HSBC Bank has launched flexible benefits for its 55,000 UK employees and made significant changes to its pension schemes.
Speaking in a conference session on flexible benefits at the Employee Benefits Live 2009, held at the Business Design Centre in London today, Peter Robotham, head of performance and reward, described how the bank had implemented the flex scheme after 18 months of consultation with staff.
The bank, which had previously offered a range of core benefits, launched the MyChoice flex platform with Towers Perrin. Employees can trade down on perks such as life assurance, but the focus of the scheme was to allow staff to exchange a proportion of their salary for products negotiated by the firm.
More than three quarters (78%) of total workforce made flex election choices. New benefits to be launched in January 2010 are set to include holiday trading and a healthcare cash plan.
Major changes were also made to the firm’s occupational pension scheme. For example, its defined contribution (DC) scheme was improved to be more competitive in order to attract new staff. “It was becoming a recruitment issue,” said Robotham.
The scheme had previously been open to staff aged 23 and over, but was opened up to all employees. Contribution rates were increased from 4-6% depending on age, to an 8% core benefit plus 5% matching employer contribution.
Furthermore, the defined benefit (DB) scheme, of which a third of the employees are members, was altered to improve cost-efficiency. Staff who wanted to remain in the final salary scheme were asked to contribute 1% of their salary to maintain the same accrual rate, while the retirement age was also increased from 60 to 65. Members could contribute 3% to continue at the lower retirement age.
Robotham said in hindsight it would have been tempting to close the DB scheme entirely given that some competitors had done so in more recent times. “Total closure would have been very radical at the time but in hindsight we could have been braver and more aggressive.”
Find out more about Employee Benefits Live 2009
