HSBC faces union fury after cuts to final salary pension scheme

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HSBC is facing angry trade unions after unveiling plans to cut the benefits of staff in its final salary pension scheme and raise the bank's retirement age, blaming increased life expectancy for the decision to "share costs" with employees.

The Unite union reacted with fury and said it would consult its members about what action to take, raising the prospect of a second strike at HSBC in three years.

Britain's biggest bank, which posted record profits of $24.2bn (£12.4bn) last year, said the scheme's 18,500 members could either pay in some of their salary to maintain their pension on retirement, make no payment and accept a lower pension, or transfer to the bank's defined benefit plan. The bank's standard retirement age will increase to 65 from 60.

Unite said staff had made it clear that they did not want the final salary scheme changed, and that HSBC had not consulted with Unite before making the announcement. Members of Amicus, now part of Unite, staged a walkout at HSBC branches in 2005 over pay.

To keep their current pension entitlement, staff will have to pay in 2 per cent of their salary from January 2009, rising to 5 per cent over three years. The scheme is currently non-contributory.