Diamond manufacturer pension scheme members say they are owed €50m
MEMBERS of a wound-up pension scheme of an industrial diamond manufacturer claim they are owed around €50m, a court heard.
Mr Justice Peter Kelly today agreed to fast-track to the Commercial Court an action by 124 members of the scheme against the trustees of the contributory pension plan of Shannon-based Element Six Ltd (formerly De Beers Industrial Diamond Division (Ireland) Ltd).
The judge said the action raises general issues about the obligations of trustees of pension schemes.
Among various claims by 124 is that the Element Six parent company threatened and bullied the trustees concerning the company's obligations to address the deficit of up to €184m in the pension plan.
Mr Justice Kelly made the matter returnable to court next February.
Seeking the transfer to the Commercial Court, Una Tighe BL, for the members, said the pension plan was wound up in December 2011 with a minimum funding standard deficit of some €129m, increasing to €184m to take account of the sum required to fully provide for the plan's liabilities
By a 4/3 vote carried by the casting vote of the chairman, a company trustee, the trustees had accepted an offer by the company to pay €30m towards the deficit, the court heard. That sum included the company's €11m annual contribution for 2011 to the pension plan.
The members have raised a range of issues concerning the trustees handling of the matter, including their alleged failure to exercise their power to require the company to make a contribution to fund the full amount of the deficit. The trustees should also have referred the matter to the High Court for directions, it is claimed.
Ms Tighe said her clients are some of the members of the plan and the value of their claim is between €40-50m.
When the pension plan was in deficit in February 2009, a funding proposal was submitted to the pension board setting out the steps agreed between the trustees and Element Six Ltd (as principal employer), to fund the deficit, counsel said.
The trustees had power under the plan to issue a demand requiring the employer to fund the deficit on receipt of one month's notice from the principal employer of its intention to terminate contributions but failed to exercise that power, she argued.
In an affidavit, John P. Greene, one of the members, said the employer proposed in October 2011 that the plan be wound up and also described the agreed funding proposal approved by the Pensions Board as "unsustainable". It proposed the plan be wound up subject to conditions, including an employer payment of €30m.
Mr Greene said he was informed the company had in a presentation and circular to the trustees in October 2011 referred to various factors which might affect pensions, including possible legislative reform of the statutory minimum funding standards which could require the company to double its existing fund of the plan to about €20m per year.
The circular stated the company could not increase its current level of contributions and stated the best means of securing the sustainability of the Shannon site was to close down the plan completely.
Mr Greene said he was informed the trustees were told the employer's "offer" had to be accepted by them or it would be withdrawn and the Shannon plant closed, it is claimed. One of the member trustees, Thomas O'Brien, had said the member trustees felt coerced and bullied by the employer, he added.
In their action, the members claim the Trustees, having regard to their duties, were required to make a contribution demand for the full amount of the outstanding deficit but failed to do so.
It is also claimed the member trustees had expressed views at meetings the trustees were entitled to demand payment of the total deficit from the employer and should make that demand.
It is also alleged a forensic accountant's report presented to the trustees in November 2011 "posed a number of difficult questions" for the company, which later disputed that report.