Through our solicitor, Martin Jenkins, we have been told by the Pensions Regulator in a letter dated 18th May 2016 that HPS will be writing to each member to advise that an agreement has been reached which is acceptable to HPS, tPR and PPF. (see attachment)
Although we have not yet seen the agreement, we believe from the wording of the tPR letter that this agreement fails to take into account that the covenant review prepared by Ernst & Young at the time of takeover stated that "CH2M Hill has stated that they will honour payments under the existing agreed recovery plan."
- The covenant review was approved by the Directors of CH2M, and stresses the financial strength of Ch2M. It was a key element in the justification for HPS and tPR not to contest the scheme of arrangement and insist that part or all of the price paid for Halcrow of £M123 be used to reduce the deficit from £M149 to as little as £M26.
- The commitment to honour the recovery plan does not depend in any way on Halcrow's performance.
- The 2008 recovery plan was the one then in operation, and it still is. It provides for the payment of over £M204 from now until end-2026. If these payments were made as scheduled, there is every reason to believe that the scheme would be in good shape, with only minimal on-going payments required from then on.
- We strongly urge members of the HPS to watch this site before making any decision with regard to the contents of the expected letter from HPS.
- Meanwhile, we are asking HPS to send the letter to each member by the fastest possible means rather than second class post as they did with the circular about the court hearing.
Nick if you know of any Halcrow pensioners who do not know about the HPA please tell them about us. Present members are the only way we can spread the word of what could happen.
Nick – the court case indicates that the Trustees cannot enforce a change on our retrospectively earned defined benefits. At least, I am 99% sure. If not, all companies with similar scheme deficits would be doing the same.
The extract from the tPR letter states that there will be information to enable members to make decisions. As per previous post, I think the liability management scheme will have determined the £numbers in order to propose these sorts of options to us:
• A one off increase in lieu of no further indexation. Note that many people buy their annuities in this way these days.
• A reduced level of indexation (probably CPI instead of 5%)
• Enhanced transfer value to take cash now out of HPS and into your own defined contribution savings pot (for those not yet retired)
• No change – because by definition we have to give our consent to change. I have no idea what threshold will be required to make the overall liability management proposal work.
Note that CH2M/HPS will have to provide some form of independent financial advice for us to be able to make these decisions.
The HPA newsletter notes that the 2011 and 2014 valuations are still 'missing'. This is a really good point – how can we make decisions when this information has been withheld? For all we know, the scheme might actually be in massive surplus.... (just kidding)
I think a key question needs to be answered before any member of HPS deferred or otherwise, can make an informed decision on whether or not to support HPS2.
So, if the members did agree that HPS becomes HPS2 (hopefully not such a white elephant as HS2 will be) and then subsequently HGL or CH2M decide that they cannot or will not support the scheme any longer and it effectively is insolvent, can the new pension scheme HPS2 go into the PPF? If not, then I would change my initial views supporting HPS2 and go for the PPF option now on the basis that a bird in the hand etc.
If, because of legalities over timing of the creation of HPS2, and the fact that it's HPS/Halcrow/CH2M (I wish someone would draw me a picture of who's responsible for this mess, I'm getting old) who have presumably been paying into the PPF insurance pot in order for HPS to be eligible for protection, then HPS2 may not have the legal basis for subsequently being bailed out by PPF. This really does have to be resolved clearly before we are asked to 'vote' on any proposed solution. Can I therefore ask the HPA to get their legal advisor to clarify this aspect. If it's still murky, then I'll go for PPF thank you.
And my point about whether it's HGL, some other Halcrow entity or CH2M which is responsible for keeping HPS alive is not quite as light hearted as it appears. Is it right that the supporting company has to go bust in order that HPS can be taken over by PPF? In which case it's highly unlikely that CH2M would go down that route. But if HGL is still there as the sacrificial lamb then it's much more likely that CH2M will cast us adrift.
You are absolutely right in saying we need information to make informed decisions, and that the Trustees are not supplying it.
HPS2 is dead, but it is likely that any new proposal will ask us to make a Hobson's Choice between a new scheme (HPS3?) and PPF, neither of which is attractive. I am not satisfied that we have been given enough information to assess whether there is a third choice, made possible if tPR insists that CH2M honour its commitment to paying £204 into HPS over the next 11 years under the 2008 recovery plan. By then the scheme should be in such good shape that it can keep going.
We may have to lobby our MPs to insist the tPR use its statutory powers. If the time comes, I hope you feel you are up to that, however old you feel! CH2M are paving the way for a thriving new business, buying up companies with pension deficits while stating they will pay the liabilities, then reneging after a few years and forcing the same Hobson's Choice on the pensioners It makes a laughing stock of our regulatory system, designed to protect the 11m other DB pensioners in the same boat as us.
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