Comparison Between Pension Schemes
Comparison Between Pension Schemes Sponsored by Jacobs UK
The three existing befined benefit (DB) schemes sponsored by Jacobs prior to Halcrow Pension Scheme No. 2 (HPS2) being added were Jacobs Engineering UK Ltd, Babtie and Allott and Lomax. Similar to HPS2, all three schemes have been closed to contributions for many years (excluding some TUPE transferred staff). All four schemes including HPS2 have differing accounting year ends and therefore their respective valuations are at different dates so Jacobs have had to employ actuaries to assess them all at the common date of 1 October 2020. Disappointingly, Jacobs have elected to report the analytical detail of all the pension schemes transferred across from the Halcrow Group as a singular block total so this, to some extent, prevents direct comparison between HPS2 and the other three DB schemes as we had hoped. We do however have comparative details for HPS2 at the end of December 2020 (from the Trustee HPS2 Financial Summary) which we can fall back on. It is reported that the sponsor in each case formally changed between Halcrow Group and Jacobs UK over a period between 30 September 2019 and 2 October 2020 but we don’t know on which dates each of them other than HPS2 were transferred. It is possible that the extended transition timeline and the very short reporting periods of only a few months have been a factor in the way Jacobs UK have chosen to report the HGL schemes as a block. Despite the limited reporting, there are useful and interesting comparisons that can be observed and interpolated.
There were six defined benefit pension schemes in total transferred from Halcrow Group, although two are administered by other organisations. Not all are closed to new entrants. HPS2 is the main scheme by size.
As explained, the above six are reported as a block total in the October 2020 accounts and the lack of suitable breakdown between the six is not presented in a manner that is helpful for our purposes.
The assets and liabilities of the four defined benefit schemes Jacobs Engineering UK, Babtie, Allot and Lomax and HPS2 are tabulated below:
We know from information provided by the HPS2 trustee that the HPS2 deficit had improved to nearly zero by July 2021 so it is possible that the other schemes will have been close to or in positive territory by the same time. HPS2 is the largest although the Babtie scheme isn’t far behind. The Allot and Lomax scheme is relatively small. The annual company contributions put HPS2 in the same ball park as the Babtie scheme (the largest current contributory commitment for Jacobs UK) and the Jacobs Engineering UK scheme. The last formal valuation date for the Jacobs Engineering UK scheme was April 2019 and for HPS2 was December 2019 but the other two dates are not reported. As for HPS2, by their respective next valuations and recovery plans, it is possible that the Jacobs Engineering UK, Babtie and Allot and Lomax scheme contributions above could change. No doubt Jacobs will be hoping for reduced contribution requirements.
On transfer of HPS2 from the sponsorship of Halcrow Group Ltd (HGL) to Jacobs UK, HGL was retained as a functional entity for reason(s) that are not been explained. The continuing purpose of HGL is not clear, other than that “certain assets were excluded from the transfer and retained by HGL”. The 2020 Jacobs UK accounts state that it is Jacobs UK intention “to reduce the trading activities of HGL and eventually fully wind down”.
Overall, since the revised recovery plan was agreed for HPS2 in July 2021 and given its relative size, the costs to Jacobs UK of HPS2 appear to be on par with the other three. Previously the level of company contribution at £8.73m/yr did make HPS2 stand out markedly to the other three and it is of some comfort to us as pensioners and no doubt Jacobs UK as the employer that the scheme funding position seems to have stabilised. Its going to be interesting to monitor how this stability is maintained for the foreseeable future. We hope to see if there is a more useful reporting breakdown for the accounts year ending October 2021, especially seeing as HPS2 is the largest DB scheme that Jacobs UK now sponsors.