HSBC UK STAFF PENSION CLAW BACK on retirement

Grumps52

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3rd April 2012 coming up to retire with 30years service with HSBC UK. HSBC has provide final figures which then includes a claw back by HSBC of nearly £2k per annum because I opted out, £1K when I retire at 60 then another £1k at state pension age of 62 actually reducing my HSBC provided pension as I get older. My figures show an £8k pension per year with £2K clawed back making a final pension of £6K at 62-How can this be:

1)HSBC/I opted out so do not get a better state pension
2)My pension from HSBC will be £1k less at start then actually gets less by a further £1k as I get older as they claw back more

I have called HSBC and they just say its the HSBC rules that I signed up to in 1990.

xylophone

Can you quote the clauses ( see your pension handbook) that explain this arrangement?
I am at a loss to understand whether you are referring to the opting out (contracting out) of SERPS that was typical in DB final salary pension schemes, or whether you opted out of the HSBC scheme at some point, or whether there was some change in the HSBC rules in 1990 that affected pension benefits?
Or are you getting tangled up in the GMP rules, or does HSBC still practise some form of abatement (where a company pension was reduced to take account of State Pension coming into payment)?

You'll need to be more precise before anybody can comment.

dunstonh

opt out typically means leaving the occupational scheme
contract out typically means contracting out of SERPS/S2P.

Many people mix up opt out with contract out. I suspect that is the case here and the difference is the interim payment made until state pension is payable.

Grumps52

Hi-I will quote the HSBC paragragh I think applies
"As you attained age 60 your pension has been reduced by the amount of the State reduction you accrued to May 17th 1990. At State pension age 6th July 2014 your pension will be further reduced by the balance of the State Deduction"
I have not opted out of the HSBC pension scheme at any time. I will however review the HSBC pension handbook again.
As mentioned my first port of call was with HSBC who just said it was the rules, not very helpful, hence posting today.

xylophone

Does your handbook explain what "state reduction accrued" means?

xylophone

dunstonh wrote: »

opt out typically means leaving the occupational scheme
contract out typically means contracting out of SERPS/S2P.

Many people mix up opt out with contract out. I suspect that is the case here and the difference is the interim payment made until state pension is payable.

I have added (contracting out) in brackets for clarification.

I am still not quite sure what is going on here though. The OP is retiring at 60 (presumably because this the pension age in the HSBC scheme). The reduction in the pension does not appear to be anything to do with GMP because this only becomes relevant at SPA.

The OP's SPA appears to be 62. Her HSBC pension appears to be reduced at 60 (as soon as she retires??) even though she is not receiving any State Pension at this age.

I'm puzzled.

SnowMan

Grumps52 wrote: »

Hi-I will quote the HSBC paragragh I think applies
"As you attained age 60 your pension has been reduced by the amount of the State reduction you accrued to May 17th 1990. At State pension age 6th July 2014 your pension will be further reduced by the balance of the State Deduction"
I have not opted out of the HSBC pension scheme at any time. I will however review the HSBC pension handbook again.
As mentioned my first port of call was with HSBC who just said it was the rules, not very helpful, hence posting today.

It sounds like the scheme benefit structure has a basic state pension deduction that applies from State Pension Age (which used to be 65 for males and 60 for females).

A typical deduction (the actual calculation would be as per the HSBC rules) might have been calculated as

BSP x years of pensionable service /40

so for someone with 40 years pensionable service the deduction would be equal to the BSP.

where BSP is the full Basic State Pension

So for example if the scheme provided a benefit of

1/60 x final pensionable salary x pensionable service

less 1/40 x BSP x pensionable service (deduction at SPA).

then allowing for someone receiving a full BSP from the State the person's total pension income including BSP would be

2/3rds of final pensionable salary (if they had 40 years pensionable service)

The point of these deductions were in a broad way to target a specific level of post retirement income 2/3rds salary in this example.

The deduction is split into a deduction that applies from age 60 and the rest at 62 (in your case) because of a requirement that benefits accrued after 17th May 1990 had to be the same for males and females (following a judgement to this effect in the Barber vs GRE court case).

I suspect the scheme had a basic state pension deduction that originally applied from age 60 for females and from 65 for males.

However following changes that the scheme probably applied for accrual from 17th May 1990 the deduction for post 17th May 1990 service applied it appears from female State Pension Age for both males and females (allowing for the increase in female State Pension Age).

Note the scheme deductions based on BSP apply regardless of the actual State Pension you receive, so someone who paid reduced 'E' rate married woman's national insurance would still have a deduction applied. Otherwise it wouldn't have been fair to females who opted NOT to pay married women's 'E' rate national insurance.

While I don't have knowledge of the HSBC scheme it sounds like it is just a case of you being paid in accordance with the scheme rules

Grumps52

Hi
Have checked all HSBC documentation I have and have found some small print that refers me to the Trusts Deeds and Rules regarding the State Reduction accrual HSBC is applying. How would I get hold of the HSBC pension funds Trusts Deeds and rules?

SnowMan

Grumps52 wrote: »

Hi
Have checked all HSBC documentation I have and have found some small print that refers me to the Trusts Deeds and Rules regarding the State Reduction accrual HSBC is applying. How would I get hold of the HSBC pension funds Trusts Deeds and rules?

You can contact the scheme and ask to inspect the scheme Trust Deed and Rules (you have rights to see these). This is the legal document that sets out how benefits are calculated. However they are written in legalistic language and will be very difficult to understand.

So you would be better to ask the scheme administrators for a copy of the scheme booklet (relevant to you) and the announcements of the change in scheme benefits following the changes in benefits following the Barber vs GRE judgement.

The scheme administrators should also be able to provide you with the calculation of your benefits (including the calculations of the deductions that apply).

In the what I hope is the unlikely event that the scheme are unhelpful then you can raise a complaint initially with the scheme administrators, more information here.

xylophone

Further details about the DBS Scheme, including the DBS Scheme Explanatory Booklet and details of the
DBS Scheme Administration Team are available on the DBS Scheme intranet site
(http://dbsscheme.hacl.uk.hsbc).

Does this help, OP?

Grumps52

Thanks to all -but seems HSBC have found a way reducing costs, even using long serving, loyal workers. My husband also retired recently(not from HSBC) but no State deduction with his pension. I will contact the schemes administrators for a fuller explanation, however seems a bit(very) unfair to have worked 30-40 years and find a 25% reduction by your employers(That's how I see it anyway) when you come to retire-My total pension fund according to the personal pension documentation I have received is £160K-can I get this out of the HSBC pension fund without reduction and buy an annuity from someone else without incurring this penalty?