Halcrow Pensioners Forum
News => News => Topic started by: John Ratsey on June 04, 2016, 01:50:21 PM
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The HPA committee will welcome your feedback on how it is trying to handle the current situation with HPS and would also appreciate suggestions for where we can do better.
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Greetings to all former colleagues. The vast majority of my pensionable contributions were pre 1997, so as far as I am concerned there is to all intents and purposes no difference between the two options on offer. When I joined Halcrow in 1988, I transferred in my Thames Water local government superannuation pension pot, in the belief that the benefits offered by Halcrow were so much better. I am beginning to wish that I had not done so. I am enough of a realist to recognise that former employees come a fairly long way down present shareholders' lists of priorities. Nevertheless, if CH2M wishes to be known as a ethical employer (and I am presently ethics director for a small charity), I suggest they consider matching the conditions that we formerly expected. If I have to, I will opt for the CH2M proposal as it stands, but I regard that as an unethical choice being forced upon us.
Kind regards,
Stuart Brown
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Dear all, firstly many thanks to John and all HPA for doggedly pursuing our cause. The letter to Sam Hannis is excellent and raises pertinent questions many I would not have thought of.
I am taking my benefits, and all my benefits were earned pre 1997 so I am very annoyed at the loss of annual increase, and would like this to be re-negotiated.
I am curious as to why there is such a push for us to join the new scheme and would like to know what vested interests this hides.
All best wishes
Simon Allen
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Stuart
I strongly suggest you - and everyone else - hold off on a reply until our legal challenge has been launched.
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You ask for feedback, so here is mine! I was disappointed by the aggressive and antagonistic tone of the HPA letter. Although there are no doubt legitimate questions to be asked and clarifications sort, in my view there is nothing to be gained by demonising CH2M. The situation that HPS finds itself in is far from unique. Final salary schemes in general are facing a situation that is becoming increasingly unrealistic and untenable. The 'solution' of trimming long term percentage increases seems to have a significant impact on current funding requirements (a la the current TATA proposal) and seems to bring schemes back into the realms of sustainability. We have to be realistic and ultimately there will, I believe, have to be compromise if we are to retain an acceptable level of pension and CH2M is to remain a viable employer. I look forward to seeing the response to the letter, but my feedback is please let's keep it professional and objective.
Nick Swannell
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Nick
1 Your contract was with Halcrow, not HPS.
2 You are entitled to pension payments just as much as you were entitled to salary, because pensions were a clearly defined benefit of your conditions of employment.
3 You paid for your pension; indeed you paid a lot of money for your pension. The amount you paid was not evident, but the difference between Halcrow salaries and what you could have earned elsewhere that did not offer such a generous pension arrangement was large.
4 Yes final salary schemes are facing difficulties, but you can be sure that they would not have paid a bonus to you if the accounts had worked the other way where the schemes ended grossly in surplus.
5 Perhaps the most important point. CH2M are not offering any form of inflation increase for the majority of pension money owed to those of our vintage (i.e. the portion earned before 1997). This alone leaves CH2M open to demonisation.
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I drafted this yesterday but delayed posting, giving time for consideration. I am pleased to see Nick Swannell’s comments which I support.
Following the issue of the recent correspondence (29th April 2016 and 31st May 2016) and HPA Newsletters 17 and 18, I feel that I must express my concerns that some of the proposed actions by HPA could in the end be counter-productive.
HPA exists, rightly, to protect the interests of members of the Halcrow Pension Scheme. Amongst the benefits that HPS provides is the 5% per annum increase in pensions. It seems to me that this particular benefit is the one that HPA are fighting hardest to retain, since other benefits, such as spouse’s pensions, do not seem to be threatened.
The 5% increase is by today’s standards (provided inflation continues to remain low) generous and it is probably unrealistic to think that this can be maintained indefinitely in the future.
It is apparent that whatever agreements CH2M made when they purchased Halcrow, they are either unable or unwilling or both to maintain this commitment and appear to be seeking every opportunity to release themselves from their obligations. They are possibly still smarting from finding after purchase that Halcrow was in a more precarious position than they at first thought. In my view they appear to have no regards for Halcrow, our achievements or the pensioners. There is no mention of Halcrow on their website and at one time they claimed to have been involved in the Victoria Line!
