Cantillon: Element Six case will cause ripples throughout the indursry

Two key issues in High Court pensions case will cause disquet

More than 100 workers are claiming about €50 million – the deficit they allege the trustees should have made sure was resolved before the pension scheme was wound down

More than 100 workers are claiming about €50 million – the deficit they allege the trustees should have made sure was resolved before the pension scheme was wound down

Tue, Nov 26, 2013, 01:00

When pension fund members start suing their trustees, it is a clear indication of the deep rupture in the formerly paternalistic relationship between workers and their employer. Trustees, after all, are supposed to be independent and to act in the interest of members in managing the pension promise of employers.

While not unprecedented, the action today in the High Court where workers at industrial diamond group Element Six will, therefore, attract attention across an increasingly troubled sector.

In the Element Six case, more than 100 workers are claiming about €50 million – the deficit they allege the trustees should have made sure was resolved before the pension scheme was wound down.

The courts will decide but, even at the outset, there are two issues that will cause ripples of disquiet throughout the industry.

First, it was reported over the weekend that the chairman of the trustees was finance director of the company. While there is nothing to expressly rule out someone holding both roles, it seems at best inadvisable, considering the potential conflicts of interest that could arise – especially in a situation where the pension scheme is being wound up.

It has also emerged that the company, while not party to the litigation, has provided an indemnity to the trustees, covering any damages that may be awarded should the workers’ claim be successful.

While this will come as a relief to trustees who can be held personally liable for damages in such cases, it will do nothing to increase the faith of pension scheme members that trustees are independently acting in the interests of beneficiaries in the many defined benefit, or final salary schemes, that are confronting the real possibility of being wound up – in a position where members will lose an often significant share of their retirement benefits.

Sign In

Forgot Password?

Sign Up

The name that will appear beside your comments.

Have an account? Sign In

Forgot Password?

Please enter your email address so we can send you a link to reset your password.

Sign In or Sign Up

Thank you

You should receive instructions for resetting your password. When you have reset your password, you can Sign In.

Hello, .

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

Thank you for registering. Please check your email to verify your account.

We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.