A newly-formed all-party parliamentary group of MPs is demanding HSBC compensate member of its pension scheme in the Midlands that are seeing their pensions reduced by up to £2,500 per year.
The MPs met on Wednesday (November 21) to hear about how a process known as ‘clawback’ has significantly reduced the pension income of more than 50,000 employees who joined the Midland Bank and then HSBC between 1975 and 1996.
Clawback was introduced in the 1940s and allowed workers to pay lower contributions into their occupational pension plans. It also allows employers to deduct some - or all - of the basic state pension amount from their pension payments.
The new APPG, backed by union Unite, is also calling on HSBC's chief executive to attend the group's next meeting and answer to MPs.
Labour party MP Clive Betts, chair of the group, argued that there is "real anger that a bank making billions of pounds a year is depriving long term and loyal former employees of the pensions they have worked so hard to earn".
He said: "There is a moral imperative for them to reverse this policy now."
Independent Labour MP Frank Field, chair of the Work & Pensions select committee – which has previously alerted this situation – stated the policy is an anachronism.
He said: "More and more major employers have either scaled back, capped or scrapped the clawback of state pensions from the occupational pensions they pay out, and rightly so."
He noted that the bank would incur a cost of around £400m to cancel the clawback for long serving employees who are coming up to retirement.
He said: "Not a small sum, but it should be set against the bank's last reported profit of £10.1bn – a profit that dedicated and long-serving bank staff, often on low pay, contributed to over decades of work.
"The bank should now do all it can to mitigate or scrap this loss which, despite the bank’s protestations, many were unaware of."
Sharon McGeough-Adams, who worked for Midland Bank and later HSBC for 37 years and now helps to coordinate the Midland Clawback campaign group, said: "Clawback was never communicated to us in a clear and consistent manner.
"It was further confused by calling it a 'state deduction', even though it has nothing to do with the state or ‘contracting out’. Now many of the lowest paid workers, mainly women, have been plunged into financial hardship.
"Clawback is an outdated, unfair and discriminatory practice that does not belong in the 21st century. The vast majority of employers recognise this, and a wealthy bank like HSBC could readily afford to remove it."
A spokesperson for HSBC UK said: "Since the state deduction was introduced in 1975, it has been consistently communicated in member guides, members’ annual pension statements and the deferred statements that members receive on ceasing active membership.
"Through our UK pension scheme, we support a wide group of current and former employees and their dependants, including defined contribution members, and we have a responsibility to provide sustainable pension benefits to all members, both now and in the future.