Pension Funds 2025-04-23

Opened the debate

Pension funds hold not just financial value but moral weight. How we treat our pensioners, and how we invest in the future of the hard-working people of this country, says everything about the kind of society we are. I want to bring to the House’s attention one of the most concerning injustices faced by thousands of former HSBC employees, particularly women: the use of an outdated, punitive policy known as pension clawback. The Midland Clawback Campaign seeks justice for 51,000 affected members who were misled about their retirement income and are being short-changed. Unlike other institutions that phased out clawback in the 1980s, HSBC continues to enforce it. Former employees were told they would receive a defined-benefit pension at two thirds of their final salary but face deductions upon reaching state pension age, plunging many into poverty, especially women who took career breaks and faced new contracts with clawback attached without proper information. The University of Exeter research shows the disproportionate impact on women and low-paid staff. HSBC’s pension fund stands at £4.1 billion in surplus, but ending clawback would cost only £450 million. Equality law does not cover pensions, yet HSBC lacks accountability despite its resources.

Government Response

The Minister acknowledged the issue with integrated pension schemes and emphasised that all defined benefit schemes must pay out the full value of promised pensions to each member as per their scheme rules. He stated that while the original aim was to provide a smooth level of pension income throughout retirement, it is important for employees to understand how benefits are calculated and communicated clearly by employers. He mentioned that savers have avenues of redress through complaints to internal dispute procedures or the Pensions Ombudsman if issues arise. The Minister recognised calls for changes but noted that retrospective legislative change would risk affecting some well-funded schemes negatively. He highlighted progress made in closing gender gaps with the new state pension and automatic enrolment, but also acknowledged a large existing gap. The Government aims to address adequacy questions through phase 2 of their pensions review and will continue efforts towards labour market reforms benefiting women more broadly. Concerns about inflation were addressed by encouraging trustees to consider discretionary increases given recent high inflation rates. He mentioned the importance of using surpluses in defined benefit schemes for member benefits. Lastly, he responded to a question regarding pension fund control over investment decisions and ethical considerations like defence company investments, affirming existing responsibilities and freedoms under current laws.