Lawyers acting on behalf of Halcrow Pensioners' Association (HPA) are disputing a proposed regulated apportionment arrangement (RAA) for the engineering company's defined benefit (DB) scheme.
Irwin Mitchell, which is aiding HPA, said it has submitted a case to the Upper Tribunal of the Pensions Regulator (TPR).
The association, which has correspondence with around 528 members of the Halcrow Pension Scheme (HPS), is challenging TPR over the RAA which has been granted as part of a rescue plan. This will see the sponsoring employer being severed from the scheme with members going into the Pension Protection Fund (PPF).
Irwin Mitchell said the HPA is concerned the deal would set a precedent for millions of other pensioners of DB schemes. It also disputed the choice for the 3,204 members of being transferred either to the PPF or a new DB scheme called Halcrow Pension Scheme No 2 (HPS2) in which pension increases would be reduced to statutory levels. Members have until 6 August to make their decision.
It also challenged TPR for lack of information to members over the status of HPS, as well as the basis for the regulator's decision to grant the RAA.
HPA is proposing an alternative, more objective assessment carried out by another independent trustee over whether the rescue plan was in fact the best deal available under the circumstances. It also believes a committee should be formed, comprising of current Halcrow members who would report the latest HPS developments to the remaining membership.
The prospect of the British engineering company going into immediate insolvency was also called into question by HPA. It said Halcrow has many business contracts that would be important to its parent company CH2M going forward.
Irwin Mitchell pensions partner Martin Jenkins said: "It's clear the members are being presented with a very odd proposal. This isn't British Home Stores or British Steel where the company going into administration has been declared and the scheme has to go into the PPF. No insolvency has been declared [with Halcrow] and therefore we're being asked to take on faith and trust that the trustee and TPR have reached the right conclusion.
"There is a deep suspicion [of CH2M and TPR by HPA] which stems from the behind closed doors nature of this exercise when CH2M sought to gain a notice of transferring members to a new scheme without their consent and consultation. There's also the lack of ability from TPR or the trustee to answer simple questions, which is why we're suspicious."
"What is needed is sufficient time and resources to make a thorough and independent review that takes into account the integration between Halcrow and its American parent," he added.
A CH2M spokesperson said the company was still working with TPR, PPF and trustees parties to implement the rescue plan to the 5 August deadline.
"HPA clearly do not understand the economics of the situation and we are deeply concerned that a small group of unelected activists are placing at risk the future savings of thousands of pension scheme members based on this misinformation," the spokesperson added. "TPR, HPS trustees and Halcrow have worked closely together to develop an approach that was agreed as the best way forward and prevents the scheme entering the PPF. This small group does not speak for the wider interests of the scheme members."
TPR said in a statement: "This type of pension restructuring is rare, and we will only agree where stringent tests are met, so that they are not abused. In this case, all of the requirements were met.
"There is already an independent trustee in place in relation to the scheme. The trustee sought independent financial advice throughout and concluded that this was the best outcome for all members in the difficult circumstances. As outlined in the section 89 regulatory intervention report, TPR was party to negotiations and believes this is best outcome for both members and the PPF.
"It is also the trustee's role to communicate with all scheme members and we have been fully engaged with the trustee, as the representative of all members, throughout.
"The trustees sought independent financial advice which confirmed insolvency was inevitable and we were satisfied by this conclusion."
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