Halcrow Pensioners Association

HPA Questions on Section 89 Report

HPA's Questions on Section 89 Report Issued by the Pensions Regulator

The questions sent to the Pensions Regulator by HPA's solicitor (quoted text is in a different font):

1.     (p1) Buy-out deficit of £633M on 19 Feb 16 and the PPF deficit £222M on 31 Dec 16. These figures are not meaningful in isolation. What were values of the Technical Provisions, s179 liabilities and Scheme Assets on these dates?

2.     (p3) Between August and October 2014, CH2M and HGL considered changing the benefits that the scheme was set up to pay. On p8 you say that in August 2013 you were informed that the trustees are considering reducing members pensions rights. Which of these statements is correct?

3.     (p4) The trustees also asked a scheme member to act as a ‘representative beneficiary’ – someone who is appointed when it is not practical for all beneficiaries who might be affected by the issues to participate in the proceedings. Were you aware at the time of the existence of the HPA, an organization of a large number of pensioners who were so affected, and which was practical and easy to contact? If so, why did you not ask the Trustees for it to be involved?

4.     (p4) In this case, the representative beneficiary was given the role of putting forward arguments in opposition to the benefit redesign. Did you ascertain whether the beneficiary had the capacity and resources to independently research and develop these arguments?

5.     (p4) The judge ruled in our favour, so the benefit redesign could not go ahead without member consent. However, as you note elsewhere, the benefit redesign did go ahead without member consent, and the members were only informed of the result of the redesign when they were given a choice of whether or not to accept it. Why did you accept a process that was precisely what you state the judge did not accept?

6.     (p4) At the request of HGL, the proceedings and the judgment were subject to a court confidentiality order until 29 April 2016.The grounds given were the serious implications for HGL if its financial strength were known. The financial strength was made public on 13 Jan 2016 with the publication of the Company Accounts for 2014, but the proceedings were kept confidential until 29 Apr 2016. Why did tPR not object to this continued secrecy?

7.     (p5)  The alternative was for CH2M to withdraw support from HGL which would have led to an insolvency event, loss of jobs and the scheme entering the PPF in late 2015. Who supplied the evidence to these three “facts” and what was it?

8.     (p5) RAAs are extremely uncommon and the continuation of a scheme following the conclusion of an RAA is even rarer. Please advise how many times RAAs have been used in each of these two cases since RAA’s were introduced

9.     (p6) The trustees sought independent financial advice which confirmed that insolvency was inevitable. Who supplied independent financial advice?

10.    (p6) This confirmed that the £80 million negotiated was more than the scheme would have received in an insolvency of HGL. How much would the scheme have received in the event of an insolvency?

11.    (p6) The trustees sought independent advice as to the circumstances of the purchase of HGL by CH2M and we have seen a copy of this advice. Who provided this advice, and did it take into account the ongoing goodwill attributable to Halcrow as shown in SEC filings?

12.    (p7) At the time of the takeover in 2011, we explored whether it would be reasonable to use our powers and concluded that it would not. Can we see the review that was undertaken by tPR?

13.    (p8) When exactly in October 2011 did tPR open the case? Did tPR consider using its powers to ensure some of the sale price was used to reduce the HPS deficit? Why did tPR state it shared the concerns of the pensioners on the future funding, yet take no action when their concerns were ignored by CH2M/Halcrow?

14.    (p8) Why in August 2013 did the tPR not instruct the Trustees to advise members that they were considering reducing members’ benefits, since tPR was well aware the members were not being given information by the Trustees?

15.    (p8) After January 2014, did tPR at any stage verify whether or not CH2M had in fact actually engaged a licensed insolvency practitioner and commissioned a Statement of Affairs at any time in the following 12 months?

16.    (p9) In the timeline, why is no mention made of the letter to tPR from HPA’s solicitor dated 13th May 2016 and their reply dated 18th May 2016, which omitted to mention that the period of consultation on the RAA would expire on 28th May 2016.

17.    (p12) Where an employer is at serious risk of insolvency it is important for employers, trustees and their advisers to explore the available options for the pension scheme. Why are members excluded from this list?

18.    (p12) The trustees of pension schemes have a representative role for all their respective scheme members. They are, therefore, a DAP for these purposes and in this case, the trustees of the scheme were kept fully informed throughout the process. The fact that trustees are a DAP does not mean that members are not DAPs. tPR has a duty to contact DAPs, not just selected DAPs. Why were the Trustees the only DAP contacted?

19.    (p12) It is also important that members are involved, are given a choice, and are not transferred without their consent. We note you distinguish between the three actions of being involved, being given a choice, and being transferred. Why in the case of Halcrow did tPR not insist on the first action?

20.    (p13) We would expect members and the PPF to be treated equitably with all other creditors and shareholders, which may include them compromising some or all of their rights. The law is quite explicit that members retain their acquired rights to a pension even if it is not paid. Why does tPR believe that members should compromise them? Which rights have other creditors and shareholders had compromised under the RAA?