Hoover has revealed it is pushing for a deal to send its defined benefit (DB) scheme into the Pension Protection Fund (PPF) in order to avoid collapse.
The electricals company confirmed it is in talks with the lifeboat fund and The Pensions Regulator (TPR) to undertake a regulated apportionment arrangement (RAA), which would split the Hoover (1987) Pension Scheme from the company and move it into the PPF.
An RAA is a statutory mechanism that allows a company to free itself from its pension obligations in order to avoid insolvency, dependent on meeting certain conditions approval from TPR and the PPF.
Yet, these arrangements are very rare with just around 25 having been agreed.
If an RAA is agreed for the Hoover scheme, it means around 7,800 members would be forced to take a 10% cut to their benefits. However, this would be dependent on Hoover persuading both TPR and the scheme's trustees that such a move would be in the best interest of members.
The final salary scheme, which closed to accrual in 2012, had a deficit of £194.1m on an IAS 19 accounting measure as of 30 June 2015, according to its most recent accounts. At the time, it had liabilities amounting to £529.7m and assets totalled £335.6m.
In that same report, the company said it had made a pre-tax profit loss of £6.2m in the 18 months to June 2015.
A spokesperson for Hoover said it had been working to find a solution for some time.
"Like many other companies, Hoover has for some time been working collaboratively with its pension scheme trustees and TPR to find a long-term solution to the deficit in its DB pension scheme," they said.
"We are committed to finding an outcome that it is in the best interests of all the members of the scheme, current employees, and the company. These discussions are ongoing."
Moving the scheme into the PPF would reportedly cost an estimated £250m, but a final decision is not expected for several months.
Both the PPF and TPR said they could not comment on ongoing discussions with schemes.
While rare, RAAs have been touted as a potential solution for companies with overwhelming DB deficits, where the shortfall could cause the company to go insolvent.
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