Top Midland staff balk at loss of health perk

Click to follow
The Independent Online
MIDLAND Bank has provoked outrage among some of its most senior employees by deciding to withdraw an attractive post-retirement healthcare scheme.

The scheme, worth thousands of pounds to those included, covers 3,400 senior employees and their partners for private healthcare from the time they retire to death.

It also includes provision for children under the age of 18.

The bank admits that more than 200 employees have refused to sign a letter agreeing to eliminate the scheme from their employment contract.

However, some bank insiders say that figure is nearer 400 and that some managers have already left the bank in protest at the withdrawal of the benefit.

Brian Pearse, the chief executive, has said the contracts will be changed regardless.

Midland, which is now owned by the Hongkong and Shanghai Banking Group, has told those covered by the scheme that it cannot be continued because of the spiralling costs of private medical cover and because of recent changes to financial accounting standards, which affect the way the costs of the scheme are carried in the group's trading figures. Midland says the scheme is unusually generous and that other companies which offered similar benefits have now withdrawn them.

The cost of such post-retirement healthcare schemes is considerable. In its 1991 accounts, Midland estimated the potential cost of its overall healthcare scheme to be pounds 99m, but by 1992 the figure had increased to pounds 124m.

The bank's internal documents argue that without the proposed withdrawal of post-retirement cover, the figure would have risen to pounds 178m. In its last set of half-yearly figures, Midland included a pounds 10m charge for its health scheme against its profit-and- loss account for the six months ended 30 June 1993.

The bank says that this figure will increase substantially unless it takes decisive action now.

The bank first told employees of its decision in November.

Mr Pearse has sent letters to dissenting employees this summer saying: 'I hope that in reading this letter and the enclosures you will now be able to reconsider your decision and accept what is proposed. However, if you do not feel able to accept the change, as the bank believes that post- retirement medical expenses insurance is a contractual benefit, then the only step the bank can take is to terminate the current contract under which you received that benefit.

'This would be done by giving you the notice required by your contract.'

The bank says that it sought employees' consent before invoking the changed contracts because it felt this was the right approach, having taken advice that the provision of post-retirement benefits is a contractual term of employment.

(Photograph omitted)

Comments