Field questions HSBC pension ‘clawback’

Field questions HSBC pension ‘clawback’

Frank Field, chairman of the Work and Pensions select committee, is questioning a significant reduction in benefits received by some pensioners of the HSBC Bank (UK) Pension Scheme.

In a letter written to Russell Picot, chairman of the HSBC Bank Pension Trust, the Labour MP said that concerns have been raised by scheme members who claim that a state deduction feature of the Midland Section of the scheme “and its implications were not adequately communicated”.

The result of this practice - a form of 'clawback' or 'offset' whereby the scheme pension is reduced when the state pension becomes payable – was that these members were “left surprised to learn that upon reaching state pension age their scheme pension is substantially reduced,” Mr Field said.

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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 state deduction feature became part of HSBC scheme rules in 1975 and applied to benefits accrued before 1 July 2009.

Mr Field said: “I understand that a number of banks which also operated a clawback in their pension schemes have either abolished, partially withdrawn or capped the deduction that they apply.”

The Labour MP also noted that HSBC “reported a profit of $14.9bn (£11 .1bn) for the nine months to September, up from $10.6bn (£7.9bn) in the equivalent period last year”.

Due to this, Mr Field asks the scheme to clarify how was “the state deduction communicated to scheme members throughout the period of its application”.

He is also questioning the bank on “what steps were taken to ensure that all scheme members were aware of how this feature would affect their retirement incomes,” and how much money is the scheme “saving from applying the state deduction, compared with if there were no such deduction”.