More than 100 members of a pension scheme are suing their fund’s trustees for approximately €50 million saying they should have ensured a funding deficit was resolved by their employer before the scheme was closed down. The case is to open tomorrow in the Commercial Court.
The members of a scheme run for Element Six Ltd, a producer of industrial diamonds based in Shannon, Co Clare, are arguing that the trustees had the power under the terms of the scheme to demand that the employer fund the deficit before closing the scheme. The arguments involved raise general issues about the obligations of the trustees of pension schemes.
Element Six Ltd is part of an international group and its ultimate owners are Belgian company Umicore, Anglo American plc, and the government of Botswana. The trustees of the scheme have an indemnity from Element Six, meaning it would become liable for any ruling made by the court against the trustees.
According to the latest filed accounts from Element Six, an agreement to wind up the pension scheme was reached with the trustees in December 2011. This agreement involved a final payment of €34.2 million in full settlement of the company's obligations.
The accounts also noted that some members of the scheme subsequently brought a claim against the trustees.
“Whilst the company is not party to the litigation, Element Six Ltd has provided an indemnity to the trustees, which may cover this claim and any award of damages or costs which may be made by the courts should this claim be successful. The trustees are vigorously defending the claim and Element Six believes that the trustees have a strong defence to the claim.”
The six trustees include three executives, with Element's finance director Danny Coady being chairman.
The case, before Mr Justice Peter Charleton, is scheduled to last three weeks. The plaintiffs are being represented by McDowell Purcell solicitors, and the trustees by Matheson Ormsby Prentice.
Element Six made a pre-tax profit of $1.45 million last year, having made a profit of $27.9 million the previous year, according to its latest accounts. At the end of 2012 it had a net liability position of $9.19 million. The accounts show the scheme closed with a deficit of $70.8 million.