The European Commission has asked the Government to provide information on the measures it is taking to protect the pensions of workers made redundant by Waterford Crystal.
Waterford Crystal’s manufacturing operation in Waterford shut down last month with the loss of 480 jobs. Workers are continuing a sit-in at the plant in protest at the job losses. They remain hopeful that the manufacturing operation can be sold and that it can continue in business.
Labour Party MEP Proinsias De Rossa has been told by the commission that it has sought information on the measures adopted to protect redundant workers, in relation to defined benefit pension schemes in particular.
Defined benefit pensions give employees a guaranteed level of income on retirement but many are facing insolvency due to the decline in world stock markets, and many may be unable to meet their financial obligations to members.
Waterford Crystal’s pension deficit was €68.6 million at the end of April 2008, compared with €55.8 million a year earlier.
In reply to a question tabled by Mr De Rossa at this week’s European Parliament plenary session in Strasbourg, the commission said that if the Government’s response indicated the measures to protect such pensions did not comply with EU law, it would “not hesitate” to initiate infringement proceedings.
"This is a very significant development in the continuing scandal of the underfunding of the Waterford Crystal pension scheme - the Government could now find itself liable under EU law not just for the shortfall in the Waterford Crystal scheme, but for shortfalls in other underfunded schemes across the country,” Mr De Rossa said.
The commission told the MEP it had published a working document last year on how member states were implementing a directive in relation to the protection of employees’ pensions in the event of the insolvency of their employer.
It said that in certain cases, issues could be raised about whether some of the measures adopted by member states were sufficient to protect the interests of employees and retired people in the event of insolvency of the employer.
It said further investigation was therefore needed in order to address certain issues, including how to protect employees and retired people against the risk of under-funding of pension schemes.
The commission said it was preparing to begin a study on the various issues, including how to deal with cases where the pension scheme is managed by the employer itself.
“As far as Ireland in particular is concerned, in the wake of the difficulties of the Waterford Wedgwood company reported by the press in mid-January 2009 and the risk for the pensions of its workers, the commission has requested further information from Ireland on the measures adopted to protect them, in particular as regards defined benefit schemes.
"Should an analysis of the reply show that these measures do not fulfil the requirements of Article 8 of Directive 2008/94/EC, as interpreted by the European Court of Justice, the commission will not hesitate to initiate infringement procedures under Article 226 of the Treaty,” said the reply to the MEP.
Mr De Rossa said he believed there were sufficient grounds for believing there had been such a breach in the case of the Waterford Crystal pension scheme.
“I am deeply concerned about the Government's inaction in protecting the pensions of all workers in light of the Waterford Crystal situation," he said.
“It must now undertake an immediate review of Irish legislation to establish the amendments necessary to ensure that employers who fail to maintain pension funds are prosecuted and that adequate insurance is provided to protect workers pensions."