Written evidence from Hewlett Packard Pension Association (HPPA) (DBP0091)



Additional information from the Hewlett Packard Pension Association (HPPA)


08 November 2023





Contents              Page



Our appeal to the Select Committee to shape and influence future outcomes

1.      Spotlight on corporate behaviour              2

2.      Clarity on interpretation of Pensions Act 2021 amendment              3

3.      Influencing the DWP and TPR Codes of Practice              4

Overview of HPPA and Scheme details              5

Supporting submissions received from other pensioner groups

1.    3M UK Pension Action Group              6

2.    FOSPEN Association of members of Foster Wheeler UK Pension Plan              7

3.    AMEX UK Pre-97 Pensioners Campaign Group              8

APPENDIX 1 HPPA submission to TPR Code of Practice consultation              Attachment

APPENDIX 2 Request for clarity on interpretation of Pensions Act 2021              Attachment




Our appeal to the Select Committee to shape and influence future outcomes


We would very much appreciate the Select Committee considering the lines of inquiry and suggested actions outlined below.


1.      Spotlight on corporate behaviour


We think there is value in putting a spotlight on the way in which certain companies treat their pensioners dependent on discretionary increases for their service before April 1997.


The HPPA are aware of several pensioner groups appealing to their companies and Trustees for better outcomes for pre-97 discretionary increases. These companies are typically large US Corporations:



We have previously provided information on the discretionary practice at IBM. We believe there are other large schemes such as Fujitsu, Siemens and NEC awarding indexation up to 5% of RPI for both pre and post 97 service.


It is very difficult to find out the true scale of the problem across the DB landscape and our awareness is based on our own internet research and prior connections made through word-of-mouth.


Request for further research of the largest 50 schemes within the DB landscape


We would like to see the Select Committee, the DWP and TPR carry out research that provides greater insight and understanding of how the 50 largest DB schemes deal with discretionary increases.


Our submission to the TPR Code of Practice consultation included our research data highlighting the number of pensions schemes and estimated membership subject to discretionary increases. There are approximately 50 DB schemes with scheme membership greater than 5,000 members dependent on discretionary decisions for their pre-97 pensions in payment.


We believe that insight and understanding into how these larger companies deal with discretionary increases can help improve the way in which the proposed Code of Practice is designed and implemented, improve standards of corporate social responsibility and citizenship, and through this, improve the outcomes and lives of the many thousands of pensioners subject to discretionary practices.


Having this insight and understanding of the DB landscape is essential to having an effective code of practice.


The code of practice, in current form, risks being not fit for purpose for many thousands of pensioners and Trustees if this aspect is not recognised and dealt with. We elaborated further on this within our submission to the TPR consultation.


The HPPA submission to the TPR consultation exercise is included as Appendix 1.




2.      Seeking clarity on interpretation of Pensions Act 2021


We would also ask the Select Committee to seek clarity from the DWP and TPR, or other relevant body, on interpretation of amendments introduced by the Pensions Act 2021.


Our written evidence to the committee included reference to a specific statement within the Pensions Act 2021. The statement refers to Trustees having to develop a strategy for pensions and "other benefits” over the longer term. Our written evidence outlined our interpretation of what we believe the statement means for Trustees and company in relation to governance and collaboration. This section of our written evidence was extracted from our submission to the TPR consultation.


It is our view that the Pensions Schemes Act 2021 Schedule 10 amendments to Part 3 of the Pensions Act 2004, relating to a scheme’s Funding and Investment Strategy, places a new and fundamental and critical requirement on Trustees. The amendment states the following:


“The trustees or managers must determine, and from time to time review and if necessary, revise a strategy for ensuring that pensions and other benefits under the scheme can be provided over the longer term.”


It is my interpretation that a discretionary benefit is an “other benefit” and therefore, when a company has sole decision-making power over discretionary increases, this new legislation places an obligation on company and Trustees to collaborate in good faith to develop a strategy for discretionary increases over the longer term.


What exactly is the meaning of “other benefits” and how should this legislation be interpreted?


