HSBC is proposing a raft of changes to its pension arrangements, including changes to its flagship final salary scheme.
One-third of the banking giant’s UK workforce of 58,000 are on the final salary scheme. Under the new plans, staff would be asked to pay a contribution from their salary. Traditionally, final salary schemes across the banking sector were non-contributory, with workers taking lower wages as part of the deal.
However, the bank is also proposing increasing its input into the defined contribution pension scheme it operates, which covers two-thirds of the HSBC workforce. At present, it pays up to 6% of eligible employees’ salaries into this pension. Under the plans, this would increase to an 8% contribution from January 2009.
HSBC is also proposing to raise its normal retirement age from 60 to 65.
“In our pensions arrangements, we need to address a simple reality – people are living longer,” said Dyfrig John, HSBC deputy chairman and chief executive.
Every extra year’s life expectancy added £340m to the liabilities of the firm’s pension scheme, he added.
Graham Goddard, deputy general secretary at the Unite union, said the move would leave many staff in a “precarious” financial situation.
“The HSBC proposals today will come as a slap in the face for the long-serving employees. Unite is furious that HSBC is citing a financial justification for the changes when it made profits of £13bn last year,” he said.