CH2M has warned criticism from the Halcrow Pensioners Association (HPA) over its rescue plan for the Halcrow scheme goes against the best interests of members.
It follows CH2M's announcement of the proposed overhaul for the Halcrow Pension Scheme (HPS) whose sponsor Halcrow Group is unable to continue funding the liabilities. Last week the parent company's plans to reduce members' benefits were rebuked by the HPA, which has correspondence with around 500 members.
The plans in question include moving the scheme's 3,204 members into a new defined benefit (DB) scheme called HPS2 and letting HPS fall into the Pension Protection Fund (PPF).
CH2M said the HPA's comments could discourage members from transferring into the proposed new scheme which will reduce current benefits but not as much as by going into the PPF. If members decide to not transfer into the new scheme they will be automatically transferred to the lifeboat fund.
The American engineering consultancy also warned the HPA was jeopardising attempts to get members a better deal than PPF benefits.
In a statement CH2M said: "Given it is in the majority of cases it is in the best interests of HPS members to elect to transfer to the new scheme rather than enter the PPF we view that it is irresponsible of the HPA to continue discouraging members from transferring."
The HPA has strongly objected to several aspects of the proposed plan in a letter to CH2M European HR director Sam Hannis, such as a perceived lack of clarification on the financial situation of the new scheme. The association believes CH2M is financially stable enough to support the current scheme and is sceptical about the security of the proposed new scheme.
CH2M also criticised HPA's suggestion that polling of decisions should be carried out by the Electoral Reform Society in a similar way to that undertaken by the Kodak pension scheme.
The firm added it was committed to a ‘sensible' funding plan but that the funding position of HPS2 could not be determined with precision at this time.
This was because CH2M did not know how many members would choose to transfer to the new scheme and it was therefore not yet possible to undertake a formal valuation of the new scheme.
In a statement CH2M said: "The Kodak and Halcrow situations regarding polling are not comparable and we are concerned that HPA has misunderstood a fundamental point.
"In Kodak, a condition of regulatory approval was that a minimum percentage of the membership had to agree to transfer or nobody would be allowed to do so. So the Kodak transaction was both a vote and an election to transfer accrued benefits. There is no such minimum threshold requirement in respect of this solution.
"Members are simply being asked whether or not they want to transfer their accrued benefits. As there is no vote, the use of the Electoral Reform Services would make no sense.
"CH2M has made available £80m to Halcrow, part of which will be paid to the new scheme and part to the PPF. A CH2M guarantee of £50m has been put in place and the parties are committed to a sensible plan to manage any identified deficit.
"This proposal was not one which required court involvement and there has therefore been none. Instead, the proposal was developed with appropriate regulatory oversight from the Pensions Regulator (TPR) and the PPF."
A spokesman said CH2M is responding separately to HPA on these points.
Details of the new Halcrow scheme:
- All members get a one-off uplift to their benefits of either 1% or 2.5% at the date of joining Pension Scheme (No 2) if they choose to transfer to the new scheme.
- Members will also be able to transfer the cash equivalent of their benefits to another tax registered pension scheme.
- CH2M will provide a £80m cash contribution towards the HPS deficit and £50m company guarantee to Halcrow Pension Scheme (No 2).
- Regarding annual pension increases in the new scheme pension earned between 6 April 1997 and 5 April 2005 will be increased in line with CPI up to 5% a year. This compares to 2.5% in the PPF.
- Increases on pension earned on or after 6 April 2005 increase in line with CPI up to 2.5% a year as they would in the PPF.
- Benefits forming part of guaranteed minimum pension earned due to the member contracting-out between 1988 and 1997 will be increased in line with the CPI up to 3% a year.
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