The Pensions Regulator (TPR) has approved a proposal by Hoover Limited regarding the Hoover (1987) Pension Scheme (HPS), which will achieve the best possible outcome for members in challenging circumstances, and help safeguard jobs at the company’s UK sites.
As part of the plan, known as a regulated apportionment arrangement (RAA), the HPS, which has 7,500 members, will receive £60 million from Hoover and is expected to transfer into the Pension Protection Fund (PPF). The scheme will also receive ordinary shares representing a 33% stake in Hoover.
Hoover and HPS trustees have agreed the RAA and TPR granted clearance to the proposal. Formal approval of the RAA was issued on 30 May 2017.
TPR only agreed to the RAA after ensuring that Hoover met our criteria. These criteria are designed to stop employers abusing the RAA mechanism, and include that the scheme’s employer would have become insolvent within the coming 12 months if the RAA had not taken place.
The lump sum being paid into the pension scheme is higher than it would expect to receive if Hoover fell into insolvency.
Nicola Parish, TPR’s Executive Director of Frontline Regulation 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 companies 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 businesses 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.”
This is the first RAA that TPR has approved this year and only the second in the last two years.
- The Hoover (1987) Pension Scheme has a membership of 7,503. This is made up of 5,319 pensioners and 2,184 deferred members. The scheme does not have any active members.
- For more information about RAAs see our media guide.
- The criteria for an RAA application being accepted are:
- whether insolvency of the employer would be otherwise inevitable or whether there could be other solutions which would avoid insolvency
- whether the scheme might receive more from an insolvency
- whether a better outcome might be attained for the scheme by other means including the use of our powers (for example, our anti-avoidance powers) where relevant
- the position of the remainder of the employer group
- whether the scheme is being treated equitably compared to other creditors
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are: to protect members’ benefits; to reduce the risk of calls on the Pension Protection Fund (PPF); to promote, and to improve understanding of, the good administration of work-based pension schemes; to maximise employer compliance with automatic enrolment duties; and to minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only).
Matt AdamsMedia Relations Manager