“An American company has struck a secret deal which allows it to walk away from the British pension scheme of engineering firm Halcrow – jeopardising the retirements of thousands of workers and setting a dangerous precedent for millions more.
Engineer CH2M has been given permission to dump 3,000 savers from the Halcrow scheme into the lifeboat Pension Protection Fund after arguing it has no legal responsibility for the promises made to the British workers before it took over the 148-year-old company in 2011.
Since then, the black hole on the Halcrow final salary scheme has climbed to £500million. And now, in a deal that is thought to be the first of its kind, CH2M has managed to argue that pensioners must accept lower retirement incomes than they were promised or have the scheme handed over to the PPF.
Colorado-based CH2M – which has a number of lucrative contracts including work on the High Speed 2 Railway – is solvent and made a £60million profit last year.
It is a move that experts believe poses a threat to thousands of other company schemes which have giant pension deficits, particularly those with foreign owners.
Labour MP John Mann, who sits on the Treasury Select Committee, said: ‘This could set a dangerous precedent for other foreign firms buying UK companies.
‘These employees have paid into the pension and this company shouldn’t be trying to wriggle out of its responsibilities.’ CH2M said that without being able to pare back generous annual cost of living increases the scheme’s members receive, it will have no choice but to put Halcrow into insolvency.
The deal has been thrashed out by CH2M, the Pensions Regulator and the trustees of the Halcrow Pension Scheme.
In a further twist, the Mail can reveal that the chairman of the trustees of the Halcrow scheme is Chris Martin, who is also chairman of the BHS pension scheme which is set to fall into the hands of the PPF.
The move tears apart an important principle of pensions law, which is that any benefits promised to savers cannot be reversed.
Savers must either accept being put into a new pension scheme set up by the company or being pushed into the Pension Protection Fund. In the former option anyone with a pension built up before 1997 will effectively see it frozen.
Pensions built after this date will receive cost of living increases in line with the consumer price index.
This is likely to be far lower than the up to five per cent annual increases they receive now. If members do not accept this deal they will have their nest eggs taken over by the pensions lifeboat.
With this arrangement those who have not yet retired will receive 90 per cent of their annual payout up to a limit of £34,470 a year, as well as reductions to cost of living increases.
A spokesman for the Pensions Regulator said: ‘These types of pension restructuring are permitted under law, but have stringent conditions attached so that they are not abused. We will only agree to them in rare circumstances.’
A CH2M spokesman said: ‘The interests of members have at all times been very well protected.’ ”
East Devon Watch 
“A CH2M spokesman said: ‘The interests of members have at all times been very well protected.’ ”
Hardly!!!
What I can’t quite understand is why a company is allowed to declare a profit when they have a pensions deficit. Surely any profits should be used either to prop up reserves or to fund the pensions deficit – rather than be declared as profits / dividends and sent off-shore.
As far as I know, it is a well understood principle that if you take over a business as a going concern (rather than just buy the assets), then you assume all the responsibilities of the previous owner (see Transfer of Undertaking TUPE) – and that is why you undertake “due dilligence” when you acquire a company. On this basis, you should not later claim that you have “no legal responsibility for the promises made to the British workers before it took over the 148-year-old company in 2011”. It seems to me that if they had undertaken their due dilligence properly and identified this issue at the time that they were THINKING of buying the company (rather than 5 years too late), then they could have negotiated this into the purchase price or perhaps done some sort of deal with existing employees as part of saving their jobs. It is this precent, to claim that you are not responsible for promises made before your purchase, that is so dangerous because it potentially does not just apply to pensions responsibilities but to ANY responsibilities.
It also appears that, whilst the private sector is supposed to shoulder the commercial risks of running a business and employing people, once again it is the taxpayer who is now owning this risk.
I think that this is the sort of legal precedent that should be decided by judges – not by secret negotiations with the pensions regulator.
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