The HPPA asked our Trustee to get its own legal interpretation of the wording within the legislation. We did this in the belief that clear understanding and interpretation of the legislation will lead to improved dialogue on developing policy and strategy for future discretionary increases.


Our Trustee has informed me that it has been advised that my interpretation is incorrect.


Request for clarification on interpretation of Pensions Act 2021 and impact on Code of Practice


The way in which the meaning of the legislation is interpreted has a direct bearing and impact on the Code of Practice.


This is why we are asking for help from the Select Committee and seeking clarification on this aspect.


A summary of the legal advice given to our Trustee contrasted with our 'layperson’ interpretation and the clarification we are asking the Select Committee to seek, is contained in Appendix 2.




3.      Influencing the DWP and TPR Code of Practice


HPPA Interventions


The HPPA has tried to influence the content of the proposed new DWP DB Funding Code of Practice and TPR General Code of Practice by participating in their recent consultation exercises. We also asked our members to engage with their MPs to get their MP to write to Pensions Minister Laura Trott MBE and CEO and Chair of TPR, advocating our proposal for a code of ethical practice.


Our representations emphasise that the HPPA proposed code of ethical practice is:


Such a code of practice is designed to work within the framework and improve the implementation of existing legislation and:


Responses received from DWP and TPR


Unfortunately, the responses received were not encouraging and very disappointing – and most importantly – suggest that there is clear misunderstanding of what we are asking for and the rationale for it. The basis for this view is contained within the respective responses which included the following:




Copies of the responses from Minister for Pensions Laura Trott MBE MP and Charles Counsell (former CEO) and Sarah Smart (Chair) of TPR can be provided if required.


Request for Select Committee to engage with DWP and TPR and influence future outcomes


We believe the Select Committee has the potential to influence and shape the way in which legislation and future Code of Practice is defined and implemented by the DWP and TPR.



Concluding comments


We hope this additional information gives the committee valuable and useful insight enabling you to achieve the intended purpose, aims and outcomes of your inquiry.


Supporting statements from other pension groups are included below.




Overview on HPPA and Pension Scheme details


The original aim of the HPPA was to build relationships between its members, the company and Trustee. The purpose of the association has transformed into a campaign to secure better discretionary increases for members with pre-1997 service. The HPPA has been campaigning for better discretionary increases for over ten years. The HPPA has approximately 2000 members, the majority of who are ex-employees of Digital Equipment Company Ltd (DEC).


DEC was acquired by Compaq in 1998 who were in turn acquired by Hewlett Packard in 2002.


The Hewlett Packard Retirement Benefits Plan (HPRBP) has two separate pensions schemes – The Digital Section and the Hewlett Packard (HP) Section, both governed by a single Board of Trustees. The plans merged under the governance of a single Trustee Board in 2006.


The current company sponsor is Hewlett Packard Enterprise (HPE). HPE was formed when Hewlett Packard split into two companies, Hewlett Packard (HP) and Hewlett Packard Enterprise (HPE) in 2015. The Trustee Board incorporated in 2016 and is listed on Companies House as Hewlett Packard Enterprise UK Pension Trustee Limited.


The Digital Section pension plan has approximately 9,500 members with about 60% now pensioners. The average pension in 2018, based on the actuarial report of that year, was approximately £9,300.


The Hewlett Packard Section pension plan has about 4000 members. The average pension in 2018, based on the actuarial report of that year, was approximately £14,690.


The Digital Pension plan closed to new members in the late 1990s so many members will have predominantly pre-1997 service.


Prior to 2002, discretionary awards had maintained close alignment with RPI inflation. Since the acquisition by HP in 2002 – only three discretionary increases to pre-97 pensions in payment have been awarded, totaling 5%.


The investment strategy for the two pension plans, governed by the single Board, have identical “mirror image” investments strategies, investment advisors and fund management companies and both schemes have been de- risked over the years with significant LDI investments. Both plans were in surplus prior to the LDI “crisis”.


The LDI “crisis” resulted in both plans suffering a significant decline in the value of invested assets, with a combined decline of approximately £1.5Billion (39%) in asset values. Both plans went from a funding level of 108% to 99% - a decline of 9%.


