A group of 3,500 Hewlett Packard defined benefit (DB) scheme members, which claim that each lost on average in excess of £24,000 due to a legal loophole, are asking for a change in the law.
The Hewlett Packard Pensioners Association said that the company hasn’t increase the annual pension payments in line with inflation.
The pensioners have written to pensions minister Guy Opperman, calling on him, and prime minister Theresa May to solve this situation.
Under UK law, any DB scheme pension built up after 6 April 1997 must be increased in line with the consumer prices index (CPI) or 5 per cent, whichever is less.
Any pension built up after 6 April 2005 is increased in line with the CPI or 2.5 per cent, whichever is less.
But increases to pensions built up before 1997 are at the discretion of the employer with no legal obligation to pay, although most companies do.
According to the group, around 100,000 pensioners are affected by the loophole.
After a meeting with more than a dozen on MPs or their representatives, the pensioners are now seeking a face-to-face meeting with Mr Opperman.
Julian Russell, a spokesman for the campaign, said: “We shall be asking him to confirm that the commitment made in the Conservative party's election manifesto, and reinforced the prime minister's pledge to ‘protect the pensions of ordinary people from the actions of unscrupulous company bosses’.”
“Both the former and present pensions ministers have indicated that they regard our ex-employer's actions to be ‘morally unacceptable’ so we are expecting a positive response to this.”
The group will also ask Mr Opperman to introduce appropriate measures in the forthcoming DB white paper to extend the future powers of The Pensions Regulator (TPR).
The goal is to “prevent the unreasonable withholding of discretionary increases that have previously been promised to the employees,” Mr Russell said.
The Department of Work and Pensions (DWP) expects to publish this paper, which will look at DB schemes regulatory regime, by the end of February 2018.
Mr Russell argued that the government has taken “vigorous steps to censure Sir Philip Green [former owner of BHS] and to close off any of the legal loopholes he may have been exploiting”.
BHS went into administration in April 2016, putting workers' pensions at risk and TPR has been investigating the case since.
In the end a £363m settlement with Sir Philip was reached to fund a new independent pension scheme for 19,000 former BHS workers.
Mr Russell said: “Whilst the circumstances are quite different, the harm being inflicted by Hewlett Packard’s actions is arguably more severe than the potential harm to BHS pensioners."
The campaigning pensioners were all originally employed by Digital Equipment Company, the UK subsidiary of the Digital Equipment Corporation, a major US computer firm.
Many of them joined in the 80s and 90s. DEC was taken over by Compaq in 1997, and then Compaq was acquired by the US giant Hewlett Packard in 2002.
The company also took over the Digital pension plan and, while the plan members believed that the discretionary increases they had been receiving each year from Digital and then Compaq would continue, Hewlett Packard decided not to pay them unless it was legally obliged to, the group said.
According to Tom Selby, senior analyst at AJ Bell, “one has to feel sympathy for members of this scheme if they were led to believe inflation protection would be guaranteed by their former employer”.
He said: “I would be stunned if the government capitulated to the demands of this group, however.
“If anything, policymakers are more likely to consider ways to ease the financial burden on DB schemes in its forthcoming white paper in order to encourage more employers to keep them open.
“Mandating inflation protection for post-1997 pensions would go in precisely the opposite direction and place a huge financial strain on the companies that have to pay out DB benefits.”
maria.espadinha@ft.com
