Pensions Minister Guy Opperman has said the government has no plans to legislate to compel schemes to withdraw an integration arrangement, also known as a clawback scheme.

Opperman clarified the government’s stance on the issue in parliamentary written answers and questions, after receiving a question from Labour MP for Crewe and Nantwich, Laura Smith, on HSBC’s Midland Bank Pension Scheme.

She asked what the government’s policy is on compensating people affected by the clawback feature of the Midland Bank Pension Scheme. In response, the Pensions Minister stated that such arrangements are not a matter for the Department for Work and Pensions.

“It is a decision for employers and trustees to operate ‘clawback’ or ’integrated’ pension scheme arrangements,” Opperman said.

“There are no plans to legislate to compel schemes to withdraw an integration arrangement. Any retrospective change would impose significant additional unplanned costs. Pension scheme rules on the calculation of benefits are many and varied, and must remain a matter for employers and scheme trustees to decide,” he added.

Members of HSBC’s Midland Bank pension scheme have been campaigning for a change to the laws surrounding integrated pension schemes. They believe that they were not adequately made aware of the clawback feature, which sees their occupational pension reduced when they become eligible for the state pension. As a result, members have said they were denied the opportunity to make additional financial plans for their retirement.

A government briefing paper, published November 22, explains that clawback pensions were introduced in the 1940s when the state pension was brought in. The briefing paper explained that the schemes were designed to avoid additional contributions from sponsors and members by taking account of some or all of the state pension when calculating the amount of occupational pension payable.

Opperman has previously said that a compelling schemes to withdraw a clawback scheme would amount to a retrospective change that would impose significant additional unplanned costs on schemes.

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