Whilst it is right that every effort is made to ensure that our benefits are maintained, my concern, given CH2M’s approach, is that they may decide to cut their losses and completely abandon any commitment to HPS and thus force us down the PPF route. The HPS2 offered in the letter of 31st May, whilst being less generous than HPS is better than PPF, and appears to be the only offer on the table.
I agree that there are still some questions to be answered but urge some caution in the actions taken as they may not yield the intended results.
I am also concerned about some of the apparent criticism of the HPS Trustees. The ones I know (I worked closely with one of the Trustees in the late 1970s and early 1980s) are men of integrity who I believe will do the best available for HPS members. I suspect that they are not able for legal reasons to openly declare all of the discussions that have been held and further, given the above, it is likely that their hands have been somewhat tied.
In conclusion, I urge caution in any proposed future HPA actions, lest CH2M decide to pull the plug and abandon us completely. HPS2 seems to me to be the best available option. Don’t risk killing the goose that laid, in this case, the papier-maché egg!
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I have been following the discussion here with interest and note the variety of opinion being expressed. I am sure there are many things happening behind the scenes that are not being communicated to us and it is precisely because of this that so many of us are having difficulties accepting the scenarios being presented as being the only scenarios possible. No one likes to make an ill informed choice or being presented with a fait acompli situation.
I support the HPA position to probe and question the choices being presented as being the best choices, how solid are the CH2M guarantees for future funding given their track record and whether the advice being given to the trustees (I am sure they are all men and women of integrity) is sound. As members of the HPS, we all have a stake in this and I don't believe that any situation which smacks of 'thou shall or else' will ever go down well. Let us get some answers and then make choices instead of trying to make sense in a vacuum.
I have worked with many on the HPA committee and have admired their depth of knowledge, perception and abilities for rational and logical thinking. Equally, their ability to recognise their limitations and know when to seek expert help is admirable. I look forward to hearing what the legal arguments and responses to the questions being asked are.
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Stuart
I strongly suggest you - and everyone else - hold off on a reply until our legal challenge has been launched.
There is plenty of time yet so no need to reply. The issue that irks me the most is the failure to publish the triennial reviews for 2011 and 2014 which are I understand unable to be finalised because the Trustees cannot agree with CH2M over some matters of accounts.
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It is apparent that whatever agreements CH2M made when they purchased Halcrow, they are either unable or unwilling or both to maintain this commitment and appear to be seeking every opportunity to release themselves from their obligations. They are possibly still smarting from finding after purchase that Halcrow was in a more precarious position than they at first thought. In my view they appear to have no regards for Halcrow, our achievements or the pensioners. There is no mention of Halcrow on their website and at one time they claimed to have been involved in the Victoria Line!
Whilst it is right that every effort is made to ensure that our benefits are maintained, my concern, given CH2M’s approach, is that they may decide to cut their losses and completely abandon any commitment to HPS and thus force us down the PPF route. The HPS2 offered in the letter of 31st May, whilst being less generous than HPS is better than PPF, and appears to be the only offer on the table.
I agree that there are still some questions to be answered but urge some caution in the actions taken as they may not yield the intended results.
I am also concerned about some of the apparent criticism of the HPS Trustees. The ones I know (I worked closely with one of the Trustees in the late 1970s and early 1980s) are men of integrity who I believe will do the best available for HPS members. I suspect that they are not able for legal reasons to openly declare all of the discussions that have been held and further, given the above, it is likely that their hands have been somewhat tied.
In conclusion, I urge caution in any proposed future HPA actions, lest CH2M decide to pull the plug and abandon us completely. HPS2 seems to me to be the best available option. Don’t risk killing the goose that laid, in this case, the papier-maché egg!
Whoever did the due diligence must have had a hard time in front of the board.
CH2M, as any US company, does not care about the overseas company they have bought. They get tax breaks in the US for buying out overseas firms and in most cases those overseas firms cease to exist shortly afterwards.
