Following action by The Pensions Regulator (TPR), the MGN Pension Scheme will be fully funded by January 2028, with an additional £25.5 million five-year injection from publisher Reach Plc.
TPR has today published a regulatory intervention report detailing its response after receiving notification of a failure to agree a scheme triennial valuation between Reach Plc and MGN Pension Scheme. It also highlights the statutory duties relating to a scheme’s triennial valuation and, where a failure to reach an agreement occurs, how TPR will consider using its powers.
When a valuation and recovery plan cannot be agreed, a defined benefit pension scheme runs the risk of the employer not paying the right amount of money into the scheme and members may miss out on their full benefits.
TPR’s Executive Director, Compliance and Enforcement Gaucho Rasmussen, said:
“This case shows how we will support trustees in their role as the first line of defence for savers, and to stop bigger problems arising later. We want to protect members of schemes and are pleased that in this instance the employer and trustee were able to agree their valuations without the need for us to use our powers.
“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. 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.”
An agreement which benefits savers
In this case, TPR worked with the trustee and company following notification of a failure to agree the 2019 scheme triennial valuation between Reach Plc and the MGN Pension Scheme, which has 5,490 members. Following TPR’s involvement, 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.
Notes for Editors
- The scheme is expected to be fully funded on its prudent technical provisions basis by January 2028. When a UK pension scheme is described as 'fully funded on its prudent technical provisions basis' it means the scheme has enough assets to cover its liabilities, as calculated using cautious assumptions. These assumptions are designed to ensure that the scheme can meet its obligations to pay benefits to members, even in adverse conditions. In simpler terms, the scheme has sufficient funds to pay out all the promised pensions, considering a conservative estimate of future investment returns, life expectancy, and other factors.
- TPR’s involvement 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.
- TPR is the regulator of work-based pension schemes in the UK. Our statutory objectives are to:
- protect members’ benefits
- reduce the risk of calls on the Pension Protection Fund
- promote, and improve understanding of, the good administration of work-based pension schemes
- maximise employer compliance with automatic enrolment duties
- minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)
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