HSBC stands firm over pensions clawback
HSBC rejected calls to end a controversial “clawback” policy on staff pensions and refused to stop the funding of coal power projects in developing countries at a fiery annual meeting in Birmingham.
The bank has been under fire for its clawback policy, which unions claim allows it to deduct up to £2,500 a year from the pensions of ex-midland Bank staff who have final salary pensions.
However, HSBC shareholders yesterday overwhelmingly rejected a motion to scrap the policy, with just 4pc voting in favour. Chairman Mark Tucker argued the policy was both legal and fair. The bank added that removing the policy would “raise complex issues” for other pension scheme recipients and would cost £350m. According to the Unite union, which led protests outside the AGM, around 51,000 former employees are affected by clawback, a rarely used rule that allows employers to deduct payments on the grounds that pensioners also receive the state pension. Because the state pension can kick in some time after a worker has retired, this can result in a sudden drop in income for some.
The rules on the so-called “state deduction” feature were designed so that workers could pay lower contributions into their occupational pension plans. They became part of HSBC’S scheme in 1975 and applied to benefits accrued before July 2009.
HSBC was also attacked for its decision, announced last year, to stop financing new coal-fired power stations in all countries except Indonesia, Bangladesh and Vietnam, amid pressure to help countries meet their goals as part of the Paris climate agreement of 2015.
One campaigner for Christian Aid described the bank’s coal policy as a “net
‘It’s too easy to sit in London and tell low income countries that their people can’t have electricity’
contributor to climate change”, causing “typhoons in Philippines, floods in Bangladesh and droughts in Kenya”.
HSBC stressed that it would end its financing of coal power projects in the developed world this year, and in Indonesia, Bangladesh and Vietnam by 2023. “It’s too easy to sit in London and Birmingham and tell low income countries that their people can’t have electricity,” said John Flint, chief executive.
The bank chose Birmingham for the AGM to mark the establishment of its ring-fenced UK bank in the city last year. Mr Tucker noted HSBC’S ties with Birmingham dated back 183 years to the founding of the Birmingham and Midland Banking Company. HSBC bought Midland Bank in 1992.
♦the UK is fast weaning itself off coalfired power ahead of a total ban by 2025. Official data has revealed the UK has already managed 650 coal-free hours of power generation this year, more than in the whole of 2017.