HPS Options Selection - Some Considerations

[Jane Tordoff]

Comments or questions?

http://www.halcrowpensioners.org.uk/pages/news/newsletters/newsletter-no.-22/ultimatum-options-which-should-members-chose-some-considerations.php

[tonybird1946]

Would only comment that if you took the maximum tax free lump sum from your pension entitlement at retirement  your spouse/partners would only get the survivor's pension based on the pension in payment at the time of death. However in HPS2 as in HPS the survivor's pension is based of the amount that would have been in payment if the lump sum had not been taken.

You need to factor this into your decision if you did take a lump sum on retirement.

[Mort Deas]

To whom should such an Option D rejection letter be sent?

[Jane Tordoff]

Correspondence should be addressed to the UK Pensions Team at BP

[Ken Falls]

The Option B provided on the form is deliberately worded. It is in effect consenting to your rights being transferred to the PPF by the mechanism of closing your pension pot in HPS to a shell company deliberately set up for the purpose. This shell company has no assets and is immediately made insolvent so that PPF take on making reduced contributions in lieu of your pension. Whether this is legal is questionable but you have consented for it to happen.

Not returning your form as per Option C, means that you have not given your consent but the Trustees state that will result in the above. Whether that statement is correct/legal is open to question. After all they also state that they need your consent as per Section 67 of the Pensions Act to implement Option A or Option B.

Option D makes it very clear that you are not giving your consent but you are stating that you wish to remain in HPS. However the Trustees state their intention to close HPS as per Option B and say there is no option to remain in HPS. If they do not have your consent then it would appear to be illegal for them to transfer your pension pot to the shell company effectively abandoning the scheme. Whether the RAA gives them some power to do this is irrelevant as surely the 2015 court decision and Pensions Act trumps that contention.

This is my interpretation but legal advice might differ.
 

[Tim SMITH]

May we please have HPA's lawyers' advice on Ken's interesting and important comments - and indeed the whole question of how to respond to the kind offer?

[Stephen Brichieri-Colombi]

Sorry to keep you all in suspense. After the meeting, we thought we were out of legal options until a rearguard action could be fought,  but a flurry of activity in the last 20 hours looks encouraging. I really cannot say more but hope to add something within a few hours. For the moment, we suggest you keep your powder dry and hold off a reply on options until the situation is clarified.

[michael tordoff]

A point of information if you are waiting for a response from HPS.  I chased up HPS today for a response to my letters and e-mails sent on 29 July, 10 August and 19 August.  I was told that a letter had been sent on 22 August, but it could have been held up in a postal strike.  It still has not arrived!  So I asked Paula to send me an e-copy by e-mail.

You may not be surprised to know that the letter was of no value towards resolving matters.  Instead of answering specific questions and points made, it says, "We have already provided responses ... in my previous letters".  It does not in any way clarify which points have been answered or how.  I have replied saying I am not asking to be told what the position is (as stated by CH2M); instead I am asking for the evidence to make these statements credible.  In particular I am asking that HPS provide evidence requested by HPA to demonstrate:

1.   CH2M have no obligation, legal or moral, to support HPS.
2.   The Offer is the best offer that can reasonably be expected.
3.   There is full and satisfactory legal validity in the RAA procedure as it was implemented by CH2M and in particular the covert and undisclosed records of this procedure.

I have suggested that there should be a further extension of the deadline to allow for this evidence to be presented.  What I did not say (yet) is that I think it is in the interests of the trustees that this is done in order to clear the air and remove doubts.

[Stephen Brichieri-Colombi]