A 3% discretionary increase awarded in 2022, the first increase after 13 consecutive years of zero increases, was fully funded by the surplus that existed prior to the LDI “crisis”.


Within the Digital pension plan, the policy is that the company must fund any discretionary increase at the time the decision is made. We consider this practice to be counterproductive as it suggests no coherent strategy.


It is our view that discretionary pension awards to be based on continuing good faith and good ethical practice – must be a holistic decision that factors in the cumulative impact of all past decisions. While company decision makers may consider themselves to be acting logically and rationally within the context of a single year there comes a tipping point where a series of negative decisions building on each other crosses a threshold that reasonable people and objective observers would consider unethical and not in good faith.


A track record of thirteen consecutive years of zero discretionary increases with only 5% increase to pensions

in payment over 20 years seems a clear indication of the need to improve corporate social responsibility.







Hundreds of 3M UK’s pensioners, many of whom only had pre 1997 service, have not been granted an increase on their pensions for that service since 2009. Their pensions have thus declined in value by 60% which is the increase in the UK RPI since 2009. Annual increases on pensionable service were paid annually from 1982 to 2008. There is a rule in the Trust Deed which sets out that at the Principle Employer discretion it can request the Trustee to grant an increase. This rule has not been applied since 2008.


The parent company 3M Corporation has stated previously that “as a general benefit principle globally they do not support discretionary pension increases”. However from 1982 to 2008 they did allow the UK subsidiary to request the Trustee to pay discretionary increases on all pensionable service pre and post 1997. Precedents and expectations were therefore well established within the pensioner community.


From 2011 to 2017 a 3M Pensions Action Group (PAG) acting on behalf of Scheme members set about putting pressure on both the US based Corporation, the UK subsidiary 3M UK PLC and the Scheme Trustee to reinstate grant of increases on pre 1997 service. The PAG sought input from legal sources, the UK Pension Advisory Service, and sent a formal complaint to the Pensions Ombudsman. UK Members of Parliament and the Parliamentary Work and Pensions Committee were contacted. These efforts resulted in a meeting with the then Pensions Minister Guy Opperman who in turn requested a meeting with the Managing Director of 3M UK PLC. Neither this meeting or the subsequent letter sent by Theresa May to the US Chairman and CEO resulted in any positive outcomes regarding the payment of increases on pre 1997 service.


Whilst discretionary increases were granted up until 2008, the annual statement sent to pensioner members did not differentiate between pre and post 1997 service until 2005. Even up to 2008, the year of the last discretionary increase, the annual statement never stated that an increase on pre 1997 service was at the discretion of the Principle Employer. Furthermore, the Trustee in agreeing the actuarial criteria have continued to include an allowance for a discretionary increase to be paid to all pensioner members with pre 1997 service.


In addition, the UK Scheme, contributed to by all members, admitted some new members due to the acquisition of the company who employed them. Unlike their long term colleagues, they have been granted increases on pre 1997 service. This has put the Scheme Trustee in an intolerable position as they have effectively been prevented from disbursing the Scheme’s funds in an equitable manner and in fact must discriminate against the longer term 3M employees who have received no increases since 2008.


On the most recent advice in early 2023 the Scheme funding showed a surplus versus liabilities in excess of 30%. The Company has for the time being discontinued its contributions to the defined benefit scheme, a contribution holiday, whilst the oldest members predominantly on lower pensions will continue to suffer declines in their purchasing power (currently 60% as stated above).


The Government through the work of the Pensions Select Committee urgently needs to ensure that the regulations and guidance applicable to all direct benefit pension schemes put an end to the morally unjustifiable, discriminatory practices such as those evidenced above. All pensions schemes irrespective of their value should enshrine principles of fairness and equality that ensure they are managed for the benefit of the all the Scheme members and not the employers.


Further input relating to the 3M Defined Pension and Life Assurance Scheme.


The Principle Employer is 3M UK PLC a wholly owned subsidiary of the US based 3M Corporation.

In 2022 the Scheme had 7378 members - 549 actives members, 2447 deferred members and 4382 pensioner members.


In early 2023 funding stood at £2.4 billion approximately 130% of liabilities i.e. a 30% surplus.






