The actuary is not required to consider the security of benefits where a bulk transfer without member consents is proposed, the Court has decided.
A transfer without consent cannot be made unless the actuary certifies that, in their opinion, the past service rights each member will be credited with in the receiving scheme will be "broadly no less favourable" than their rights in the transferring scheme.
The sponsor, Halcrow UK, was in financial difficulty and relied on support from its US parent to continue trading. The parent signalled that it would no longer fund the UK pension scheme unless changes were made. The scheme had a solvency deficit of £600 million and of £226 million on the PPF basis.
A plan was made for members to be transferred to a new scheme that would provide benefits below the original scheme but above PPF compensation level. This new scheme was considered viable in the long term. The alternative to this plan was Halcrow UK's insolvency.
The transfer would be without member consents because of the potential impact on Halcrow UK of publicity about its position.
All parties accepted that the security of members' benefits in the new scheme would be greater than in the original scheme. But could the actuary give a certificate?
The trustees asked the Court whether the legislation allowed the actuary's to trade off increased security against lower benefits in the "broadly no less favourable" test. The judge decided "with some reluctance" that the legislation does not allow this. Consequently, the restructuring plan did not go ahead as originally conceived.