Will HSBC pensioners get unjust deserts?

HSBC is currently in the process of seeking UK court approval to use the significant funding surplus (£4.2bn) from its older, and now closed, Defined Benefit pension scheme to help fund their employer contributions in the current Defined Contribution pension scheme.

Based on current figures, HSBC could take £152m p.a. in cash from one scheme to pay their employer contributions in another scheme.

I’m normally cynical about the motives behind such moves….enhancing P&L to show growth in profit and unlock bigger bonusses. But challenging the Bank Leadership on moral grounds is like trying to nail blancmange to the ceiling.

Interestingly, the government want to agree on how UK PLC can benefit from investing DB surpluses to help the economy grow. The HSBC timing is probably aimed at utilising the surplus for their benefit before they are told what to do with it.

If we are spending money with lawyers going through the process of clarifying the Pension Scheme Rules and how to exploit surplus assets, then I propose that we also look at.

Firstly, removing clawback for those lower paid and mainly female staff. £152m would go a long way to help mitigate this issue and bring relief to many.

Secondly, do away with the outdated rules to limit pension increases to either 5% or 2.5% and linked to the RPI. This rule has resulted in pensioners receiving way lower than inflation increases during the cost-of-living crisis.

In fact, HSBC leadership could have overridden this increase rule but unsurprisingly, chose not to.

Let’s watch how this plays out…I fear pensioners will continue to get their unjust desserts!!