Newsletter No. 21
HALCROW PENSIONERS ASSOCIATION
Newsletter No 21 : August 2016
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*** Stop Press *** HPS Option Selection Deadline Extended to 31st August
The HPS Trustee has sent out a letter dated 29th July announcing that the deadline for submission of the option selection has been postponed to 31st August. You can read a scanned copy of the letter here. The letter also makes disparaging remarks about discussion in forums and the information disseminated, although the HPA has been careful to get legal advice when making suggestions.
One reason for the discussion is the secrecy surrounding a deal which affects future incomes. People have a justifiable right to be wary of deals developed in secret without full disclosure of the underlying facts. For example, the Trustee could have published the incomplete 2011 and 2014 valuation reports which would have provided a more comprehensive description of scheme assets and liabilities than those presented in the company annual reports and which showed an abnormal increase in the pension scheme liabilities.
HPA's Appeal Against the Regulated Apportionment Arrangement (RAA)
On 7th July, Edward Evans, co-chair of the HPA, submitted an application to the Upper Tribunal (UT) on behalf of the HPA to appeal the decision by tPR to issue a Regulated Apportionment Arrangement (RAA) in respect of the HPS. The appeal was submitted and registered with the Upper Tribunal by Martin Jenkins, a solicitor from Irwin Mitchell LLP. The Pensions Regulator requested that the UT refuse to register the appeal on the grounds that only Directed Affected Parties are entitled to lodge appeals and neither Mr Evans nor HPA were directly affected parties. The judge refused, but allowed tPR to apply for a strikeout on the grounds that the UT had no jurisdiction in the matter.
At the same time, as Edward Evans would not have qualified for legal aid, we applied for an order that costs be paid by HGL (as was done with Colin Reed). However, HPA's solicitor was advised that Lovells (acting for HPS) vigorously opposed the application. At this point we had three legal cases to win: (1) to oppose the strikeout requested by tPR (2) to request legal costs and (3) to appeal against the tPR decision based on our 4-point paper. It was also clear that both they and Sackers (acting for the Trustee) intended to join with tPR to vigorously oppose our appeal if it got to Court. We were advised that we had around a 50:50 chance of winning in each of the first two cases and a small but real risk of costs against in each (i.e. having to pay the legal costs of the other side). For the third case the chances were not estimated, but we were advised that cost would go with judgement (lose, and you pay the other side’s costs).The potential cost (estimated at over one million pounds) of fighting up to three legal teams representing organisations entrusted to protect the interests of HPS members is substantial and unfortunately HPA felt it could not afford to bear the risk of this cost in the event, however remote, of the case being unsuccessful.
We therefore instructed Martin Jenkins to inform the UT that we wished to withdraw our appeal, and the judge order it to be vacated. It is difficult to understand why the Trustees and tPR would oppose efforts to establish that the process they were using had the blessing of a court (the scheme now being put forward is not identical to the one put before Justice Asplin); or why the Trustees would oppose efforts to get a better deal which took inflation into account. This brings into question the independence of the Trustees, who are selected by the company and/or by existing trustees rather than elected by members. The position of CH2M is much easier to understand. Given the very questionable premise that HGL would be made insolvent, and the highly dubious nature of the arrangement to transfer the liabilities associated with the HPS to an independent sacrificial company, known as Project Magnolia Ltd, it is worthwhile for them to budget for all legal costs needed to avoid a thorough and objective examination of the facts underpinning the granting of the RAA.
Update from Malcolm Fletcher
Those who attended the first Swindon roadshow will recall that Malcolm Fletcher, a former Halcrow chairman, strongly criticised the HPS trustees for agreeing a proposal without price escalation provision in respect of the pre-April 1997 pension accruals. Malcolm has reported:
"I have submitted an application to the Pensions Ombudsman in which I ask for a review of the impartiality of the Trustees in respect of the frozen pensions earned prior to 1997. I have e-mailed the pensions team to inform them of this and to ask them to confirm that they will not transfer me to the PPF until the Ombudsman has concluded. I have previously submitted an application under the internal dispute resolution procedure on the same topic but felt that I should also concurrently apply to the Ombudsman well before the 5/8/16 date. Both applications are in my name alone as that seems to be what the Ombudsman likes, rather than a class action. Of course if I manage to get the pre 1997 pensions unfrozen the trustees will have to give the same benefit to everyone."
HPS members also have the right to open their own dispute with the HPS trustee. The dispute resolution procedure is available from the pensions team. As noted above, the deadline date has been deferred.
What should HPS Members Do?
It was suggested in Newsletter No. 20 that members may wish to qualify their signature with the words ‘without prejudice to the result of any future legal action'. HPA was subsequently informed by some members that they had been notified by the Pensions Administration advising that qualified acceptance of Option A (HPS2) would result in members being transferred to the PPF. If you do not want to accept Option A, stay in HPS so you can benefit from any settlement associated with the possibly fraudulent transfer of HPS to Project Magnolia Ltd. You may end up in the PPF anyway, but it should not be because you have asked to end up there. We are currently investigating the legality of this route and will report on it as soon as possible. Scheme members are allowed to withdraw an already-submitted option form and submit a new one (which can be downloaded from the HPS website).
One question which needs to be answered explicitly by the HPS Trustee is whether unconditional acceptance of Option A represents surrendering the legal right to a better pension should a future opportunity for redress appear such as arising from a decision by the Pensions Ombudsman or through a class action lawsuit. This aspect has not been made clear in any of the documents released during the past few months but may be a consideration when deciding which, if any, option to select. We are writing to the Trustee to ask what form of words members should use to protect their interests, since to date they have rejected any of our own suggestions. Since the job of the Trustee is to protect members’ interests, we hope they will co-operate in this effort.
The Pensions Regulator's Section 89 Report
The report under Section 89 which was mentioned at the meeting on 20th June has now been released by the Pensions Regulator and is available here. It is evident that considerable effort has been expended on drafting this report as it is more than twice as long as any previous Section 89 reports. The HPA committee read the report with considerable interest and prepared a list of 20 questions (see here) which has been sent by HPA's solicitor to tPR on 13 July 2016. As yet there has been no response to these questions.
The press continues to show interest in the developments with HPS as well as featuring many other pensions issues. We have set up a Press Reports topic in the forum. If you come across any relevant press reports or articles that are not already mentioned then please post links to them. The House of Commons Work and Pensions Committee is expected to carefully examine the performance of the Pensions Regulator during the next session and we have been invited to submit details of the HPS case. Performance of pension scheme trustees and their advisors is another area requiring scrutiny, so watch out for news in the coming months. The committee's examination of the BHS pension scheme was very revealing.
Please Spread the Word About HPA
Given the current situation which has major implications for HPS members' future financial security, HPA wants to reach out to as many members of HPS as possible. The ongoing media campaign should help in enhancing awareness but please dredge through your individual memories and make all former colleagues who might have an interest in the Halcrow Pension Scheme aware of the current situation and of HPA's existence. HPA endeavours to represent all members of HPS, not just those in receipt of a pension. The underlying reason for forming HPA still exists and could well continue long into the future. This will be a subject for discussion at the next AGM but, at present, the committee expects HPA to remain open for business.
If you haven't been with HPA from the start or want to remind yourself of previous events then you can browse through the previous newsletters for which there is a full list here.