Liz Levy, Freelance Writer
FORMER EMPLOYEES of Gillette Caribbean have split into two contending parties over the award of the entire $42 million surplus in the company's pension fund in December.
Twenty-four former employees of Gillette, the personal care products manufacturer which closed down its Jamaican plant 8 years ago, are the latest set of pension fund contributors heading to the courts. The contributors are appealing a December 2004 judgement delivered by Justice Patrick Brooks in a case brought before the courts by the trustees of the pension plan which sought the court's direction on the distribution of the surplus.
Attorney Wentworth Charles who represented the lone awardee, contended that the rules of the plan stipulate that the surplus should go to all employees at the date of the fund's discontinuance (in reality only one person), as well as other persons in receipt of, or entitled to receive pension benefits from the fund.
The fund was discontinued on December 31, 2000, and was administered by Life of Jamaica.
In interpreting the effect of the phrase 'the then members' used in the plan?s rules, Justice Brooks found that all "former employees who had elected to receive, and have, prior to 31st December, 2000, received a cash return under rule 6(b) of the Gillette Pension Fund Rules?, were not entitled to share in the surplus.
INCONSISTENCY
In Justice Brooks' view, the question of the pension plan's surplus going to the company as in the case of Air Jamaica did not arise, despite an apparent inconsistency between one of the rules which anticipates the possibility of a portion of surplus funds being paid to Gillette, and another rule which indicates that all surplus funds are to be paid to the plan's members.
There would only be a refund to Gillette, the judge found, if there were a failure of the Trust Deed, or an inability to allocate all the funds existing at the date of the discontinuance of the pension plan.
But the 24 former employees are contending, among other things, that the judgement, allowing one employee to obtain all of the pool of funds accumulated by the trustees, "is contrary to justice and equity and could not have been in the contemplation of the trustees, whose purpose under the Trust Deed was to hold the Fund on trust 'for the exclusive benefit of members, retired members, their widows and/or designated beneficiaries.'"
The contributors have retained attorney John Graham to present their case which is likely to come before the Court of Appeal within the next 6 months. The notice of appeal was filed six weeks ago.
Myers, Fletcher and Gordon represent the Trustees, while Nunes, Scholefield, DeLeon & Co-partners represent Gillette Caribbean.
FAR-REACHING IMPLICATIONS
The Gillette case will, in the view of one commercial attorney, "have far-reaching implications
for the disbursement of surpluses of other pension plans".
Over the past year, this is the second matter to head to the courts involving a pension fund surplus, the other being a case brought by contributors to the Red Stripe pension fund.
"It will certainly impact decisions to be adopted by trustees of existing plans because most of our present plans were established under the old English Common Law rules as there was no specific piece of legislation outside of approvals granted under the Income Tax Act", said another pensions expert. "In the absence of this (specific legislation) one would have had to be guided by judicial precedence, for example, the decision taken in the Air Jamaica case, and remember, every case would differ.
"Thankfully, the new Pensions Act sets out a sort of pecking order as to the distribution of benefits," she added.
The Pensions (Superannuation Funds and Retirement Schemes) Act, 2004 was passed by Parliament on September 21, 2004. But the regulations related to the act - though approved by the lower house on March 8, 2005 - are yet to be approved by the Senate. It is understood that the Senate could consult pensions experts on several issues related to the proposed regulations, including increased costs to plan administrators and how it would impact benefits.
At the end of 1996, Gillette Caribbean ceased operations at its Gordon Town Road plant where it manufactured Minora razor blades, Right Guard deodorant, White Rain shampoo and conditioner, Liquid Paper, and Papermate pens. The company then switched its focus on the local market to the distribution of products imported from its other regional plants.
In 2000 Gillette pulled out of the island and appointed a local distributor, Cari-Med Limited. Its US-based parent company was recently acquired by US-giant Proctor & Gamble.
