite low salaries for the amount of responsibility we had. I did a lot of roles throughout the bank. I always asked for an increase in salary but I was told: ‘You’re on a low salary because of your benefits.’

“I feel that we weren’t informed [about the scheme].

‘I feel proud I worked for HSBC but I feel aggrieved this is what they’re going to do to us’ Anne Johnson

“That’s the problem, we have been left financially unprepared. No information, no chance to plan for the future.

“It is really upsetting. I had a lovely career. I feel proud I worked for HSBC but I feel aggrieved this is what they’re going to do to us. It would be wonderful, with the profit the bank makes, if they could think of the people,” adds Anne, who left HSBC in 2012 after being made redundant.

Disproportionately affects women

A major issue with the clawback practice is that it disproportionately affects women and people on lower salaries. Clawback is calculated using an employee’s length of service, not their salary. So a clerk and a senior manager who work for the same amount of time will have the same clawback despite vastly different pension payments, which are based on final salaries.

“It particularly affects women. They didn’t historically have well paid jobs,” says Labour MP Clive Betts, who is a member of the all-party parliamentary group on pension clawback.

“Their income, on average, is less than men’s but they have the same amount of money taken away. In that sense it appears to be unfair and discriminatory,” he tells i.

“People have paid into a pension scheme and they have paid into their state pension and then one is taken away from the other. It’s something that wouldn’t happen these days but unfortunately people are suffering from the past. I hope the bank will just accept, for the sake of £450m, they ought to put this injustice right.”

He has written to the Equalities and Human Rights Commission about the issue, calling the clawback “really unfair”.

The Commission told i it was trying to obtain further information from HSBC to “understand the rationale” for clawback.

Unite, the union which represents some of the workers, is also calling on HSBC to address “the shameful practice of clawback”.

‘I trusted HSBC’

Sharon McGeough-Adams, 61, faces a clawback of £2,400 a year.

She joined Midland Bank in 1976 as a clerk and worked her way up to manage two branches in Stoke-on-Trent, retiring after 37 years due to health issues.

She too says the pension scheme was used to entice workers but the terms and conditions were never properly communicated.

‘I was working for nothing. I was doing extra overtime. I’ve always done that because I was loyal to the company. To come along and say we’re gonna take this much off your pension, it’s £200 a month, it’s a lot for me’ Sharon McGeough-Adams

Losing £2,400 a year is “an awful lot,” says Sharon, who set up the Midland Clawback Campaign to protest against the practice.

“I’m angry, sad and disappointed that an employer I trusted so much and worked so hard for can do this.

“I’ve worked all my life. I gave 1,000 per cent to the bank. When I was working there, Midland had some really tough times. We pulled out the stops to keep the place afloat during the 1980s, when they had a proper crisis.

“I was working for nothing. I was doing extra overtime. I’ve always done that because I was loyal to the company. To come along and say we’re gonna take this much off your pension, it’s £200 a month, it a lot for me,” says Sharon.

“We’re not talking about, ‘Am I going to have a cruise this year?’ We’re talking about, ‘Will I get to put the heating on in the winter?’ And there’s people worse off than me. Some people will have to get Pension Credit.”

Sharon hopes HSBC will abolish the clawback practice.

Steve Webb, former pensions minister and director of policy at insurance company Royal London, said: “Pensions can be very complicated and a deduction for state pension rights, which has itself changed over time, adds to the complexity.

“It is therefore absolutely vital that pension schemes which run this sort of arrangement communicate it clearly to scheme members in plain English and on repeated occasions. From the experiences of many HSBC members it would seem that the communication of this complexity has not been as good as it could have been.”

HSBC said it would not be commenting on state deduction but referred i to the AGM circular document, which states: “The Board’s view is that this is not an unfair or discriminatory practice.

“HSBC has also received external legal advice to confirm that the State Deduction is not unlawfully discriminatory.”