Thousands of people worked at its Merthyr Tydfil washing machine plant over 60 years. It stopped production in 2009 but a warehouse still operates.
The company will contribute £60m to the pension scheme.
The Pensions Regulator has approved the proposal and the scheme is expected to transfer into the Pension Protection Fund (PPF).
The deal has been struck because there was "clear and extensive evidence" that Hoover would inevitably fall into insolvency otherwise.
The regulator said it was the "best possible outcome for members in challenging circumstances".
Up to 4,000 people in Wales could be affected. Those still under retirement age could receive an immediate 10% cut in their pension pot.
The pension scheme has 7,500 members, made up of 5,319 pensioners and 2,184 who have deferred their pensions.
A distribution warehouse and head office is still based at Pentrebach in Merthyr.
At about £500m, the pension scheme is roughly the same size as collapsed store group BHS's scheme. That is still being assessed for take-over by the PPF, which acts as a pensions "lifeboat".
The Hoover pensions scheme will also receive a shareholding worth a 33% stake in the company as part of the deal.
The scheme has a deficit of about £250m and Hoover had to prove the business was at risk of going bust in the next 12 months unless action was taken.
Nicola Parish, of The Pensions Regulator, 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."
She said this type of pension restructuring was rare and guidelines were in place to the arrangements were "not abused by businesses seeking to offload their pension liabilities".
This is the first such deal approved in 2017 and only the second in the last two years.
Hoover is a century-old household appliances brand but has been owned by Italian firm Candy for more than 20 years.
A deal has been struck for Hoover to move the company's pension scheme into a protection fund.