Make sure your company pension is safe.

That’s the warning from the former Ronaldsway Shoe Company boss Jack Yardley who says ex-staff have seen their pensions decimated after the company’s final salary scheme became the first in the island to be wound-up.

Since then, trustee, administration and legal fees linked to the winding up had approached half a million pounds by April last year.

Many Ronaldsway Shoe Company pensioners have seen their pensions cut by 50% - while some have received no pay-out at all.

Mr Yardley blames the actions of the regulator and the reluctance of government to intervene. He said: ’There are real people we are talking about - not just numbers.

’I feel like I’ve let them down.

’Since 2005 in the UK, the maximum they would lose is 10%. But there is no protection for company pensions in the Isle of Man.’

Ronaldsway Shoe pensioner Kevin Weir, who retired from the company aged 60 when it closed in 2005, has seen his pension cut by 50%.

He said: ’It’s too late for us but we want to warn others that their private pension may not be secure. The unions need to inform their members that there is no protection in the Isle of Man.’

At its peak, the Ronaldsway Shoe Company employed 300 operatives and other staff at its plant in Ballasalla and manufactured two million pairs of shoes a year, mainly for Marks and Spencer.

It was making £0.5m profit a year. But when M&S put up its discount from 3.5% to 10% in 2004, the company forecast a £1m loss and the entire workforce were given a 90-day notice in February the following year.

It was an upsetting time for the company’s loyal staff and for Mr Yardley personally. He had worked for the company for 36 years, 15 as managing director and chairman.

Ironically, the company actually posted a £1.3m profit in its final year, out of which £750,000 was paid in redundancy and £237,000 returned to the government for money the firm had received in loans and grants.

A £612,000 payment was subsequently made into the pension scheme to cover a shortfall identified by the trustees.

But problems spiralled when UK parent company Lambert Howarth went into administration and the trustees announced they were resigning. The 2008 credit crunch also had an impact.

The then regulator, the Insurance and Pensions Authority, appointed new trustees who petitioned for the winding up of the pension scheme in 2010, claiming a £1m shortfall.

This was the first time a company pension scheme had been wound-up in the island.

Since then, improved stock exchange performance has given some stability to the fund, with the pot for pensioners and deferred pensioners containing about £1.4m, up from £1.3m in 2008, and that for annuitants who had taken their pensions before 2001 containing £732,000.

But about £500,000 had been paid out in trustee, administration and legal fees by April last year. That includes the costs of winding up the scheme which have been estimated at about £200,000.

A request for assistance from Treasury to offset that £200,000 cost has been turned down.

Thirteen pensioners, some of whom took early retirement when the factory closed, have lost an average of 50% of their expected pension, claims Mr Yardley - and there has been no cost of living increase since 2009.

There are also 17 deferred pensioners, half of whom had 25 years’ service with the company and paid 5% of their salary into the scheme, who were told two years ago that they would receive nothing.

The situation has improved since then and they are now looking to get between 10 and 40% of their entitlement.

But Mr Yardley added: ’Four of them have already been retired at least four years and have not received a penny.’

Those who retired before 2001 and took out an annuity have until now received their full pension with 3% annual increase.

But they are now being told their payments will be cut to 2009 levels and frozen, with trustees saying they are to be treated in the same way as the pensioners.

There were 10 annuitants in 2001, now down to six.

Last year, the scheme paid out benefits totalling £108,406 and since 2008 it has paid out £541,040 in payments to pensioners, with over £400,000 for annuitants.

The pensioners and deferred pensioners along with the annuitants were senior management on a final salary pension scheme.

The rest of the 300 people were operatives who joined a voluntary private pension scheme and got their full pension.

Mr Yardley said retail tycoon Philip Green had been criticised for taking nine months to hand over millions of pounds to rescue the British Home Stores pension scheme.

But he pointed out: ’We have been over nine years. The main reason has been the horrific costs involved in the winding up.’

In 2005, the UK introduced a pension protection fund, funded by a levy on all defined benefits schemes. There is no plan to introduce such a fund in the Isle of Man.

Trustees asked if the Ronaldsway Shoe Company, given it had a UK parent, could join that scheme but the answer was ’no’.

In a letter to Mr Yardley in 2010, the then Treasury Minister Anne Craine explained that the cost of setting up such a fund would be ’prohibitively onerous’.

Policy and Reform Minister Chris Thomas (pictured) wrote to Mr Yardley in December saying he was unable to pay £200,000 towards the professional fees of the Ronaldsway Shoe Company pension scheme as there was no scheme in place for such a move.

The trustees said there is always a risk for members in a defined benefit scheme being reliant on their employer’s solvency. They said all scheme members would have been better off with personal pensions. Having received a bulk annuity purchase quotation, they are confident all members will soon get a guaranteed annuity on equal terms.