In record year Swedish multinational closes Irish pension scheme
A Swedish multinational closed its Irish pension scheme in 2012 — a record year for group profits — and the opportunistic move in Ireland was not because of a collapse in investment values after the bubble burst but because during the boom years the Irish subsidiary delivered bumper dividends to Stockholm while its pension scheme was underfunded.
We highlight this issue because while ministers, with no need to fear poverty in old age, are quick to promise a rise of a few euros a week in the State pension at election time, but the shamefully low level of private sector occupational pension coverage coupled with low worker protection for those lucky to have a pension, are inconvenient issues that typically are ignored.
The former Waterford Crystal workers who had to assert their pension rights by battling the State all the way to the European Court of Justice in Luxembourg, were lucky as they had trade unions to fund legal fees of over €1m.
Atlas Copco, founded in 1873 and with a payroll of 39,000 in 2012, said itself that it was "an industrial group with world-leading positions in compressors, expanders and air treatment systems, construction and mining equipment, power tools and assembly systems." It made a profit before tax of 18.5bn Swedish krona in 2012 or over €2bm at then exchange rates.
Its product range for industry and construction including road building, gave it a big opportunity to take advantage of the growing Irish economy from the mid-1990s.
The Irish operation is a sales company and at the end of 2007 there were 55 members of the pension scheme including 4 pensioners.
The 2007 accounts of the scheme stated that an actuarial valuation carried out as at 1 January 2005 found that the funding standard required according to 2004 regulations were not met and the trustees had put a proposal to the then Pensions Board which outlined plans to meet the standard by 31 December 2013. However, an actuary judged that based on 31 December 2007 data, the funding standard target of 31 December 2013 would not be met.
Although the value of investments grew between 2007 and 2010, the pre-bust underfunding gave the group the opportunity to wind up the scheme.
Invesco who became administrators of the scheme in 2005 pleaded on behalf of Atlas Copco (Ireland) Limited during the record year of 2012 for the group:
The company were not in a position to pay sufficient contributions to fully secure your benefits on wind up [ ] There are sufficient assets in the scheme to secure transfer values in respect of accrued benefits for deferred members (former employees who were not retired), but insufficient assets to secure post retirement increase of 3% per annum.
I had been a member of the scheme in the period 1984-1995 including the period 1989-1995 when I was a financial manager of Atlas Copco's operations in Saudi Arabia.
The transfer value payable in respect of a defined benefit entitlement, as calculated by the scheme actuary, was 26% greater than the minimum transfer value in line with the provisions of the Pensions Act of 1990, which Atlas Copco paid.
The Pensions Board now the Pensions Authority nodded through the wind-up and to add insult to injury, as I need my final pensionable salary details related to my time in Saudi (which of course the Irish Revenue hasn't got as I was not tax resident in Ireland), Invesco says that it did not receive "historic salary details" when it took over administration of the scheme in 2005 while Mercer Ireland — a unit of Marsh & McLennan, the US financial services giant — which in 1998 acquired Irish Pensions Trust, the previous administrators, has been unable to locate the records in recent weeks.
Update: The Revenue clarified that Mercer was using my old Social Welfare Number which did not correspond with my PPS number!