Waterford Wedgwood UK schemes head for PPF
UK/IRELAND - Defined benefit (DB) schemes belonging to the UK businesses of failed china firm Waterford Wedgwood are likely to end up in the Pension Protection Fund (PPF), although the future is more uncertain for members in Ireland where this is no equivalent 'lifeboat' fund.
Waterford Wedgwood plc yesterday suspended its listing on the Irish Stock Exchange after failing to raise sufficient funds to recapitalise the company or to attract a buyer for the firm.
Following confirmation that the company had entered administration, a UK spokesman for the company said the UK pension schemes of the firm - belonging to Royal Doulton, Wedgwood and Stuart & Sons - would go into the PPF, as the "group has been in discussions with them since December".
However a spokeswoman for the PPF said the organisation "had not heard anything" from the company, and confirmed it had not yet received a section 120 notice from the administrators, which is the first step in the process for determining whether the schemes are eligible to enter the PPF.
Figures from Waterfood Wedgwood's interim results showed at 4 October 2008 the total pension deficit for its DB schemes, mainly based in Ireland and the UK, had reduced from €147.9m to €111.1m between April and October, as a result of an 0.6% increase in the rate used to discount liabilities.
However, the figures also revealed between April 2007 and April 2008 the total value of assets in the DB plans dropped from €814.8m - and a deficit of €93.1m - to a total value of €675.5m, a loss of almost €140m in just 12 months, although the fall in value could now be even higher following further market falls in the final quarter of 2008.
For members of the Irish scheme the situation could be complicated as there is no Irish equivalent to the PPF, so with a significant deficit in the schemes - despite annual contributions of €10m a year, with €15.9m of additional contributions planned for 2009 - their fate seems to depend on whether the Irish government will help, and whether the administrators can sell the businesses.
At the moment if an Irish scheme is forced to wind-up under funded, then benefits will be paid in accordance with the scheme rules and the level of funding available, although pensioners will be a priority and active and deferred members are likely to receive less than their expected entitlement.
However the Pensions Board, responsible for regulating Irish occupational schemes, could not confirm this would be the case for Waterford Wedgwood, as "it is our policy not to comment on specific schemes".
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