The State must pay €2.8 million into a liquidated company’s workers’ pension scheme following a landmark ruling by the Workplace Relations Commission (WRC).
Kieran Wallace, liquidator of Dublin-based Protim Abrasives Ltd, recently appealed to the commission to overturn a Department of Enterprise, Trade and Employment refusal to pay more than €6 million into the company’s pension scheme.
In a decision published on Monday, adjudicating officer Penelope McGrath upheld Mr Wallace’s appeal but ruled that the department’s social insurance fund’s liability to the scheme was €2.84 million.
Lawyers and insolvency practitioners say Ms McGrath’s ruling is significant as it confirms that a 2008 European Union directive and the Protection of Employees (Employers’ Insolvency) Act, 1984, oblige the State to make up shortfalls in workers’ pension schemes where a business is insolvent.
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Ms McGrath noted that EU member states were “obliged to ensure that measures are taken to protect the interests of employees in situations of employer insolvency”.
Even though the Irish legislation pre-dates it, the adjudicating officer said she had to consider the 1984 law “through the lens” of the 2008 EU directive.
She opted for the lower sum as actuary Paul O’Brien told the pension trustees in September 2009, shortly before Protim was wound up, that the company needed to contribute €3.7 million to the pension scheme to ensure it could meet all its commitments.
As €876,000 from the sale of assets during the liquidation was paid to the scheme’s trustees in 2015, Ms McGrath ruled that this should be set off against the €3.7 million total, leaving a final liability of €2.824 million.
Her finding will come as a relief to workers who have been waiting 15 years for a decision on their retirement savings.
The Department of Enterprise, Trade and Employment could not say on Monday if it would appeal Ms McGrath’s finding.
She noted that the case was complex and that the department needed time to consider it.
“The interests of the pensioners concerned are obviously an important consideration, as also are the sustainability of the social insurance fund and the interests of taxpayers,” said the spokeswoman.
She added that the department would not comment further at this stage.
The High Court wound up Protim Abrasives and appointed Mr Wallace, then with KPMG, as liquidator in November 2009, leading to the loss of 23 jobs.
A further 18 staff had retired from the company, while 27 others who had worked there and contributed to the scheme had left the business for other jobs but had not reached retirement age.
The company established a defined-benefit pension scheme, guaranteeing workers a proportion of their pay on retirement, in 1992.
Employers who offer such pensions are obliged to ensure that the fund can meet outstanding and future obligations.
Section seven of the 1984 Act obliges the State to pay any outstanding employer’s contributions due to a pension scheme on the date of a company’s insolvency, or the amount that an actuary certifies is needed to pay the benefits for which it provides.
Shortly after his appointment, the trustees informed Mr Wallace that the scheme required €8.635 million to meet all its obligations. Changing circumstances reduced this to €7 million, which was cut to €6.124 million when the €876,000 sale proceeds were taken into account.
Mr Wallace made three applications to the department, the third in March 2020, which was rejected, prompting his appeal.
Alison Keirse SC, with Michael Murphy of McCann Fitzgerald, appeared for Mr Wallace. Frances Meenan SC and Elizabeth O’Donovan appeared for the Minister for Enterprise, Trade and Employment with Joseph Dolan and Emmet Hayes of the Chief State Solicitor’s Office.
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