Some members of the wound up pension scheme of a company in the De Beers diamond manufacturing group have been left with no money and in great personal and financial distress, the Commercial Court heard yesterday.
Senior counsel Paul Sreenan was speaking on the opening day of a case on behalf of 124 members of the Shannon-based company Element Six Ltd, formerly De Beers Industrial Diamond Division (Ireland), over the firm’s closed defined benefits pension scheme, which has 800 members.
In a representative case brought on behalf of 124 members, they claim the scheme’s six trustees acted in breach of fiduciary duty by accepting a company offer to wind up the scheme on the basis of a contribution of around €35m from the company. This was at a time, it is claimed, when the scheme had a minimum funding standard deficit of some €129m, increasing to €184m to take account of what was required to provide for the plan’s liabilities.
The members are suing the trustees claiming, among other things, that Element Six’s parent company threatened and bullied the trustees concerning the company’s obligations to address the deficit. The trustees deny the claims and Mr Justice Peter Charleton is being asked to first address the question of liability.
By 2008/9, the scheme had built up a substantial deficit and following negotiations between employer and the trustees, it was agreed the company would pay €10.75m per annum until 2020 to address the deficit.
However, by the middle of 2011, “matters started going awry”, counsel said, and an actuary was predicting the scheme would be “off track” by the end of the year.
The company decided the scheme should be wound up and told the trustees it would be on the basis of a €35m contribution, including around €8m in a side payment towards a separate defined contribution pension scheme and €4m to supplement low income pensioners, counsel said.
This was “accompanied by a threat” that if the trustees did not accept it there was a risk the company would close down in Shannon and the trustees could then make their demand for a contribution to the deficit from the liquidator, counsel said.
The hearing continues.
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