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Pensions and jobs protected by Halcrow agreement

Ref: PN16-33
Monday 11 July 2016

The Pensions Regulator has published a report showing how it worked closely with the Halcrow Pension Scheme and its sponsoring employer to help protect member benefits and jobs.

TPR worked with sponsoring employer Halcrow Group Limited (HGL), an engineering consultancy, its US owner CH2M Hill (CH2M), as well as the scheme trustees, to agree an outcome that kept the scheme out of the Pension Protection Fund (PPF) and avoided HGL’s insolvency.

The case highlights how TPR is able to work quickly to agree complex pension restructuring plans, called Regulated Apportionment Arrangements (RAA), if it has the co-operation of the parties involved and receives credible proposals.

Details of the RAA case are explained in a regulatory intervention report (PDF, 244kb, 13 pages) published today.

Lesley Titcomb, Chief Executive of TPR, said: “The agreement in this case gives members the option to transfer to a new scheme providing pensions above PPF compensation levels, while also preserving jobs and growth by avoiding HGL’s insolvency. We were satisfied that this was the best available outcome in challenging circumstances.

“It has been a difficult time for members and we are pleased that the pension trustees are now consulting them about their options.

“This type of pension restructuring is rare, and we will only agree where stringent tests are met, so that they are not abused. However, this case also clearly demonstrates that when we receive the information we require from co-operative employers and scheme trustees, we can use the tools available to us as part of the regulatory framework to agree innovative restructuring solutions.”

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, plus a minimum 25%, and maximum 45%, equity stake in HGL. In practice, this will be split between the new scheme and the PPF, depending on the number of members who choose to transfer.

Buyers of pension scheme sponsors are not automatically responsible for funding or making contributions to that pension scheme. Our anti-avoidance powers enable us to impose such a responsibility if we think it is reasonable to do so and the legal criteria have been met. At the time of the purchase of HGL by CH2M in 2011, and again in connection with the RAA proposal, TPR considered it would not be reasonable to use our powers. In considering this we took into account the agreement reached, the fact that CH2M provided significant financial support to HGL and continued to fund the contributions due to the scheme under the 2008 valuation.

Editor's notes

  1. The intervention report has been published under Section 89 of the Pensions Act 2004 which gives TPR the power to publish information on cases where it has exercised or has considered exercising its powers.
  2. TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).

Press contacts

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Ben Lloyd 01273 627208