On 6 March the High Court will consider whether the trustees of the £19bn HSBC pension fund can amend scheme rules relating to the use of defined benefit surplus to fund contributions to the money purchase section of the scheme.

HSBC has asked its UK pension trustees to make DC contributions of around £152mn a year, based on 2024 figures, from the DB surplus. While the existing rules permit the use of surplus for DC provision, the trustees have concluded that the relevant power has fallen away following the closure of the DB section to active members. They are therefore seeking court approval to reinstate that power on a time-limited basis, initially for four years.

Senior Partner Anna Rogers commented that this looks like being an “open and shut case”, explaining that “it’s obviously all been very carefully constructed to make sure it takes account of DB members’ interests”.

Anna explained that the outcome in cases like this turns on the specific scheme rules and on trustees following a proper fiduciary process. In this instance, the trustees already had a surplus power, but one that was contingent on the presence of active members, meaning a rule amendment is now required.

She added that the proposal involves the use of scheme assets for the benefit of other scheme members, with the DC section sitting within the same trust structure, rather than any diversion of assets outside the scheme. Against that background, she noted that it would be surprising if the court did not approve the application.

Read Anna Rogers’ comments in Mallowstreet here.