Newsletter No. 24
HALCROW PENSIONERS ASSOCIATION
Newsletter No 24 : September 2016
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News Update From HPA
The 31 August deadline has now passed and according to the HPS Trustee's letter of 9 September over 90% of members have returned their option forms, with 99% of these ticking Option 1. The obverse of this is that about 10% of members, either deliberately or by default, did not return their forms and will, according to the Trustee, have their pensions transferred to Project Magnolia Ltd, a one-pound company without assets or business, set up for the sole purpose of going insolvent, thereby putting the members who did not return their forms into the PPF (see below for details).
Your committee have previously been constrained on legal advice when communicating with members, but now feel that it is appropriate to report more fully to you.
Legal Efforts to Date
We have previously told you how we were invited to a meeting with the Pensions Regulator on 20th June through the good offices of Robert Buckland, MP for Swindon South and Solicitor General in the present government. The main upshot of this was the revelation that tPR, in a letter to HPA dated 18 May advising us that an “equitably balanced” agreement had been reached, had failed to tell us that the form of the agreement was an RAA and that it was the middle of the 28-day window for appeal to the Upper Tribunal. The Upper Tribunal sits above all the various government tribunals and agencies and hears appeals from members of the public affected by the decisions of these lower bodies.
Notwithstanding the fact that by the time of the meeting with tPR the 28-day window for appeal had passed we lodged a reference to the tribunal and it was accepted by the judge. TPR then wrote to the tribunal in what can only be described as a hostile and vehement letter, saying that we were not a directly affected party, that we were represented by the Trustees, and implying that we were “mere busybodies”. This from the regulator supposed to protect, according to its charter, the benefits of pension scheme members.
The judge then ordered a strike-out hearing to hear tPR’s objection. At this point we were warned by our solicitor that the costs of opposing this objection (with tPR supported by the HPS trustees and the company) could be very high and that we would be at risk of the award of costs of up to £240k against our co-chair, Edward Evans, who had submitted the reference on behalf of HPA, and possibly against HPA members in general. HPS Trustees were asked to fund HPA’s costs under their fiduciary duty to safeguard scheme members interests and that they refused. In the light of this the committee felt we had no option but to withdraw the appeal.
The committee’s attention was subsequently drawn to the case of Hampshire vs. PPF and DWP in the Court of Appeal. We will not go into exactly what Mr Hampshire was appealing against, but it made your committee wonder how he financed the appeal. As a result we got in touch with Mr Ivan Walker, the solicitor who represented Mr Hampshire, who then arranged the conference on 23 August with Nicholas Randall QC referred to in Newsletter No. 23.
In a nutshell, the QC felt that the Upper Tribunal was the right court for us and that we had a near-certain case against tPR on the grounds both under domestic law and under Article 6 of the European Convention on Human Rights, which gives all citizens a right to be consulted on the actions of governments and their agencies affecting them. He felt that the case more generally passed the “sniff test”. He also said that the Upper Tribunal would not award costs against appellants unless their case was vexatious or frivolous, which ours was certainly not. Mr Walker in any case proposed to seek a Protective Costs Order which would limit any residual risk to an affordable level.
Unfortunately when we discussed the manner in which we had withdrawn our reference at the UT, by closing the case completely due to the prospects of costs well beyond our capability, the QC felt that we could not re-open it at such a late date in the Halcrow process with the 31 August deadline only a few days away.
We also discussed the possibility of a Judicial Review, but the timing problem was again heavily against us. Both Mr Walker and the QC felt that we had been badly let down by the Trustees and the Regulator, but had come to the end of the legal road.
It has been a very disappointing story where we had a good case, managed to get to the right court, but were scared off by a combination of a regulator hostile to the very people they are charged with protecting.
The Route to the PPF
The 300 or so members who are set to enter the PPF may be interested to know that we have been advised that the route is via Project Magnolia Ltd and may go like this:
- PML executes a deed to become a participating employer; it will have a single employee with a salary of a few shillings a week who is then admitted to the HPS as an active employee. As HPS is closed to new members, to allow this, HPS Trustees exercise residual discretion to admit a new member, or they amend the rules to allow the admission of a single member, and then close it.
- PML thus becomes a statutory employer. Halcrow then withdraws from the HPS with a liability to pay its share of the deficit (which of course is almost all of it); but its share is re-apportioned under the RAA to one of the other employers - PML - and Halcrow pays its residual apportioned share of the deficit - £1.
- PML is then left with the liability to pay all benefits, not only for its single part-time employee but also for all of the employees and former employees and spouses of departed employers. It cannot afford to do so, goes into administration, and the winding-up process with PPF starts.
We are struggling to understand how cooperation in this manoeuvre by the Trustees can be considered to be in accordance with their responsibilities to look after the interests of those remaining in the HPS. It looks and smells like fraudulent conveyancing in contravention of the laws of insolvency, and, although it could be blessed by tPR, we are trying to ascertain more about its legality.
The need for HPA continues and among the ongoing tasks are:
1. To closely monitor HPS2 and watch out for CH2M trying to reduce pensions further or claim back contributions on the grounds of the scheme being over-funded (a few years of higher inflation could create this situation).
2. To lobby for improvement of the law to prevent companies with complex corporate structures shifting profits and evading pension liabilities (which they will look on as another form of taxation).
3. To absorb the lessons learned during the past few months and pass them on to future members.
4. To pass on these lessons to the wider community of those whose DB pensions will now be at great risk from the CH2M/Halcrow “success”.
Please Spread the Word About HPA
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 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.
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.