Tánaiste & Minister for Social Protection Secures Government Approval for Waterford Crystal Pension


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The Tánaiste and Minister for Social Protection, Joan Burton, T.D., has today (9th December, 2014) secured Government approval for a mediator set of recommendations to settle the long-running Waterford Crystal pensions case.

Under this settlement, the former workers of Waterford Crystal will receive significant pensions and a tax-free lump sum by way of compensation for the delay and stress involved in bringing Irish and European Court cases to resolve the matter.

This case arose as a consequence of the Waterford Crystal company being found insolvent and its occupational pension schemes being wound up with deficits in 2009. A number of legislative and procedural issues are being put in place and will be finalised early in the New Year with a view to having lump sums paid as early as possible in 2015 and pension payments starting by the middle of the year. The settlement will include all 1,774 deferred members of the Waterford Crystal Staff and Factory Pension Schemes and will encompass the families of some members who have unfortunately died since the company went into receivership.

The Tánaiste said: "I am very pleased to announce today a resolution for the Waterford Crystal workers and their families, subject of course to the workers balloting on and accepting the proposals. I hope this will bring security and peace of mind for them in the certain knowledge that their pension entitlements are now secure."

The Tánaiste also praised Mr Kieran Mulvey of the Labour Relations Commission, saying: "I’d like to sincerely thank Kieran Mulvey, who chaired the mediation process, for helping to bring about a resolution to this highly emotive and very complex and technical set of problems."

The Tánaiste continued: "I’d also like to commend the representatives of the former Waterford Crystal workers who have done a tremendous job in representing the case and in striving for a fair resolution to this very difficult problem. I hope and trust they will see this as a very satisfactory outcome to their efforts, which will benefit not alone the workers and their families, but the economy of their local communities too."

Finally, the Tánaiste noted: "I introduced legislation in the Social Welfare and Pensions (No 2) Act 2013 and subsequent changes have been made in regulatory policy to ensure that this situation cannot arise in the future for workers or the State."

ENDS

Notes for Editors:

  • 1. The protection of employees in the event of employer insolvency is covered by an EU Directive 2008/94 (Insolvency Directive) which requires Member States to ensure that the necessary measures are taken to protect the interests of employees (and of persons having already left the employer) at the date of the employer’s insolvency in respect of rights conferring on them immediate or prospective entitlement under supplementary or occupational pension schemes. This becomes an issue for defined benefit (DB) schemes in a “double insolvency” situation – where both the employer and the DB scheme are insolvent.

 

  • 2. At the beginning of 2009, a receiver was appointed to Waterford Crystal and it was found to be insolvent. The pension schemes set up by that company were wound up on 31 March 2009. In 2010, a case was brought on behalf of 10 members of the Waterford Crystal staff and factory pension schemes against the Minister for Social Protection, the Attorney General and Ireland for the alleged failure by the State to properly transpose the Insolvency Directive and for consequent financial losses suffered. 1,200 former workers issued plenary summons. There are 1,774 members in the Waterford Crystal factory and staff pension schemes. In 2011, the High Court referred certain matters to the European Court of Justice (ECJ). On 25th April 2013, the ECJ ruled against the State in relation to all matters raised. It ruled that Ireland did not have measures in place to ensure that the plaintiffs would receive in excess of 49% of the value of their accrued benefits and that Ireland was in breach of its obligations. As a consequence, the case is continuing in the High Court and is next scheduled to be heard on 13th January 2015.

 

  • 3. In August 2014, a mediation process chaired by Mr. Kieran Mulvey of the LRC was initiated, with Unite representing the plaintiffs and the Department of Social Protection representing the State. That process has now concluded with this proposed settlement. Acceptance of the settlement will result in the High Court case not proceeding.

 

  • 4. Part 3 of the Social Welfare and Pensions (No.2) Act 2013 introduced changes to secure Ireland’s compliance with the Insolvency Directive. It amended the Pensions Act to provide that, where a pension scheme winds up insolvent and the employer is insolvent, the assets in a defined benefit scheme will be distributed initially to secure 50% of the pension benefits for scheme members and beneficiaries. Once these benefits are secured, pensioner benefits up to an annual amount of €12,000 will be secured. Social Welfare legislation, as amended also makes provision for the payment for monies from the Central Fund by the Minister for Finance at the request of the Minister for Social Protection, and following consultation with the Minister for Public Expenditure and Reform, to the trustees of a scheme in the event of a shortfall in the resources of a scheme.

 

  • 5. In Budget 2014 and in the Finance (No 2) Act 2013, the Minister for Finance provided for changes to the pensions levy to provide funding to meet potential State liabilities emerging from pre-existing or future pension fund difficulties. The pension levy is paid into the Central Fund.

 

  • 6. Under the settlement, it is proposed that deferred members of the pension schemes will receive €1,200 per year of scheme service by way of compensation. Approximately 70% of members, whose pension entitlement under their scheme was €12,000 or less will receive 90% of that entitlement with all others getting a pension on a sliding scale to 50% of expected benefit at €24,000 or higher.

 

  • 7. In full, the settlement proposes:
    • a tax-free lump sum to the deferred members of the Waterford Crystal factory and staff schemes of €1,200 per year of service in the pension scheme.

    And
    • Workers with pensions under €12,000 will get 90% of their pension.
    • Workers with pensions of between €12,000 and €24,000 will get 90% of €12,000 plus 67% of remaining benefit between €12,001 and €24,000.
    • Workers with pensions in excess of €24,000 will receive 90% of €12,000, 67% of benefit between €12,001 and €24,000 and 50% of any benefit above €24,000
Last modified:09/12/2014