Waterford pension case may go to ECJ

FORMER WATERFORD workers who are suing the Government for failing to provide pension protection expect their case to go to the European Court of Justice (ECJ).

About 1,800 former Waterford Crystal workers have been left with no pensions as a result of the company’s closure and the fact that their retirement schemes are insolvent.

The workers, led by trade union, Unite, are taking legal action against the Government.

They argue that European law obliged the Government to provide protection for workers in cases where both employers and pension schemes become insolvent.

According to Unite official, Jimmy Kelly, the case will first go before the High Court, but it is expected to go to the ECJ, as the union’s argument revolves around European law.

If the union wins its case, it will have implications for workers who find themselves in the same situation in the future.

The outcome of the case could force the Government to establish a protection fund for private sector pension schemes.

Last October, it emerged that the Waterford Wedgwood plc pension schemes had a deficit of €111 million.

Assets in the schemes at the time were €120 million, far short of total liabilities.

The group’s banks appointed a receiver in January, and most of its businesses, except the Waterford Crystal manufacturing plant, were sold to US investment fund KPS, which is not obliged to take on any of the plc’s liabilities.

The result was that the pension fund was effectively closed, but would continue to pay retired workers who are drawing benefits from it.

KPS is a New York-based private equity firm which specialises in buying manufacturing businesses that are insolvent or facing financial difficulties.

However, former workers who have not reached 65 years of age and those who lost their jobs as a result of the closure, now stand to get nothing from the pension scheme, despite the fact that they had been contributing to it for up to 20 years.

The rights of workers in Wedgwood, the group’s former British business, were not affected as Britain has a state pension protection scheme.

Unite’s case is based on Article 8 of the European treaties, which states that member states must take necessary measures to protect the interests of employees and pensioners in situations where both employers and their pension schemes are insolvent.

This protection has to be in addition to states’ social security systems. According to Mr Kelly, the ECJ ruled in a 2007 case, Robins, that a British scheme which provided up to 49 per cent of pension benefits was not adequate.

The British government argued against this and lost. The Irish Government supported its British counterpart in the case.

Mr Kelly explained that the Republic’s Government was thus aware of its responsibilities and did not act on them, with the result that Waterford workers lost out.

The Irish Congress of Trade Unions (Ictu) raised the issue of pension protection with the Government during the failed partnerships earlier this year.

Ictu’s general secretary, David Begg, has also held talks with senior officials from the departments of the Taoiseach and Finance.