Publishing giant Reach has agreed to increase its annual contributions to the MGN Pension Scheme by more than £5m a year until January 2028 following an intervention by the Pensions Regulator (TPR).
In a report published today (11 March), TPR detailed its work with Reach and the trustees of the pension scheme after the two parties failed to agree a contribution schedule following the scheme’s 2019 valuation.
Further disagreements lasted past the date for the 2022 valuation, but with the threat of enforcement action from TPR, the employer and trustees eventually settled with a new plan that is expected to lead to the scheme being fully funded by 2028.
The MGN Pension Scheme was one of the pension schemes affected by the Robert Maxwell fraud. Maxwell took more than £400m from pension schemes attached to the Daily Mirror newspaper’s publishing company, Mirror Group Newspapers, in the 1980s.
What was agreed
The trustees alerted TPR in 2021 that it was unlikely to agree a new funding approach with Reach by the statutory deadline – 15 months after the valuation date. The regulator’s report did not give a reason for the disagreement.
TPR’s engagement team attempted to help forge an agreement but this was unsuccessful, and the case was handed to the regulator’s enforcement team in August 2022.
However, while TPR said it had “explored all our regulatory options”, it was not required to act as the two parties eventually came to an agreement.
“We directed the company and trustee to continue negotiations and made it clear that, if an agreement was not reached, we would take formal enforcement action,” TPR said.
The MGN trustees and Reach agreed that the employer will pay annual deficit recovery contributions of £46m until January 2028. This compares with £41m under the previous recovery plan.
The parties also agreed to expand a dividend sharing agreement. This means that, should Reach increase its dividend by more than a specified percentage, it must match the excess amount with a contribution to the MGN Pension Scheme.
The agreement was finalised in October and backdated to the start of 2023.
‘First line of defence’
TPR’s executive director for compliance and enforcement, Gaucho Rasmussen, said the case illustrated the regulator’s support for trustees as “the first line of defence for savers”.
“We want all schemes to be open and transparent with us and engage with us early so that we can be clear on our expectations,” Rasmussen said. “As in this case, schemes and employers can then work together to resolve issues.
“If schemes and employers do not to engage with us early, and do not respond to our steers, then they should not be surprised if we use the full suite of regulatory tools at our disposal, to resolve our concerns and ensure good outcomes for members of a scheme.”
According to Reach’s latest annual report, the MGN scheme had a deficit of £219m as of 31 December 2022, the most recent formal valuation. It has since completed a partial buy-in of the scheme, although no further details were given in the report. The MGN Pension Scheme’s next triennial valuation will be as of 31 December 2025.
Reach sponsors six defined benefit pension schemes. In total, the schemes have £1.57bn in assets and £1.62bn in liabilities, according to the 2024 annual report.