Newsletter No. 23 (Published here as webmaster is overseas)
Members of the Committee met our solicitor and a QC on 23 August, and the primary purpose of this newsletter is to update members on the current legal position, and to explain how that affects the options that Halcrow and the trustees have put forward.
After taking the legal advice we believe that there are some avenues we can explore further. They may or may not lead somewhere, but we cannot offer any guarantees of success. What is clear, however, is that our legal options will not have effect before 31 August.
The trustees and the companies want you to make your decision before then. Our lawyers say that we must be cautious about offering advice as to the way you make your decision. In particular we are not in a position to provide any financial advice and do not purport to do so. However we can offer some views on the legal parameters within which your decision will take effect.
Option A: confirm that you want to transfer to the new pension scheme
The result will be that you become entitled to the benefits that the new scheme provides. The literature that the trustees and the companies have provided says that, in all cases, the new scheme benefits will be better than the benefits that the PPF will provide. If they are not, they say that the new scheme benefits will be improved at least to the PPF level.
We are not inclined to take that on trust, and our lawyers are checking the formal documents that govern the new scheme (the trust deed and rules).What is  clear, however, is that for these purposes the PPF level of benefits is fixed in accordance with the PPF legislation as at the transfer date, so if the PPF level of benefits improves in the future, the improvements will not be passed on to HPS2 members. You will have to take a view as to whether the PPF level will be improved in the future, and even if it is, whether the improvements will outweigh the additional benefits that HPS2 provides and that the PPF currently does not.
The promise of the new scheme's benefits is as secure as the ability of the new scheme to pay them. If it has insufficient money you will be left with a promise to pay which cannot be honoured. We are told by the trustees, however, that the new scheme will itself be eligible for entry into the PPF, so if Halcrow and CH2M failed to provide it with sufficient money (because they were insolvent) then we would all be back at square one and facing PPF entry.
If there is any legal avenue to explore, by definition it can only be directed at improving the position of members who transfer to the new scheme.
Option B: confirm that you do not want to transfer to the new scheme
We have not seen the RAA itself. We have asked for it, but we have not been given a copy. But if it follows the pattern our lawyers anticipate, the only company with an obligation to fund the HPS will be a company that is designed to become insolvent. When it does, the HPS will enter a period of assessment by the PPF to ascertain whether it is capable of recovery (which, of course, it will not). Benefits will be reduced to the PPF level during the assessment period and once the assessment period ends, which will not take long, you will be paid by the PPF instead of the HPS at PPF levels.
Neither the trustees during the assessment period, nor the PPF after transfer to the PPF, have any option but to pay benefits at the level set under the Pensions Act 2004. To improve benefits would require a change to the law.
Option C: do nothing
This has the same effect as Option B. The trustees cannot transfer your entitlements to the new scheme without your consent. That follows from the High Court judgment handed down by Asplin J.
It follows that if you do nothing your entitlements will be reduced to the PPF level as soon as the straw-man sponsor of the HPS becomes insolvent and the HPS enters a PPF assessment period. They will only be improved if the Pensions Act 2004 or the secondary legislation applicable to the PPF are amended.
Option D: send a rejection letter
The trustees (and their supporting Pensions Team) have made it plain that a decision not to make a decision will be regarded as a decision not to transfer. In other words, it will be treated as if you had accepted Option B, and all that follows from that.
Our advice, however, is that it if you wish to transfer you should give a positive indication to do so in a covering letter. We would suggest the following wording: "Although I am concerned and disappointed that: (a) I have not been allowed to see the RAA in this case and have not received any detail as to how it came to be negotiated; and (b) members of the Scheme were not separately represented during this process, I consider that the options provided present me with no alternative but to transfer".
Conclusion
It remains our firm view that our rights to a fair hearing have been traduced. We have a legal right to express our point of view before our entitlement to benefits under the HPS is denied by the operation of the RAA mechanism that we are now being presented with. Sadly, given the time pressure, we must all make a decision before 31 August and there is no legal avenue available to us that provides a realistic prospect of delaying this date further.
We remain committed to pursuing any legal (or other) means open to us to address the justice of our case, and we will keep you informed as to our progress. Meanwhile, our solicitor has written to Sackers and to tPR and we await a response to both letters

[mikedyer]

Stephen and Members of the Committee.

Many thanks for all your efforts it has been much appreciated.


Mike Dyer

[Tim SMITH]

I second what Mike has said. Thank you!

[John Drake]

Steve, thanks to you and the others for your tremendous efforts on this.

I have a query on the last comment under Option A in newsletter 23. You say  "If there is any legal avenue to explore, by definition it can only be directed at improving the position of members who transfer to the new scheme."

Is this in effect saying that to have any chance of subsequently negotiating a better deal, we have to accept Option A because otherwise we end up in the PPF where by law we just have to take the standard compensation?

Another query (which I know has been raised before but not sure it has been answered definitively by the Trustees or anyone else), does acceptance of Option A mean that we voluntarily give up our rights under HPS?

If the answer to both questions is Yes, then we truly are over a barrel. Short of some part of the arrangement being declared illegal it's difficult to see a better outcome.

[finneyb]

' Meanwhile, our solicitor has written to Sackers and to tPR and we await a response to both letters'   ref Newsletter 23

Which surely warrants an extension of time, if a reply has not been received from both and we also need due to time to consider the replies.

The Trustee is being unreasonably and unnecessarily hasty to the disadvantage of scheme members.
There is no financial advantage to the scheme in sticking to 31 August deadline, the next inflation rise is in 2017.


Copied to Halcrow Pension Team for their action.

[Tim SMITH]

Brian, I think that, if there were to be any change to the offer, CHalcrow would have to give members an opportunity to change their decisions. Dating the Options Form is therefore important. I understand that some members have already been able to cancel submitted forms by e-mail, on the basis that a subsequently submitted form will be accepted.

But what chance an extension of time or a changed offer? Are these things realistic possibilities?

[finneyb]

But what chance an extension of time or a changed offer? Are these things realistic possibilities?

Tim

An extension should be realistic, as the newsletter states HPA legal advisor has letters into Sackers (Trustee's legal) and TPR. Given they are from HPA's legal they should not be treated as trivial and therefore a reply from both is vitally important to the continuing process. While Sacker may produce a response  by the deadline the likelihood of TPR getting their act together before 31st is just not credible.

It all depends upon the Trustee being reasonable - the Trustee will be under no illusion that if it isn't reasonable HPA will capitalise upon it. This is simply not going to end once we sign the option forms. To think that would be naïve.

Brian