This report outlines our response to a notification of a failure to agree the 2019 scheme triennial valuation. It covers the approach we took with Reach Plc and MGN Pension Scheme and some of the considerations that applied.
It also highlights the statutory duties relating to a scheme’s triennial valuation and, where a failure to reach an agreement occurs, how we will use our powers and act.
It is vital for schemes and employers to maintain an open, healthy dialogue. This is especially important when there is a disagreement that prevents a scheme from fulfilling its legal duties which could result in us taking enforcement action. Schemes are expected to notify us of a failure to agree a scheme triennial no later than 15 months after the due date. Scheme trustees can make a notification of a failure to agree by writing to us.
We have different levers for supervising funding levels. These are essential for ensuring members get the savings they are entitled to. Schemes must regularly commission valuations to check their scheme is appropriately funded. If a scheme does not meet the statutory funding objective, a recovery plan must be put into place to protect savers’ pension pots.
Published: 11 March 2025
Key points at a glance
- In this case we worked with Reach Plc and the trustee following a notification of a failure to agree the 2019 scheme triennial valuation between Reach Plc and MGN Pension Scheme.
- We are publishing this report to set out what we expect from stakeholders and when we will intervene.
- We welcome that the relevant parties could resolve the concerns we identified without the need for us to use our enforcement powers. Where we have been notified of a failure to agree, we work with trustees and employers to reach the best outcome for savers, keeping in mind our duty to consider the sustainable growth of the employer.
- Our aim is to protect pension savers’ interests by getting employers and trustees to comply with their regulatory duties. We use the full suite of regulatory tools at our disposal, from whole-market oversight and engagement to using our powers where we need to.
Case summary
In this case we worked with Reach Plc and the trustee following notification of a failure to agree the 2019 scheme triennial valuation between Reach Plc and the scheme. Following our intervention, the two parties reached an agreement on the 2019 valuation and the subsequent 2022 valuation. Parties agreed that the scheme will receive deficit recovery contributions of £46 million per year, compared with previous annual payments of £41 million under the old recovery plan.
The case in numbers
- 5,490 members as at 31 December 2022.
- 3,079 Defined benefit pensioner members.
- 2,411 Defined benefit deferred members.
- £842 million assets at 2016 valuation.
Background
The scheme is one of several that sits within the corporate structure of Reach Plc, and MGN Ltd (the company) is the statutory employer of the scheme.
At the expiry of the 15-month statutory deadline for agreeing the 2019 triennial valuation we were informed by the trustee that agreement with the company was extremely unlikely. Our supervision team engaged with the trustee and the company, but an agreement was not possible. In August 2022, the matter was passed over to our enforcement team.
The disagreement in relation to the 2019 valuation lasted beyond the effective date for the scheme’s next triennial valuation, which had an effective date of 31 December 2022. The trustee and the company now had to reach agreement in respect of both valuations.
Regulatory action
On receiving a formal notification of a failure to agree, the potential use of our powers in relation to scheme funding was triggered. We acted to resolve the issue and would have used our powers if an agreement had not been reached.
We explored all our regulatory options to ensure the best outcome for the scheme and kept both parties informed of our considerations.
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.
Outcome
Through negotiation, we were able to help facilitate the trustee and company to reach a mutually acceptable solution without the formal use of our powers. The final agreement included making significant improvements in the deficit recovery schedule with the financial support of the wider group, and improving an existing dividend sharing agreement whereby amounts above a certain percentage increase in dividend distributions will result in a sum matching the excess dividend increase being made to the scheme.
Our intervention, through working with Reach Plc and the trustee, resulted in the scheme receiving an additional £5.1 million per annum from the company, backdated to the start of 2023, which will be paid every year until the end of January 2028. The scheme is expected to be fully funded on its prudent technical provisions basis by January 2028.
This has been a positive result for scheme members and ensures the scheme will remain well funded for the foreseeable future.