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The Government's proposed amendments to the Pension Schemes Bill include, as expected, measures to address issues arising from the Virgin Media case.
The case concerned historic amendments to post-April 1997 benefits under contracted-out salary related schemes. In broad terms, regulation 42 of the Contracting-out Regulations said that an amendment of that sort could not be made unless the scheme actuary had confirmed in writing that the scheme would continue to satisfy the statutory standard (or reference scheme test). In VirginMedia, the courts held that a failure to meet the confirmation requirement, where applicable, rendered an amendment void.
Much as indicated in Government's announcement of 5 June 2025, the measures now proposed will in principle enable trustees to cure an amendment which might otherwise be void on regulation42 grounds, by obtaining actuarial confirmation retrospectively. There are, however, some wrinkles.
The curing mechanism
An amendment will be treated as having met the confirmation requirement from the outset, if, at the request of trustees, the scheme actuary confirms in writing that "in the actuary's opinion it is reasonable to conclude that ... [the amendment] would not have prevented the scheme from continuing to satisfy the statutory standard".
The proposed legislation includes provisions to facilitate retrospective confirmation in cases where there may be gaps in relevant historic data. The actuary may:
- take any professional approach (including making assumptions or relying on presumptions) open to them in the circumstances; and
- act on the basis of the information available to them, as long as they consider it sufficient for the purpose of forming an opinion.
Whether there will be supporting guidance is not yet clear.
Exceptions: "positive action" and legal proceedings
It will not be possible to cure an amendment as above if the trustees have taken "positive action" on the basis that they consider the amendment to be void on regulation 42 grounds. "Positive action" means, broadly speaking:
- notifying members that the amendment is considered void and that the scheme will be administered as though it had not been made; or
- taking other steps which have (or will have) the effect of altering benefit payments on the basis that the amendment is considered void.
Likewise it will not be possible to cure an amendment if validity of the amendment, on regulation 42 grounds:
- has been determined by a court before the date when the legislation comes into force (theimplementation date); or
- was in issue in legal proceedings on or before 5 June 2025, and either remains in issue at the implementation date or has been settled by agreement before then.
The Government may by regulations provide that particular types of amendment will not be capable of being cured.
Wound-up schemes etc
Subject to the exceptions just described, an amendment will be treated as having met the confirmation requirement from the outset, if by the implementation date the scheme:
- has been wound up; or
- has fallen into the PPF.
In these circumstances, retrospective confirmation will not be required.
Implementation
The Government proposes that the Virgin Media measures should come into force two months after the date on which the Pension Schemes Bill receives royal assent. On that basis, the implementation date is likely to fall in Q2 or Q3 2026.
Bear in mind that this note summarises the measures currently proposed (pages 67 to 76 of the tabled amendments to the Pension Schemes Bill). There could of course be changes as the Bill passes through Parliament.
In the meantime, judgment is likely to be handed down in the Verity Trustees case, which considered a number of questions arising from Virgin Media.
Comment
Obtaining retrospective actuarial confirmation will not necessarily be straightforward, even if the actuary is permitted to rely on presumptions and act on the basis of available information. Professional guidance in this regard might be helpful, for actuaries and, indirectly, for trustees and employers.
Subject to that important caveat, the proposed measures will mean that trustees can if need be achieve certainty by curing historic amendments which might otherwise be invalid on regulation 42 grounds.
"If need be" is important. There will be many cases where retrospective confirmation will be unnecessary, because it will be sufficiently clear that confirmation was obtained when amendments were originally made.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