This submission is made by Fospen, which is a Pensioners Association for members of Foster Wheeler’s Defined Benefits Pension Plan. Foster Wheeler Limited was a British subsidiary of a US company, Foster Wheeler Corporation. The DB Pension Plan was established in 1970. Today there are approximately 2600 FW legacy members in the Wood DB Pension Plan.


Until 1990 membership of the FW Plan was mandatory; thereafter, membership was voluntary. FW Pre-97 members were given the expectation that pensions would be reviewed annually and increased at Company’s discretion. Indeed annual increases were made every year until and including 2002. Since then there has only been one annual increase of 3% for pre-1997 service, which was awarded in 2006 to members over the age of 80 years.


Fospen was formed in 2002 to recognise the threat to the welfare of Foster Wheeler pensioners as a direct result of the Company to suspend granting any discretionary increases to all pensioners apart from statutory GMP, because the pension Plan moved into deficit. Coincidentally, at that time, FW changed the trust deed to make the Company responsible for financing any future such discretionary pension increases.


Fospen made regular representations to the FW executive board together with discussion with the pension Trustees. Fospen held two general annual meetings and the Chairman of Trustees attended, explaining the situation covering the pension scheme. Despite regular requests by the Trustees for the Company to grant increases, none were forthcoming.


In 2014, FW was taken over by Amec that decided to continue to apply the terms of the FW Pension trust deed and deny any discretionary pension increases to pre-1997 pensioners, despite changing the conditions of all the pension schemes of other companies in the Amec conglomerate.


In 2017, Amec Foster Wheeler was taken over by John Wood Group, which adopted the same approach in consistently denying any discretionary pension increases for the minority group of pre-1997 pensioners. The Wood Group also has a small cadre of Pre-97 pensioners who are similarly mistreated as regards discretionary increases.


Fospen has written many letters to the Wood directors and received standard letters of rejection, with the added comment that pre-1997 increases would be considered as the position of the pension Plan improved. Indeed, the Wood Pension Plan showed a healthy surplus in 2023 at 117% valuation but still no discretionary increase was awarded despite inflation running at the highest levels for decades.


In an attempt to put pressure on the Company, the Fospen committee wrote to all members requesting them to contact their constituency MPs and asked them to write to the senior Wood executives to demand a change of attitude towards pre- 1997 pensioners. Ninety did so and 29 MP's acted. They, in turn, received the standard reply. In addition, after a Fospen meeting with MP's, a further letter was issued by Justin Madders and Munira Wilson inviting the Wood senior executives to attend a meeting at the Houses of Parliament to discuss the plight of pre- 1997 pensioners. The invitation was declined.


As a consequence of the lack of action by FW, later Amec and now Wood pre-1997 pensioners have received no increase since 2002 and have seen the value of their pensions in real terms reduced by 50%.






This submission is made by the American Express UK Pre-97 Pensioners Campaign Group, which is a Pensioners Campaign Group representing American Express UK Defined Benefits Pension Plan members. American Express UK Limited is a wholly owned subsidiary of American Express Inc whose head office is based in New York.


American Express Current Facts


We do not know the exact number of Amex UK DB members but we estimate to be at least 1000.


The Amex UK Pension Plan rules for DB members within the Pre-97 Plan state that increases can only be granted at the discretion of the Company - American Express New York. Some small increases were granted in 2004 (1.7%) 2008 (5.1%) and the last increase being made in April 2014 6.4% increase.


The latest statement issued by the American Express UK Pension Plan Trustees show the current funding level is 91.7%


The American Express business continues to return healthy annual profits showing 5 successive record Quarters of growth over 2022/3.


Appeal to the DWP Select Committee


We represent a group of Amex pensioners with the UK DB plan who have not received a pension increase since 2014. This means annual pensions received have not increased for 9 plus years, with no confidence in any increase in 2024 - or indeed beyond. The inflationary impact since 2014 means this group of pensioners have had their pensions effectively eroded by some 30%+.

