American Express has sparked criticism for freezing pension payments for thousands of former British employees for the tenth year in a row.
The US payment cards giant said in a letter to UK pension fund members on 22 March that it had considered the case for a discretionary increase in payouts and decided against it.
Campaigners have said they have suffered a 30 per cent drop in the value of their pensions over the past decade when adjusted for inflation.
During this period Amex has posted record profits from a boom in card spending and last year handed chief executive Stephen Squeri a 69 per cent pay rise to $48m (£38.2m). Amex’s shares are up 21 per cent this year already.
David Thomas, 69, of the Amex UK Pensioners Justice Campaign and a manager at the firm from 1981 to 1998, told The Times that the company’s latest decision was “massively disappointing” and some colleagues were “incandescent”.
“These pensioners have endured more than a decade-long freeze on their pensions, failing to keep pace with the relentless tide of inflation,” he added.
“The repercussions of this negligence are dire, with many pensioners facing financial straits that threaten their very livelihoods.”
Amex’s freeze affects roughly 3,000 UK pensioners who worked there before 1997, with around 2,000 more employees from that time who are members of the defined benefit scheme but have not yet retired also impacted.
Thomas said: “Since 2014, discretionary decisions have been made by the company [Amex] and no awards have been granted. In conclusion, I feel that we could certainly say that we expected that increases would be made from time to time, and that those expectations were met during the period that the trustees had the discretionary power, and that they have clearly not been met since the company took over.”
Companies are not legally required to increase pension payouts in line with inflation for those who worked for the business before April 1997, with increases for service before that date being at the discretion of the company.
The issue has intensified in recent years amid a surge in UK inflation, peaking at a 41-year high of 11.1 per cent in October 2022. It currently stands at 3.4 per cent, above the government’s target of two per cent.
MPs on the Work and Pensions Committee recommended last month that The Pensions Regulator look into the extent of the issue amid high volumes of complaints.
Other companies that have reportedly opted against discretionary increases for pre-1997 workers include Goldman Sachs, Pfizer, Hewlett Packard, 3M and Chevron.
An Amex spokesperson told City A.M.: “American Express complies with all its pension obligations to current and former colleagues and will continue to do so in the future. The company annually reviews whether a discretionary increase will be awarded in respect of pre-1997 pensions”
The company said in letters to pensioners that it “has not committed to granting discretionary increases on an ongoing basis and has at all times reserved its right to award discretionary increases only when deemed appropriate in the circumstances”.
Amex in January reported a net income of $8.4bn (£6.7m) for 2023, up 11 per cent from 2022. Its revenue jumped 15 per cent to a record $60.5bn, while the number of Amex cardholders grew 12.2m to 140m worldwide.