Halcrow Pensioners Association

Newsletter No. 33

 HALCROW PENSIONERS ASSOCIATION 

 Newsletter No. 33 : May 2018

This is a newsletter of the Halcrow Pensioners Association. More details of HPA's objectives, organisation and its activities are here. You have been sent this newsletter because you may be a member of the Halcrow Pension Scheme or its successor, HPS2. Membership of HPA is open to all interested HPS / HPS2 members and currently costs £10/year.  If you are not a member then please use the unsubscribe link at the bottom of this email to remove your name from the mailing list or email the webmaster to remove your name.

The 2017 HPS2 Trustee's Report and Financial Statements
The 2017 Trustee's Report and Financial Statements was made available on the Halcrow Pensions website in April 2018.  The HPA committee was concerned to note the statement: "Jacobs Engineering Inc. completed a takeover of CH2M on 15 December 2017. In accordance with the Framework Agreement, the Jacobs takeover crystallised the evaluation of the HGL equity and whether it fell to be converted to CH2M equity. As the HGL equity was given a nil value, it was not converted to CH2M equity and the HGL shares have been transferred back to CH2M."

These shares had been issued to HPS in accordance with the 2016 Regulator Apportionment Agreement (RAA).  The Pensions Regulator's Section 89 Report explained the purpose of this shareholding:

"As a result of approving the RAA, the scheme will receive:

  • £80 million as a cash lump sum (which is more than it would have received in the insolvency of HGL)
  • a minimum 25%, and maximum 45%, equity stake in HGL

In practice, this will be split between HPS2 and the PPF, depending on the number of members who choose to transfer. The equity stake in particular is critical in ensuring that members and the PPF share in any benefit from the continued operation of the HGL business."

Given that the decision to return the HGL shares to the company was taken when CH2M were selling their business to Jacobs Engineering at a substantial premium over the prevailing share price, and that reduction of the Halcrow pensions liability would be a factor in setting the sale price, HPA was disappointed to note that instead of some benefit accruing to pension scheme members the shares were returned. HPA therefore wrote to the Pensions Regulator tPR) to seek clarification. A response has been received which includes the following statement:

"In coming to our decision on whether to approve the RAA, TPR ascribed no value to the HGL equity holding. It was an ‘anti-embarrassment’ holding, and was taken to ensure the current owners/management did not prosper as a result of the RAA without the Scheme and PPF sharing in this prosperity."

However, it seems that ensuing the  ‘…current owners/management did not prosper as a result of the RAA without the Scheme and PPF sharing in this prosperity’ for some reason did not extend to the owners profiting from selling the company after shedding their pension liabilities. Clearly, this basic omission needs to be considered as potential maladministration by tPR. HPA will be considering the way forward and asks for your continued support.

tPR should, therefore, be very embarrassed that the 'anti-embarrassment' holding wasn't defined in a way which considered the wider fortunes of the parent company particularly given the ease with which profits could be shifted to wherever it was financially most advantageous. The ultimate owners/management prospered as they made a gain of over 50% over the prevailing share price when CH2M, with a much reduced pension scheme liability, was sold to Jacobs. Presumably tPR didn't think about the potential gain to the parent company of reducing a major financial liability? We can but hope that the ongoing review of tPR's functions will include a requirement for tPR to think. HPA has made the House of Commons Work & Pensions Committee aware of its views on the tPR performance.

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Previous Newsletters
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