Most concerning is that many individuals in this plan were lower grade employees reliant on their American Express pension. Pensioners who retired a couple of years either side of 1997 see almost the whole of their pension being subject to a discretionary increase decision. Especially significant is when an American Express retiree in the Pre 97 plan dies the widow/widower immediately faces a 50% decrease in their Amex pension with seemingly no likely increase during their remaining years should the current approach continue.

These are the very people that contributed to making American Express the successful company it is today.


The American Express campaign group have raised all these issues directly with the President of American Express in New York and the most senior American Express leader in the UK. Entreaties have been made to the UK trustees who have demonstrated no empathy regarding the current situation. The UK Pension Trustees tell us repeatedly that it's not within their remit to represent this retiree’s population and that all UK Pension increase decisions are made by the Company in New York.


The Government through the work of the Pensions Select Committee urgently needs to ensure that the regulations and guidance applicable to all direct benefit pension schemes put an end to the morally unjustifiable, discriminatory practices such as those evidenced above. All pensions’ schemes irrespective of their value should enshrine principles of fairness and equality that ensure they are managed for the benefit of the all the Scheme members and not the employers.


In conclusion we support the HPPA recommendation and submission to the DWP and in particular - " The expected outcome is that the TPR code of practice is enhanced to include basic ethical principles and guidelines that lead to better corporate citizenship and Trustee effectiveness within a particular segment of pension schemes within the DB landscape those schemes that currently do not provide any form of inflation indexation to benefits accrued before 6 April 1997".





What does “other benefits” mean within pensions legislation?


Interpretation of section 221A Pensions Act 2004, as inserted by paragraph 2 of schedule 10 Pension Schemes Act 2021


“The trustees or managers must determine, and from time to time review and if necessary, revise a strategy for ensuring that pensions and other benefits under the scheme can be provided over the longer term.”

Legal Advice provided to Trustee

The Trustee has informed HPPA that it has been advised that reference in the Act to “other benefits” is not a reference to the potential discretionary award of pension increases by the sponsoring employer of the Plan. Rather, it is a reference to benefits which have been promised to members already or where the sponsor has given a clear expectation it will provide them. In either case, those benefits clearly need to be funded for (as they will become payable) and that is what the legislation is intended to capture. “Other benefits” does not capture additional benefits that could potentially be provided under a discretion where there has been no commitment to exercise such discretion.

HPPA Interpretation

The interpretation of “other benefits” depends on the language and the intent behind the legislation. The language within the context of pension law would be interpreted by a court based on the following: plain language interpretation, legislative Intent, context, precedent and case law and regulatory guidance.


Plain language interprets “other benefits” as any other benefit that is not promised as a guaranteed pension income but can potentially be provided under the scheme. As there is no explicit definition of “other benefits” within the legislation it is unclear how the Trustee can accept the advice that “other benefits” refers only to benefits which have been promised to members already or where the sponsor has given a clear expectation it will provide them.


Whether the company has committed to provide a discretion or given a clear expectation is immaterial. The company has provided discretionary benefits in the past and can do so in the future. The company cannot fetter itself by stating it has no intention of providing a discretionary benefit in the future.


The context and intent of the legislation is to promote and facilitate good governance and strategy encompassing all benefits within a pension scheme. To ensure other benefits can be provided over the long term requires strategy and policy.


A strategy is the plan to achieve the true purpose of the pension scheme, namely, to provide pensions and related benefits at a cost that is acceptable to the employer. A strategy does not require discretionary benefits to be promised

- however - it will define coherent, co-ordinated actions, policies, investments, and funding that can create and satisfy the conditions where both Trustee and company consider discretionary benefits to be appropriate, desirable, and affordable. This requires collaboration and negotiation.


Therefore, to develop a strategy that ensures pensions and “other benefits” can be provided over the longer term requires collaboration between company and Trustee even when the company has sole decision power on discretionary awards.

The Trustee cannot comply with this requirement if the company refuses to collaborate on developing strategy and policy for discretionary benefits.

Questions for clarification?


What does the term “other benefits” mean within the context of this legislation?


If a discretionary benefit is deemed to not be an “other benefit” within a pension scheme, then what is it?


If a discretionary award is deemed to be an “other benefit” then what are the implications for Trustee and company?





November 2023