In December 2014, the Government finally agreed a deal with the former workers of Waterford Crystal who will receive significant pensions and a tax-free lump sum by way of compensation for the delay and stress involved in bringing Irish and European Court cases to resolve the matter. The deal will result in lump sums being paid early in 2015 and pension payments starting by the middle of the year. The settlement will include all 1,774 deferred members of the Waterford Crystal Staff and Factory Pension Schemes and will encompass the families of some members who have unfortunately died since the company went into receivership.
The settlement proposes a tax-free lump sum to the deferred members of the Waterford Crystal factory and staff schemes of €1,200 per year of service in the pension scheme. Workers with pensions under €12,000 will also get 90% of their pension. Workers with pensions of between €12,000 and €24,000 will get 90% of €12,000 plus 67% of remaining benefit between €12,001 and €24,000. Workers with pensions in excess of €24,000 will receive 90% of €12,000, 67% of benefit between €12,001 and €24,000 and 50% of any benefit above €24,000.
In total, it is estimated that the settlement will cost the Exchequer about €178 million.
What will this mean for Waterford and surrounding areas?
In the first instance, many of the former workers who suffered significant financial hardship since the pension schemes were wound up in March 2009 will now be able to look forward to a more secure financial future. The average lump sum payment will be in the region of about €20,000 but people with 40 years’ service will get more.
Whenever people receive a large lump sum of money their initial impulse is to look at ways of spending it. New car purchases, holidays and perhaps home improvements and extensions are among the first items generally looked at. Adult children will perhaps be looking for help with their own mortgages or for help just to get on the property ladder. Because the average age of the Waterford Crystal workers is older, it is likely that some will need to consider saving for long term care.
Many live in homes that were built in the 1970’s and are below modern energy efficiency standards. Upgrades to loft and wall insulation, central heating boilers and thermal heating systems may be a good investment for the future. People may have postponed elective dental procedures such as crowns, etc. and these might now be proceeded with.
Of course, many families may have legacy debt to clear such as credit card and personal loans. For those people, their first priority is likely to be clearing that debt and dreams of spending will remain just that.
Whatever use people decide to put their money to, it is to be hoped that much of it will be spent in Waterford. Since the closure of Waterford Crystal, the city and its surrounding areas have suffered greatly from unemployment, lack of investment and emigration. This windfall could have significant economic benefits for all of us.
The economic benefits come in two forms, direct benefits and indirect benefits. The direct benefits come from the initial spending that creates additional activity in the local economy. The money being spent will pay for salaries, supplies, raw materials, and operating expenses. The extra spending will encourage more local job creation. Indirectly, families benefit by having more family members at work; having an increased income which in turn encourages increased spending in local businesses.
Many people feel that Waterford has never had a fair crack of the whip from Government. Perhaps this legacy from Waterford Crystal might be the catalyst that allows us to do things for ourselves.
Those who have the energy and enthusiasm might consider starting their own businesses. Those who lack that entrepreneurial spirit might be encouraged to save, invest or spend their cash in local businesses. The decisions each retired worker and their family make about how they will spend their income will significantly affect our local economy for better or for worse. Let us hope the right decisions will be made that will return us to the path of growth, employment and prosperity that has been so obviously lacking for the past eight years.