UK - Government plans for the partial privatisation of London Underground could be threatened by scheme deficits at support services firms Amey and WS Atkins.
Both firms are public finance initiative specialists and are part of the two consortia that will take control of the tube.
Amey is part of the Tubelines group, which will run the Piccadilly, Northern and Jubilee lines, while Atkins is part of Metronet, which will run the rest.
Amey needs to raise £60m from banks and investors to meet its Tubelines obligations, putting pressure on its balance sheet which has already been hit by its pensions deficit.
At the start of the year, Amey’s four defined benefit schemes had assets worth approximately £215m and liabilities of £209m, giving them a combined surplus of £5.5m.
However, since they are 87% in equities, analysts believe market movements will have pushed them into a £35m deficit.
Analysts also fear for the future survival of Atkins. The stated deficit for its pension schemes in March was £7m, but analysts say that as both have a combined 71% invested in equities, the true deficit now stands at around £100m.
Atkins has seen its share price plunge 72% after it posted a profits warning. The fall took the firm’s market capitalisation down to £55m – nearly half of its total pension deficit, analysts say.
Atkins has also been hit by computer problems, which has left hundreds of London teachers without their pension contributions.
The firm took over the management of Southwark’s 104 schools last year, but Prudential – which runs the teachers AVCs – said it found a discrepancy between 350 teachers’ payroll deductions and the amount it had actually received from Atkins.
Prudential – which wrote to members in July about the discrepancies – is still pressing Atkins for action as it cannot invest the teachers’ money until the matter is resolved.
Both Atkins and Amey declined to comment.
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