The Pensions Regulator (TPR) has approved a regulated apportionment arrangement (RAA) for appliance retail organisation Hoover's pension scheme.
The proposal will see Hoover pay £60 million into the Hoover (1987) Pension Scheme (HPS). The scheme will also gain ordinary shares in Hoover, representing a 33% stake.
The pension scheme, which has 5,319 pensioners and 2,184 deferred members, is expected to transfer into the Pension Protection Fund (PPF).
The proposal aims to help safeguard pension outcomes for the 7,503 scheme members, as well as protect jobs across the organisation’s UK sites.
TPR formally approved the RAA on 30 May 2017, after both Hoover and the pension scheme trustees agreed on the new arrangement.
Hoover had to meet particular criteria to gain formal approval. This criteria included that Hoover would have become insolvent within the next 12 months if the RAA had not taken place. Other considerations include whether the scheme might have received more from an insolvency, whether a better outcome might have been achieved using other means, such as by using TPR anti-avoidance powers, the position of the remainder of the employer group, and whether the scheme was being treated equitably compared to other creditors.
The lump sum that is to be paid into the pension scheme is higher than it would likely be if Hoover were to become insolvent.
This RAA is the first such proposal to be approved by TPR in 2017, and the second RAA to gain approval in the last two years.
Nicola Parish, executive director of frontline regulation at TPR, said: “We do not agree to these types of arrangements lightly but in this case we believe it is the right outcome for scheme members and the PPF. RAAs can also be a useful means to keep [organisations] afloat and preserve jobs.
“This type of pension restructuring is rare, and will only be agreed in accordance with our published guidance, so that RAAs are not abused by [organisations] seeking to offload their pension liabilities. We insisted on clear and extensive evidence to show that Hoover would inevitably fall into insolvency without a restructuring of its pension arrangements.”
