Around 100 former employees at a Tyrone textiles firm risk having their pensions cut after it emerged that the company stopped paying into its fund.
The Pension Protection Fund (PPF) is now assessing the case after Herdmans stopped paying the required monthly contributions to its pension scheme in November 2009.
It is believed that the account had a deficit of almost £7m as of September 2010.
It is thought that this shortfall will have no bearing on the amount paid out to workers as long as the PPF accepts the scheme.
Herdman’s Ltd and Herdman’s Holdings Ltd — which dealt in property — had administrative receivers appointed on June 29.
A winding-up order for both companies, based in Sion Mills, was then issued by the Ulster Bank and administrator BDO on June 30.
A spokesman for Xafinity Consulting, on behalf of the trustee of the Herdman’s Pension and Life Assurance Scheme, confirmed that money stopped coming into the scheme almost two years ago, triggering the winding-up |petition.
“The deficit repair contributions agreed between the trustees and Herdman’s Limited ceased in November 2009 and have not been resumed,” he said.
“The current trustee issued a statutory demand upon the company seeking payment of outstanding contributions.
“As this did not prompt any payments from the company, the trustee presented a statutory petition to wind-up the employer which was heard in the High Court on 30 June 2011.”
The court subsequently ordered the winding-up of Herdman’s Limited.
The Pension Protection Fund — which acts for workers if their employer becomes insolvent and its pension scheme can no longer afford to pay the required amounts — is now assessing the situation. One man, who worked for the firm for 18 years, said that many former employees will be worried about their pensions.
“I’m not too badly off, but there will be others who could be badly hit by this because of the financial climate,” he said.
“I believe we will get compensation, but it won’t be what we were originally owed by the company. It’s a very sad state of affairs and people are asking questions about what went wrong.”
Herdman’s Ltd lost £4.3m in 2009, but that figure was an improvement on the 2008 figure of £9.7m.
Herdman’s Mill was built in 1835 by the brothers James, John and George Herdman. They constructed a model village in Sion Mills including a school, churches, recreational and sporting facilities. Following the decline of the textile industry in the north west, the family later branched out into property. But in 2011, both wings of the family business were wound-up.