‘Heartless’ multinationals exploiting pensions loophole for UK workers
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Hewlett Packard, American Express and Pfizer among firms to have frozen increases in payouts despite inflation. Some of the world’s richest companies are accused of exploiting a loophole in pension law to freeze increases in payouts for many former UK employees, despite the cost of living crisis.
![[David McIlroy]](https://i.guim.co.uk/img/media/04aa2f1567ff7e7040da7456a409ad24143a2b50/0_286_1229_737/master/1229.jpg?width=445&dpr=1&s=none&crop=none)
The companies, which include Hewlett Packard Enterprise (HPE), American Express and Pfizer, are being urged to “do the right thing” and increase these frozen pension payouts in line with inflation. MPs have condemned the failure of companies to increase the payments in the face of high inflation in recent years as “heartless” and “unethical”.
The Pensions Act 1995 aimed to strengthen regulation after Robert Maxwell plundered millions of pounds from Mirror Group pension schemes. The act introduced a general requirement to link final salary pension schemes to inflation, but it left a gap in the legislation because there was no requirement to provide such an uplift for company pension benefits accrued before April 1997.
Thousands of pensioners in many schemes now depend on “discretionary” increases by companies, in addition to any rises that apply under legislation. While most companies link these pre-1997 defined benefit pension payouts to inflation, some multinationals have repeatedly ruled against the discretionary increases over several years while earning billions of pounds in profits.