The invisible elephant in the room are the triennial valuations that haven't been published, contrary to the pensions regulations and the lack of any desire by the pension regulator to force their publication. Asking us to make decisions on our pensions without basic information like this is poor.
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It would also help to understand the choices available to CH2M and their reasons for settling on the two choices being offered to us. From my perspective, the choices are
1. Continue honouring their covenant to fund HPS as "agreed" at the time of purchase (lose/win - CH2M/HPS)
2. Wind up HPS and send to PPF (win/lose)
3. Agree on an alternative funding arrangement and reduced incremental rates - HPS2, HPS3 ? (present as win/win but more likely to be perceived as win/lose)
The third choice falls in a very rubbery grey area and I believe there may be room for improvement to make it more likely to be acceptable as a win/win. Ofcourse, one should be wary of the current offer being used as a negotiating ploy so that any improvement on it is gratefully accepted. The age old trick of offering something really bad so that a half baked offer seems like a great improvement and takes the focus away from dealing with the core issues.
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Stephen Martin says, “ HPS2 offered in the letter of 31st May, whilst being less generous than HPS is better than PPF”. The word “generous” appears to be incongruous as related to HPS2. The one off increase of 2.5% is only half what will be due anyway if the matter is not resolved before the end of 2016. As we will be over halfway through the year by the time any new arrangement came into effect (sometime after 5/8/16), it could be argued that this increase will be due anyway.
By comparison Meelit says, “one should be wary of the current offer being used as a negotiating ploy”. I suggest that is a more rational approach. I am sure CH2M will be over the moon if they can get away with HPS2. Indeed, I am sure they would be pretty happy to get away with reducing the 5% contractual commitment (that they signed up to in the covenant) to CPI rate of inflation.
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It would also help to understand the choices available to CH2M and their reasons for settling on the two choices being offered to us. From my perspective, the choices are
1. Continue honouring their covenant to fund HPS as "agreed" at the time of purchase (lose/win - CH2M/HPS)
2. Wind up HPS and send to PPF (win/lose)
3. Agree on an alternative funding arrangement and reduced incremental rates - HPS2, HPS3 ? (present as win/win but more likely to be perceived as win/lose)
The third choice falls in a very rubbery grey area and I believe there may be room for improvement to make it more likely to be acceptable as a win/win. Ofcourse, one should be wary of the current offer being used as a negotiating ploy so that any improvement on it is gratefully accepted. The age old trick of offering something really bad so that a half baked offer seems like a great improvement and takes the focus away from dealing with the core issues.
I don't think this a negotiating ploy - CH2 have from 2011 been looking in this direction for the following reasons:
1. CH2 informed of deficit prior to sale ie purchased in full knowledge
2. 2011 triennial report still not agreed - if it had have been agreed with an increased deficit, which is likely, there would have been pressure for a revised recovery plan with increased payments.
3. Chris Martin of Independent Trustees Ltd appointed as an Employer side Pension Scheme Trustee - ref John Ratsey's comment elsewhere Martin's company received £250,000 in fees from the BHS Pensions Scheme - Martin was Chair of BHS Pension - which has gone to PPF - in my opinion to get fees of £250,000 indicates it likely that Martin's company was doing more than just Chairing BHS Pension scheme eg advising the Employer on the possibilities with the Pension Scheme.
4. We then have a secret Court hearing of 2015 in an attempt to transfer members wholesale across to a new scheme. Why the secrecy for a company that claims to have ethics?
5. We have been offered a package that is so close to PPF to make almost no difference - why? I suggest that CH2 don't want to go to PPF because the existing staff will suffer a 10% cut in pension immediately if HPS goes to PPF - but by keeping it very close to PPF reduces the deficit to as low as possible. Existing staff matter, they earn fees - pensioners obviously don't.
6. The HPS Trustees have repeatedly been asked to inform HPS members of HPA's existence - they have no problem advising of re-unions or golf competitions but advising members of HPA existence has proved a step too far, why? NB The Trustees include 50% employer representatives - have they been withholding their agreement as a part of the plan to keep member adverse reaction to the absolute minimum.
