The Halcrow Pension Scheme has been running a roadshow for members to help them decide on whether to join its new pension fund or go into the Pension Protection Fund.

CH2M, the American parent owner of the Halcrow Pension Scheme, reached an agreement with the Pension Protection Fund and The Pensions Regulator to put the scheme into a Regulated Apportionment Arrangement (RAA) in June to help avoid the scheme's sponsors becoming insolvent.

Members now have until 5 August to decide whether or not to enter the new arrangement. If their response is not submitted by that deadline then they will be automatically transferred to the PPF.

Under the RAA, the Halcrow Group and Halcrow Water Services, the statutory employers to the scheme, will see their traditional link between themselves and the scheme severed. Members will also receive less in benefits than they would have if the scheme had continued to run as before.

In 2011, Halcrow Group's prospects were bleak and it is likely that the scheme would have entered a PPF assessment period if CH2M had not taken the company over.

CH2M has never had a legal responsibility to fund the scheme, but continued to fund Halcrow Group, enabling it to continue to pay contributions. By 2015, CH2M was no longer willing to provide further support.

The scheme's buyout deficit is now around £600m, and the PPF deficit is estimated to be £225m.

To help set up the RAA, however, CH2M has told UK staff that it will make a payment of £80m towards the pension scheme deficit and also provide a guarantee of £50m towards it.

JLT Wealth Management is helping to deliver the consultation for the scheme. According to the Halcrow Pensioners Association, the RAA would be a significantly better deal for some scheme members, including those who would fall foul of the PPF cap.

A spokesperson 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 where they will deliver a better outcome than the use of anti-avoidance powers, and where the company will become insolvent in the short term.

“In this case, we were able to reach an agreement that gives members the opportunity to receive higher pensions than the alternative of entering the Pension Protection Fund.

“We appreciate this is a challenging time for scheme members – the pensions trustees are currently engaging with members on their options. We recently met the Halcrow Pensioners Association to explain the steps we took and we will publish a full report on the case in coming weeks.”

A spokesperson for the PPF said: "The PPF has agreed any Halcrow members who don’t wish to join the new scheme will become PPF members and receive PPF levels of compensation."

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