Newspaper publisher Reach requests DRC suspension

Reach PLC, the publishing house for the Daily Mirror, Daily Express and Daily Star, has requested discussions with pension scheme trustees to defer pension deficit recovery contributions (DRC) amid the Covid-19 pandemic.

The firm’s board agreed that all stakeholder groups should be asked to contribute to ensuring the company is “in as strong a position as it can be”, requesting discussions with trustees as a result of this.

Commenting on the announcement, Reach CEO, Jim Mullen, stated: "These are very challenging times and I would like to thank all our colleagues at Reach for their support and commitment.

“It remains difficult to predict the duration and long term impact of the crisis on our sector so it is key we take proactive measures now on cost to protect jobs and the Reach business for the long term."

This follows guidance from The Pensions Regulator (TPR), published last week, which introduced easements to allow trustees greater discretion around DRCs.

As such, trustees are now less likely to face enforcement action if they suspend DRCs, for up to three months, with the potential for a further extension where appropriate.

However, the regulator has urged trustees to “carefully consider” these requests, emphasising that they should only be accepted where banks and other funders are “supportive”, and ensuring that no dividends, or other distributions, are being made from the employer.

Reach has also announced a number of key actions designed to mitigate costs and conserve cash, including plans to furlough around 20 per cent of its staff under the government’s job retention scheme.

This is in addition to a 10 per cent pay reduction, ensuring of course no employee falls below the living wage, as well as a 20 per cent pay reduction for all PLC board members, and some senior editorial and management team members.

The firm has also registered for the temporary wage subsidy scheme in Ireland, and confirmed that it will no longer be proposing a final dividend for the financial year 2019.

Its year end financial report, published in February 2020, reported a £52.7m fall in the accounting pension deficit to £295.9m, which was attributed to the firms contributions over the past year.

The firm had been set to make a further £48.9m in contributions in 2020, having made payments of around £49m and £39m in 2018 and 2017 respectively.

These contributions were in line with the ten-year agreed recovery plan for the group’s schemes, with the firm currently agreeing 2019 triennial valuations for the schemes.

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