The Department for Work and Pensions (DWP) has published draft legislation which it aims to introduce, that could resolve the issues caused by Virgin Media v. NTL Pension Trustees, which (as covered in our previous articles here and here) cast doubt on the validity of certain amendments made to contracted-out defined benefit pension schemes.
The Virgin Media case
To briefly recap, the Court of Appeal’s decision in Virgin Media meant that amendments to contracted-out defined benefit pension schemes made after 6 April 1997 were invalid if trustees could not prove that an actuary had confirmed that the pension scheme would continue to satisfy the statutory standard for contracted-out schemes (through what is commonly referred to as a “s.37 certificate”). This ruling exposed many schemes to the risk that their historic amendments could be unenforceable.
The proposed solution
The proposed solution is contained in amendments to the Pension Schemes Bill, which concluded the committee stage of its introduction in September. The draft legislation seeks to address the issue by allowing schemes to obtain actuarial confirmation retrospectively. To utilise the proposed solution, the amendments in question must have been treated by the trustees as a valid alteration and the trustees must not have taken any “positive action” on the basis that they considered the alteration to be void. This means an action taken by trustees in administering the scheme on the assumption that the scheme alteration was void, such as notifying the members that the amendment is void or changing the scheme records. Schemes that have previously litigated the validity of the alteration or issued proceedings regarding this on or before 5 June 2025 will also be unable to rely on the proposed solution.
To validate an historic amendment under this new power, the trustees must make a written request to the scheme actuary to consider whether the alteration “would have prevented the scheme from continuing to satisfy the statutory standard” (i.e. would have met the statutory reference scheme test). The actuary must analyse this and confirm whether it is reasonable to reach this conclusion and, in doing so, may take “any professional approach” when considering this, giving the actuary the flexibility to make assumptions or rely on presumptions.
An exemption is provided for previously wound-up schemes, which will be deemed to have met the actuarial confirmation requirement automatically.
A lingering area of uncertainty concerns any amendments made to close a scheme to future accrual. Verity Trustees v. Wood is expected to decide whether these amendments required actuarial confirmation at the time they were made. If so, the timing of surrendering contracting-out certificates becomes crucial and, as many schemes did this only after closure, they would be unable to rely on the proposed legislative fix. The Verity judgment will therefore determine whether the proposed legislation is a comprehensive solution or whether uncertainty and areas of risk remain.
Practical considerations
The complexities of obtaining this confirmation are currently unknown and the considerable flexibility given to actuaries in providing this confirmation may introduce uncertainty, which should, however, be mitigated by the intention to develop and publish technical actuarial guidance recently announced by the Financial Reporting Council.
Trustees considering any action to confirm past amendments will need to ensure that they have not done anything that would prevent them from relying on this remedy. Schemes should keep an eye on this developing area and plan to review their historic amendments after the legislation is finalised.
Next steps
The government has indicated that these measures will come into force two months after the Pension Schemes Bill receives Royal Assent, which is likely in Q2 or Q3 2026. Any trustees, schemes and advisers who may be affected by this reform should monitor the Bill’s progress and be ready to act once the law is enacted. Trustees and advisers should also monitor the outcome of Verity Trustees v. Wood.
Whilst it remains to be seen how this solution will operate in practice and, as mentioned above, further actuarial guidance should provide clarity, DWP’s proposed legislation represents a pragmatic response to the challenges posed by Virgin Media, offering a pathway to restore certainty for pension schemes. If enacted as drafted, the legislation would significantly reduce the risk of historic amendments being invalid and provide much-needed reassurance to trustees, employers and members alike.
This article is based on the most recent draft legislation as published on 18 September 2025. If you would like any specific advice regarding this, please let us know. If you are impacted by the proposed reforms, keep engaged with advisers as the legislation progresses through Parliament.