IMO this has been planned from pre-2011, it is not a negotiating ploy - it is the main attack.
Brian
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I am curious to know whether HPS can be split, as is being suggested by the "choices" being given to us ie into HPS2/HPS3 (?) and PPF ? What are the legalities? I would have thought (and quite possibly am wrong) the HPS scheme needs to have the consent of all, or is it a simple majority, to have any changes imposed on it and if that is not possible and can't be sustained, HGL has to go to the wall and HPS transferred to PPF lock, stock and barrel.
Transferring to HPS2/HPS3 (?) would be akin to transferring out of HPS to an alternative pension scheme. A recent transfer out statement I received from HPS showed that the Cash Equivalent Transfer Value due to the funding deficit was about 58% compared to a fully funded scheme. I am not sure whether this includes a safety margin to protect the rights of all the other members. I therefore suggest that if splitting HPS is not possible legally and consent by all members is not provided, anyone wishing to transfer out of HPS might be subject to this reduction (including a safety margin). This would then put the onus on HPS2/HPS3 (?) to fund the deficit (including any safety margins applied at point of transfer from HPS) for any uplift and alternative incremental terms that may be offered. Would this scenario then be as attractive to CH2M?
I suspect a lot may hinge on the relative numbers opting for HPS2/HPS3 or PPF. Ofcourse, the safety margin element in the transfer out would not be an issue if everyone opted for HPS2/HPS3. On the other hand, what if a small number of people retained their trust in HPS and it did end up going to PPF, their transfer pot may have benefitted by the safety margin element deducted from all other members who opted to transfer to HPS2/HPS3. Perhaps then, there might not be a reason to wind up the remaining HPS scheme (yet another scenario in the mix).
I agree, a lot of this is conjecture as I do not know what the legalities are and I am not sure what the level of safety margin in transfer out cash equivalent value is. I am hoping our legal minds may be able to shed some light on this. I am quite happy to be the last man standing in HPS if I can benefit from the "windfall" of cumulative safety margins for my pension pot!
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I left CH2M in 2013. As a deferred member I would like to echo the caution suggested by Nick Swannell and Meelit. The main thrust of the discussion to date appears to be on how we might get this situation reversed. Realistically I am not hopeful that that will happen. We should not forget that we would probably have all been destined to or in the PPF had CH2M not acquired the company. The information received in part indicates that HPS3 has the safety net of the PPF, in other parts it states "we believe that...". This is a clearly very important matter to nail down.
The HPS3 offer is clearly little better than the PPF and a lot worse than what CH2M signed up to so my question is how much is the HPS3 scheme going to financially hurt CH2M? Was this a consideration in agreements made with the regulator? If the reason that this deal is deemed acceptable is that meeting the deficit would now bring the company to its knees then I would have expected to have been offered a slightly worse deal, not a significantly worse deal. If the position has been that untenable for years then why has the company/Trustees waited this long to make their offer? Surely we are entitled to be sure that this is the very best deal that CH2M can offer without compromising its own viability. Anything less I would consider as theft.
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This thread is titled Feedback and Suggestions, so I shall limit comment to such, and post another comment on the other live thread about other wider issues.
I strongly support the work that HPA have undertaken to date, and its good to know I am not the only one struggling to know how to react to the saga. I have read and re-read the HPA letter to Halcrow, and for the life of me cannot see any aggressive or antagonistic tone whatsoever. Perhaps a hint of frustration, but given its in response to the threat-style choice that Halcrow have given us with so little information on the justification, that’s hardly surprising. I say this as someone quite content to give up the blatantly unsustainable 5% indexation, but would like to be treated as if I were an adult in being provided the necessary information, and to have an informed understanding of the risks.
However, couple of observations. Can I note that with summer holidays coming, we will need to be given a steer say 2 weeks before the 5th August? Leaving it to the last minute will be too late for me. Also, thoughts/comment on attendance of the scheduled meetings could be useful. Perhaps meeting afterwards at a local establishment?
