The Pensions Regulator is facing a legal challenge against its decision to allow a major restructure of the chronically underfunded Halcrow pension scheme.
The challenge, launched by members of the scheme on Tuesday (12 July) with the aid of law firm Irwin Mitchell, was announced a day after the regulator released a report confirming the restructure.
The restructure will see members of the scheme will have an option of transferring the pension into another scheme with an associated cut in benefits, or fall into the Pension Protection Fund.
Under the terms of the deal the scheme, which has 3,300 members and is £258m in deficit, will receive a lump sum of £80m and a 25 to 45 per cent equity stake in its sponsoring employer Halcrow Group Limited.
HGL’s parent company, US infrastructure firm CH2M Hill, will also provide a £50m guarantee.
The Pensions Regulator chief executive Lesley Titcomb said of the deal: “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.”
But Martin Jenkins, pensions partner at Irwin Mitchell, claimed the scheme’s members were not consulted on the decision.
Mr Jenkins said: “This agreement with The Pensions Regulator is bad news for the 3,300 members of the Halcrow pension scheme.
“They have been given a stark ultimatum: either transfer to a new company scheme by 5 August this year, or be transferred in the Pension Protection Fund.
“The Pensions Regulator’s decision forces this on pension members even though they were not consulted about it or even told it was happening.”
He claimed members had “been provided with very little of the information about the scheme finances to which they are entitled”, and given “no opportunity for consultation”.
“What is needed is sufficient time and resources to make a thorough and independent review that takes into account the degree of integration between Halcrow and its American parent,” he said.
The firm stated it would be aiding Halcrow Pensioners’ Association, a group of the scheme’s members, in challenging the regulator’s agreement at the Upper Tribunal, London.
james.fernyhough@ft.com
