Ford has offered to top up the pensions of former Visteon workers in a bid to end a long-running dispute which had been due to reach the High Court later this year.
The Visteon scheme entered the Pension Protection Fund (PPF) following the collapse of the car parts manufacturer five years ago, after it was spun off from Ford.
The settlement would see the car maker top up members' PPF compensation - which is set at 90% of accrued benefits for those below normal retirement age, with reduced indexation - so that they receive the full value of benefits accrued when working for Ford.
It does not extend to benefits accrued between the spin-off of Visteon in 2000 and the firm's insolvency in 2009.
The offer must be accepted by members of the scheme, but is being recommended by Unite the union, which has led members' legal challenge against Ford and the Visteon Pension Action Group (VPAG)
Campaigners had claimed that members of the Ford scheme who transferred out were misadvised, and had been given guarantees that they would receive the same benefits as if they had remained in the scheme.
The legal challenge had been due to be heard in the Autumn, but will not reach court if the offer is accepted.
In a statement, Unite said: "Unite has concluded an agreement with Ford to make a settlement offer to eligible ex-Visteon employees who filed legal claims in connection with reductions in their pensions resulting from Visteon UK being put into administration in 2009.
"Unite and Ford have been involved in lengthy but constructive discussions to reach a position where a settlement has been offered."
A spokesman for Ford said: "The settlement, if approved by Visteon pensioners, would avoid further expense for participants in the case and will settle the legal claims that these individuals have made against Ford."
Ford had come under pressure to settle following a high profile campaign backed by MPs, Welsh Assembly members and MEPs.
Former-Visteon employee Paul Bailey welcomed the offer. He said: "It would have been nice if we could have got more, but this provides a pretty fair deal for everyone.
"If accepted it means we won't have to go to court, which is in everyone's interest."
