A SALE of assets at Waterford Wedgwood in receivership is unlikely to help fill a hole of about €110 million in the group’s pension fund.
The pension fund will have no claim on the company or any proceeds of a sale through the receivership process.
A spokesman for the Pensions Board said that, in the event of a company collapsing, pension scheme trustees would have two options.
These are to keep the scheme open in anticipation of a rise in the value of its assets, principally shares, or wind it up.
However, recent legislation has increased the responsibilities of pension fund directors and, in the absence of a realistic prospect for the business to be sold as a going concern in its current form, industry sources expect that it will be wound up.
That would make it the first occupational scheme to collapse since the creation of the Pensions Board as an industry regulator.
In the event of a wind-up, Waterford Wedgwood staff who are scheme members would face, at best, a cut in pension entitlements. At worst, retired staff drawing a pension could see benefits cut.
However, Waterford Labour TD Brian O’Shea said he has had consultations on behalf of Waterford Crystal pensioners, with the pension funds concerned and that there were sufficient funds to pay existing pensioners.
“It’s quite reassuring that unless there is another major downturn in the equity markets, this will remain the case,” he said.
First call on assets of the scheme in the event of a wind-up goes to the costs of the winding-up process. Next claim goes to repatriation of Additional Voluntary Contributions made by members.
Priority is then given to those already receiving a pension, or who have passed normal retirement age but whose pension has not yet commenced.
Any pension increases “guaranteed” to existing pensioners under the rules of the scheme would also be covered, although not discretionary increases. If the fund is exhausted at this stage, existing pensioners may not receive the full benefits they expect.
Only at that point will current members of the workforce share what is left. If nothing is left, they will be left without occupational pension scheme cover and would not recover normal contributions they made to the scheme.
However, when the scale of any shortfall is known, Waterford Wedgwood pension scheme members in the UK could apply to the Pension Protection Fund, established by the British government to provide some cover for people when a pension fund is wound up.
It is not certain how many of the nearly 8,000 staff at the Waterford Wedgwood group are covered by pension schemes.
The 2,700 workers in Ireland and Britain are likely to be included, but others in areas such as Germany, Indonesia and the US may be covered by other schemes, or not at all.
