Pension vacuum
Ex-Hoover workers suck up loss
THOUSANDS of ex-Hoover workers will suffer a hit in retirement after the appliance maker’s owner refused a pensions bailout.
Regulators yesterday announced a deal allowing Hoover’s UK arm to ditch its pension scheme.
The scheme, which had a £300million shortfall, will now go into the Pension Protection Fund.
The move protects the pension pots of 5,319 former Hoover workers who have already retired. But annual income increases are less generous.
And 2,184 yet-to-retire members will see their pots cut by 10%.
The deal safeguards Hoover’s UK arm, now a distribution and marketing business employing around 500 staff.
It used to make appliances at Merthyr Tydfil, Wales, and Cambuslang, Scotland.
But production was shifted to China after Italy’s Candy Group bought the business in 1995 triggering hundreds of job losses. Under the settlement, Hoover will put £60m into the pension scheme, plus a 33% stake in the business.
Nicola Parish, from the Pensions Regulator, said: “We believe it is the right outcome.”
But the scheme ended up in the PPF after Candy refused to inject money.
The regulator report said: “Candy Group – which had no legal obligation to provide support to the employer or the scheme – declined to provide further support.”
Candy is kissing goodbye to debts owed by Hoover, and sources say it had never received a dividend from the offshoot.
But independent pensions expert John Ralfe said: “The law should be changed so that when any company buys another company which has its own pension scheme, the new parent should have to guarantee the subsidiary’s pensions.
“If the subsidiary is in difficulty, then the parent would have to pay up, with no ifs or buts.”