Ban clawback by employers, MPs demand

THE Government is being urged by MPs to consider outlawing a little- known practice used by employers to reduce employees' pensions by up to pounds 63 a week.

The practice, known as "pensions clawback", uses archaic rules dating back to 1948 to justify reducing pension benefits by anything up to the full value of the Basic State Pension. Barclays Bank, BP and Marks & Spencer are just three of the FTSE 100 companies who use it.

Kerry Pollard, Labour MP for St Albans tabled an Early day Motion yesterday urging the Government to end the practice as part of its full review of pension policy.

More than 90 MPs have lent support to the campaign. William Hague, the Tory party leader, has also expressed an interest. If the campaign were successful, more than 40 per cent of FTSE 100 companies would be forced to step up their contributions to pension schemes.

Under the practice, more than 2.5 million pensioners throughout the UK see their pension benefits reduced by up to pounds 3,300 a year.

Employers use rules introduced in 1948 - originally designed to make the state pension affordable - to claw back the value of part of a pensioner's basic state pension. The practice is justified on the grounds that employers have contributed to the basic state pension through National Insurance.

While the practice is legal, pension fund consultants and unions believe it runs directly against the government's policy of having two separate tiers of pension provision, the basic state pension and a secondary pension on top of that.

Barclays Bank, which has a pension fund surplus estimated at more than pounds 2bn, recently faced angry protests from 50 pensioners at its AGM. They complained that they were losing up to pounds 1,682 a year each because of pensions clawback.

Over the past three years, companies such as Friends Provident, Scottish Widows and NatWest have ditched pensions clawback. However, Cadbury-Schweppes, Heinz, IBM, Kodak and Nestle still persist with it.

Unifi, the Barclays union, said awareness of the practice among employees was "pitiful". Barry Jones, a spokesman, said: "This is wrong on all kinds of levels. Pension funds in the finance sector are awash with money. Morally, there is no justification for not paying this money to individual pensioners."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Content Writer - Global Financial Services

£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Web Developer - PHP

£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...

Recruitment Genius: Field Sales Consultant - Financial Services - OTE £65,000

£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Loan Underwriter

£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory
Ashes 2015: Alastair Cook not the only one to be caught in The Oval mindwarp

Cook not the only one to be caught in The Oval mindwarp

Aussie skipper Michael Clarke was lured into believing that what we witnessed at Edgbaston and Trent Bridge would continue in London, says Kevin Garside
Can Rafael Benitez get the best out of Gareth Bale at Real Madrid?

Can Benitez get the best out of Bale?

Back at the club he watched as a boy, the pressure is on Benitez to find a winning blend from Real's multiple talents. As La Liga begins, Pete Jenson asks if it will be enough to stop Barcelona
Athletics World Championships 2015: Beijing witnesses new stage in the Jessica Ennis-Hill and Katarina Johnson-Thompson heptathlon rivalry

Beijing witnesses new stage in the Jess and Kat rivalry

The last time the two British heptathletes competed, Ennis-Hill was on the way to Olympic gold and Johnson-Thompson was just a promising teenager. But a lot has happened in the following three years
Jeremy Corbyn: Joining a shrewd operator desperate for power as he visits the North East

Jeremy Corbyn interview: A shrewd operator desperate for power

His radical anti-austerity agenda has caught the imagination of the left and politically disaffected and set a staid Labour leadership election alight
Isis executes Palmyra antiquities chief: Defender of ancient city's past was killed for protecting its future

Isis executes Palmyra antiquities chief

Robert Fisk on the defender of the ancient city's past who was killed for protecting its future