Unions have hailed as a “landmark” victory the €180m settlement offered by the Irish government to members of the Waterford Crystal pension schemes.
If accepted by beneficiaries, the offer could bring to an end a protracted legal dispute that saw social partners sue the Irish state over its failure to protect pension benefits in instances of company insolvency.
The settlement will see more than 1,700 deferred members of both Waterford Crystal funds offered €1,200 a year in lump-sum payments per year of service and ensure accrued benefits are paid – with cuts applied on a sliding scale depending on the size of their annual value.
Union Unite first supported a 2009 High Court case over the loss of benefits for active and deferred members, a case later referred to the European Court of Justice (ECJ).
The ECJ ruled last year that Ireland was in “serious breach” of its responsibilities for failing to ensure at least half of benefits were guaranteed.
Under the previous wind-up order of Irish schemes, amended last year to ensure a more equitable distribution of assets, pensions in payment were granted absolute priority.
The benefits of active and deferred members were paid out of the asset pool that remained, with cuts to compensate for any deficit.
Jerry Moriarty, chief executive of the Irish Association of Pension Funds, noted that, were January’s High Court hearing in the Waterford Crystal case to proceed, it would result in a ruling on the level of protection that should be offered.
The government is expected to argue in favour of the 50% threshold mandated by the ECJ, despite the proposed Waterford settlement offering benefits well above such a level.
Meanwhile, employee representatives have in the past pointed toward the 90% certainty offered by the UK Pension Protection Fund as a desirable threshold, while an Irish ruling in July saw pharmaceutical Omega Pharma ordered to contribute to the scheme despite its meeting the minimum funding standard, ensuring benefits were secured.
“That’s probably why it’s in the government’s interest to keep it out of the High Court,” Moriarty added.
A spokesman for Unite said it had yet to decide whether it would continue with proceedings.
Moriarty said that, without a High Court ruling, the matter was unlikely to be resolved, as the next group of beneficiaries offered 50% of benefits could question why their compensation fell below that offered to Waterford Crystal members.
Unite regional secretary Jimmy Kelly welcomed the settlement.
“Unite and our members have travelled a difficult road since the closure of Waterford Crystal in 2009 – a road that has taken us from the High Court to the European Court of Justice, back to the High Court and finally the Labour Relations Commission,” he said.
“The settlement now negotiated by Unite represents a landmark victory – not only for our own members but for the trade union movement.”
Minister for social protection Joan Burton said she was “very pleased” to be announcing the settlement, agreed this week by the Irish government.
“I hope this will bring security and peace of mind for them in the certain knowledge their pension entitlements are now secure,” she said.
The full cost of the settlement will be met from the revenue generated by the 0.6% and 0.15% pensions levy, ending this and next financial year.