HSBC Board Wins $590 Million Battle Over Pension Deductions

By Adam Clark

HSBC Holdings PLC's (HSBA.LN) board has defeated a campaign to end the bank's practice of reducing pension payments to some employees who receive state benefits.

At the bank's annual general meeting on Friday shareholders overwhelmingly rejected a resolution to abolish the "state deduction" applied to the pensions of around 52,000 U.K. staff who joined HSBC between 1974 and 1996. Only 3.5% of votes cast were in favor.

British unions and some lawmakers pressured the bank to get rid of the deduction, which campaigners claim penalizes the lowest paid. HSBC had warned the proposed move could cost it 450 million pounds ($590 million) and said the overall pension benefit remains competitive.

"We must be fair and equitable to all remaining 140,000 members of the U.K. pension scheme, more than half of whom are defined contribution members, and not just to those final salary members who would benefit if the state deduction ceased," Chairman Mark Tucker said at the AGM in Birmingham, England.

HSBC had already staved off one potential source of shareholder discontent by slashing its executives' pension allowances to 10% of their base salary from a previous level of 30%, bringing them into line with the majority of the bank's employees.

Write to Adam Clark at [e-mail]

(END) Dow Jones Newswires

April 12, 2019 10:41 ET (14:41 GMT)

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