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Waterford action a test case

By Alana Fearon
Ten former employees of Waterford Crystal have brought a legal action against the government in an action which will have significant implications for the pension entitlements of all workers in the Republic in circumstances of employer insolvency.
The workers have been told they will receive between just 20 and 36 percent of their pension entitlements when they reach 65 within the next 18 months, representing combined losses to them of more than €2.6 million.
They claim the Pension Insolvency Payments Scheme (PIPS), which came into effect in Ireland last month, fails to meet the state's obligations under the European "insolvency directive" to protect workers in insolvency situations.
The payments scheme only marginally improved the position of the workers which would have been considerably better had the directive been properly transposed, they claim.
The action against the minister for social and family affairs was transferred to the Commercial Court last week.
The case is of relevance to other workers unfortunate enough to lose their jobs before retirement, and whose pension schemes were also insolvent, the presiding judge, Mr. Justice Peter Kelly, observed.
The case arose after Waterford Crystal was placed in receivership on Jan. 7, 2009. The company's pension schemes were wound up two months later with a deficit of more than €100 million. All 10 plaintiffs ceased employment with the company on various dates in 2008 and 2009.
Given the funding levels in the pension schemes, the trustee of the schemes later offered each plaintiff a "transfer payment" with the effect that all would suffer reduced payments of between 18-33 percent and would sustain a combined total loss of €2.6 million.
In April 2009, the minister for social and family affairs announced PIPS with the aim of reducing the liability of a pension fund where there was a deficit at the winding up of the scheme.
The plaintiffs claim PIPS only resulted in a small improvement for them in that they will now receive payments representing between 20 and 36 percent of their entitlements. Basing their case on a 2007 European Court of Justice decision, they have argued they should be paid at least 49 percent.

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