Element Six pension scheme trustees acted reasonably when they voted to wind up the multinational's retirement fund and accepted the company's final offer of a €37.1 million contribution for its members, an expert told the High Court yesterday.
More than 100 members of the Element Six defined-benefit pension scheme are suing its trustees for breach of duty arising from their decision to back a company proposal to wind it up in December 2011, specifically for failing to demand the company ensure its liabilities were fully funded.
Element Six had offered to make a final €23 million contribution on behalf of workers still paying into the fund, along with a €14 million side payment that included €8 million towards a new plan. It had warned the trustees that making a contribution demand would force the Shannon- based plant’s liquidation.
The plaintiffs argue that the trustees should have made the demand in any case and that they had evidence to show the retirement fund would have received up to €18 million more had the company been liquidated.
Yesterday, Alan Broxson of the Irish Pensions Trust Ltd, told the High Court he believed they acted reasonably in the circumstances and would have made the "the same decision" had he been in their shoes.
“It’s my view that the trustees cannot be criticised for electing to take a firm offer on the table instead of gambling on an uncertain conclusion,” he said, referring to the fact that they believed there were question marks over what could happen the fund if the company was liquidated.
He also pointed out that there was nothing to stop the company from walking away from the scheme, even though it had agreed three years to contribute €10.75 million a year to it under a funding proposal designed to tackle a deficit that emerged in 2007.
The six trustees were split three-three for and against when they voted on the wind- up proposal. Chairman Danny Coady used his casting vote in support of the company.
Pension scheme members argue that a conflict of interest prevented the trustees from acting. They faced the loss of their jobs if Element Six was liquidated.
Mr Broxson accepted that the trustees were conflicted, but argued that this was not unusual and that the important thing was how they managed that situation.