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HPA has just been informed that the legal route being followed is through something called the Regulated Apportionments Arrangements, details of which are available at
http://www.thepensionsregulator.gov.uk/docs/regulated-apportionment-arrangements-statement-august-2010.pdf
This is a rarely-used arrangement (which might soon become very popular with unscrupulous employers) which involves an independent Determination Panel whose decisions can be reviewed by the Pension Regulator Tribunal. Interested parties can give evidence.
More to follow ...
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I will be attending the 18.00 roadshow on 28 June in Swindon, I know of three other HPA members who are also going to this one so meeting afterwards for a drink is a good idea. The HPA Committee plan to draw up a list of questions to put to the roadshow presenters.
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All US companies that buy in the UK behave the same way. Have we all forgotten the promises made to the Government by the US Company that bought out Cadbury's? They promised not to shut the Keynsham factory and make staff redundant, within 2 years they had done the exact opposite.
CH2M are required by law to publish "triennial valuations". Why has The Pension Regulator not forced them to do so?
Ethics – done once a year so the shareholders and the stock market are happy, which enables the hierarchy can get their bonus. If they were an “Ethical” company they would adhere to the covenant.
The HPA Committee are working hard to try and obtain the best deal for all pensioners.
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I left CH2M in 2013. As a deferred member I would like to echo the caution suggested by Nick Swannell and Meelit. The main thrust of the discussion to date appears to be on how we might get this situation reversed. Realistically I am not hopeful that that will happen. We should not forget that we would probably have all been destined to or in the PPF had CH2M not acquired the company.
If the position has been that untenable for years then why has the company/Trustees waited this long to make their offer? Surely we are entitled to be sure that this is the very best deal that CH2M can offer without compromising its own viability. Anything less I would consider as theft.
You have raised some pertinent points on which I would comment:
1. While some may still hope, based on treating their pension as honouring a contract, for their 5% increases for pre-March '99 accruals to continue, many appreciate that 5% is over-generous consiering the current low inflation and invest terms. However, 0% is not a reasonable offer for those who expect, based on typical life expectancy, to be drawing their pension for many years.
2. If some/all the money paid by CH2M had gone into HPS, as the judge in 2011 might have ordered if he had received some input from either the HPS trustees or the Pensions Regulator, then the hole in HPS would now be somewhat less and combined with what CH2M has offered would give a more reasonable compromise.
3. HPS first moved into deficit in the '90s as a result of poor investment performance. See the scheme reports to members (http://www.halcrowpensioners.org.uk/pages/the-scheme/background-information.php). However, the trustees have been advised by an actuary who, as indicated in this report (http://www.bbc.com/news/business-36246713) takes a long term view which, presumably, anticipaed the return of rampant inflation to swell the assets and shrink the liabilities.
4. You are correct to emphasise the question of what CH2M can reasonably afford. ie not what CH2M's version of the Halcrow accounts indicates what Halcrow can afford. We know that US companies have specialists in how to move profits around to minimise their tax bills and, in this context, pension scheme contributions can be considered to be a tax.
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I would recommend that everyone writes to their MP [http://www.parliament.uk/mps-lords-and-offices/mps/] and also the Pensions Advisory Service [http://www.pensionsadvisoryservice.org.uk/] and ask the Pensions Regulator [http://www.thepensionsregulator.gov.uk/] a direct question as to why they haven't enforced the publication of the valuations.
Make a fuss, the bigger the fuss the more chance it will annoy someone into doing something
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Clive
We used the approach of writing to tPR in 2011. Over 50 pensioners wrote to tPR to express their concerns over the failure of the scheme of arrangement to protect the HPS. The good news is that, as a result of this tPR wrote to Halcrow a few days before the hearing in the High Court to say they shared these concerns (they had ignored an earlier letter from the Trustees on the same subject). The bad news is that Halcrow ignored the letter and tPR, as usual, failed to act on the shared concerns.
tPR have promised to respond to our letter detailing their failings, but have not yet done so. Further letters from pensioners could only help. Better still, contact your MP or attend a Road Show. We can provide support for both actions.