‘Immoral and unfair’

‘Bankers’ may cash in on mammoth salaries, pensions and other benefits but for a large swathe of people who work in banks, the pay is low even as the hours are long and arduous.

Pensions for these bank workers aren’t for lavish cruises or luxury holiday homes. No, their income will be carefully budgeted in retirement so that they can meet their most basic needs – paying their rent or mortgage, heating their homes, and putting food on the table.

For those who spent their careers in relatively low-paid roles even the slightest aberration from their planned retirement income will be a massive hit to their pockets.

And this is exactly what tens of thousands of staff who between 1975 and 1996 worked for Midland Bank – which became part of HSBC – now face.

Former Midland Bank worker and Unite member Sharon McGeough-Adams was forced to stop working for the bank in 2012 because of health issues.

Now 61, it wasn’t until only two years ago that she discovered the modest retirement income she had carefully planned for would be slashed by £2,217 each year once she reaches state retirement age. For HSBC’s top earners this may be a negligible sum but for Sharon it’s a life-changing amount.

“It will literally mean the difference between heating my home in the winter or not,” she said.

Surely it must have all been a mistake, Sharon thought at first. But as she and thousands of others soon discovered to their shock, it wasn’t.

Hidden in the small print of their pensions is what HSBC has called ‘state deduction’ – a confusing term that these thousands of workers assumed was an amount taken by the government.

This ‘state deduction’ had nothing to do with the government. It was money HSBC was surreptitiously stripping out of their retirement incomes that they had worked for decades to earn.

It’s a practice called ‘clawback’ where employers reduce, or ‘claw back’ their former workers’ pensions by the basic state pension amount once they reach state pension age.

Some are even worse off than Sharon — the amount deducted through clawback varies widely among different pension scheme members depending on how long they’ve worked for the bank and when they started. Her colleague, for example, will lose a full third of her pension.

Those who don’t receive the full basic state pension will, under HSBC’s clawback policy, still have the full amount deducted. Clawback also disproportionately affects those on the lower end of the income scale, the majority of whom are women.

It’s shockingly unfair, and Sharon and thousands of others affected by clawback aren’t backing down without a fight – even if their opponent is one of the biggest banks in the world.

It all started with a Facebook group that’s now reached critical mass, with nearly 10,000 members. With help from Unite, they’ve pressed their case in Parliament and now a group of MPs are fighting their corner as part of the All-party Parliamentary Group on Pension Clawback.

Soon, Sharon and other members of the Clawback Campaign will be descending on Birmingham for HSBC’s AGM on April 12, with a demonstration outside the AGM supported by Unite.

AGM

“Many of us are shareholders who can vote at the AGM,” Sharon explained, “and through our Midland Clawback Campaign Shareholder group we’ve put forward a resolution, with Unite’s help, highlighting the injustice of clawback and calling on the bank to take action.”

Despite the decades of loyal service these workers have given the bank, HSBC has so far been unmoved by their plight. Not only has the bank’s board unanimously advised shareholders to vote against the Clawback Campaign’s resolution, it justifies its position on clawback by simply saying it is not unlawful.

This is a point that the Clawback Campaign is refuting in a separate legal challenge, while the Equalities and Human Rights Commission investigates whether the practice can be deemed discriminatory against women.

“It’s infuriating and sad really that I implicitly trusted the bank,” Sharon told UniteLive. “We were all proud to work for Midland Bank. My colleagues and I put in countless hours of unpaid overtime, especially during times when the bank was in trouble financially.”

“When we raised the issue of low pay compared to other banks, they told us that we had to look at the entire package, including what they said at the time was a generous pension. We were lied to.”

Sharon pointed out that clawback in many ways reflects a culture endemic at big banks, where there’s one rule for those at the top and another for everyone else.

“It is galling when you read that [former HSBC CEO] Stuart Gulliver got paid millions even after leaving the bank last year and then you have tens of thousands of low-paid workers facing an uncertain future in retirement,” she said.

“Something has gone terribly wrong when you speak to a woman affected by clawback whose husband has cancer and is struggling to survive financially. It’s an even bigger slap in the face when this woman tells the bank her story and they simply refer her to a charity. This has got to stop.”

Unite national officer Dominic Hook urged the bank to see sense and be fair.

“Other banks have used clawback practices for company pensions, but for one, they have communicated to their members much more clearly. What’s more, for example, at Barclay’s, the most that can be deducted from your company pension is 12 per cent.

“At HSBC, there is no cap on the percentage that may be deducted. This is why thousands of low-paid HSBC workers – many of them women who worked part-time to care for their families and whose pension pots are relatively small – find themselves in the absurd and deeply unfair situation where a huge portion of their pensions is slashed.”

Hook gave the example of a senior manager retiring on a pension of £75,000 a year who will see a deduction of £2,500 each year, or just over 3 per cent of his pension, once he reaches the state pension age under clawback. Yet a female colleague of Sharon’s who worked nearly 30 years and accumulated a pension of £3,417 will have £1500 slashed from her pension once reaching the state pension age – that’s nearly half of her retirement income.

“Whether or not HSBC’s clawback is an illegal practice, one thing is certain – it’s definitely immoral and unfair,” Hook said. “Addressing how clawback is implemented for the people it affects most, namely low-paid women, is something the bank can easily do. We will keep pushing them to remedy the situation until they do.”

The Midland Clawback Campaign is now raising funds to continue its fight. Donations are welcome — you can find out more about how you can support their campaign here.