In a statement issued on 5 June 2025, the government has confirmed that it will introduce legislation to address the implications arising from last year’s Court of Appeal judgment in the Virgin Media v. NTL Pension Trustees case.
Background
To briefly recap, the decision of the Court of Appeal was that any amendments to scheme benefits of a contracted-out scheme made during 1997 and 2016 will be void, unless the scheme actuary provided the required actuarial confirmation (typically through what is commonly referred to as a “s.37 certificate”) that the pension scheme would continue to satisfy the statutory standard for contracted-out schemes (the contracting-out test). For a more detailed overview, please see our previous articles here and here.
This decision had wide consequences for the industry, namely due to the uncertainty surrounding the scale of consequences for potentially affected schemes, and what trustees and sponsors could do to mitigate any liabilities. On a practical level, a key challenge for trustees and sponsors was addressing auditor queries regarding the assessment of any current risks and liabilities arising from the judgment.
In December last year, a joint working group comprising the Association of Consulting Actuaries (ACA), Association of Pension Lawyers (APL) and Society of Pension Professionals (SPP) called on the Department for Work and Pensions (DWP) to introduce regulations which would retrospectively validate pension scheme amendments that are currently deemed invalid due to either: (i) the absence of a written actuarial confirmation prior to implementing the amendment; or (ii) the inability to locate such confirmation.
The government has now announced that it will introduce legislation which will allow schemes to seek retrospective, written actuarial verification confirming that previous modifications to benefits satisfied the contracting-out test.
What’s next?
As of now, few details have been released about how this retrospective confirmation process will work in practice and the industry awaits further information from the government. It is presumed that schemes will be able to obtain this retrospective confirmation through existing powers available in legislation to validate past contracting-out errors. However, this is yet to be confirmed.
Additionally, it appears that the onus will be on the potentially affected schemes to take action in order to obtain this retrospective actuarial confirmation. This will likely require scheme trustees and administrators to carry out a review of their documentation, if they have not already done so, to identify any inconsistencies in their records and/or any absence of a written actuarial confirmation (and this may be particularly true for those schemes which decided to take no action until there was confirmation of regulatory intervention). From a practical perspective, this could be a challenge in itself as factually determining whether the amendments met the necessary criteria at the time – with some potentially going back nearly 30 years – may be difficult.
It should also be noted that we are currently awaiting the High Court’s decision in Verity Trustees Limited v. Wood,[1] which is expected to deliver some further clarity on issues left unanswered by the Court of Appeal in Virgin Media. With the judgment expected for August 2025, trustees and sponsors should continue to monitor developments.
Nevertheless, this development represents a significant step towards resolving the uncertainty arising from the Virgin Media v. NTL judgment and the government’s announcement has been welcomed by the industry, with many expressing relief that any uncertainty over unforeseen costs arising from the judgment can now be avoided.
