Government to introduce legislation to allow for Section 37 issues arising from Virgin Media v NTL Trustees to be addressed retrospectively

The Government has announced plans to introduce legislation to give pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met necessary standards at the time. This will provide welcome relief following the case of Virgin Media v NTL Trustees Limited, which rendered otherwise effective amendments void in the absence of an actuarial confirmation.
The announcement will provide significant comfort to contracted out pension schemes that made amendments between 1997 to 2016 and cannot locate actuarial confirmation as required from the time of the changes.
We look back at the issues arising from the Virgin Media v NTL Trustees decisions, consider the impact the cases had on the industry and what the government's announcement means.

Recap of Virgin Media v NTL Trustees

The Virgin Media decisions in the High Court, and Court of Appeal have been well reported due to the significant impact and uncertainty created for pension schemes, sponsoring employers and pension scheme advisors.

The facts of the National Transcommunications Limited Pension Plan (the Scheme) were that the NTL Pension was a contracted out Defined Benefit (DB) pension that was established from January 1991.  A "contracted out" scheme was a scheme in which the contracting employer contracted out of the State Earning Related Pension Scheme.  In exchange, it agreed to provide a range of minimum benefits to its members.  Contracting out was abolished from 6 April 2016 when a single state pension was introduced.

The Scheme included a provision for the payment of guaranteed minimum pensions to members which could be contracted out on the salary related basis.  Qualifying members that left the Scheme before their normal retirement age would be entitled to a deferred pension at their normal retirement age.  This deferred pension would be subject to revaluations on a yearly basis.  

In 1999, the Scheme's Trustees implemented a replacement deed which amended the revaluation provisions with effect from 1997 which would reduce the rate deferred pensions would be revalued.

Section 37 of the Pensions Schemes Act 1993 (as amended by the Pensions Act 1995) allowed contracted out schemes to amend its governing rules only if certain conditions were satisfied.  Regulation 42 of the Contracting-out Regulations 1996 included a provision that prohibited any alterations to rights to the payment of pensions and accrued rights to pensions (Section 9 rights) unless an actuary had confirmed in writing that the scheme would continue to satisfy the statutory standards set out in section 12A of the Pensions Act 1993 (Actuary Confirmation).

The issue for the Scheme, was that the Actuarial Confirmation could not be located. 

The Court of Appeal and the High Court concluded that Section 9 rights included both past and future service, and ruled that the absence of an Actuarial Confirmation meant that any amendments to the rules relating to section 9 rights was void.

Impact

The decisions underlined that the failure to evidence compliance with the specific wording of rules and regulations can have fundamental consequences.  Notwithstanding that the intentions of the parties had ostensibly been clear; a failure of evidence was sufficient to void amendments.  

Considering the length of time that has elapsed since the date of past amendments, numerous schemes could potentially be in the same position; despite taking the correct steps at the time of the amendments, they were left unable to evidence the Actuarial Confirmation.  The ramifications of void amendments can be costly for schemes, given this was likely to result in members having received incorrect benefits.

Based on the Virgin Media decisions, it was unlikely that schemes would be able to cure the technical breach by providing additional evidence from individuals involved with the decision-making process at the time, including by obtaining subsequent evidence from the actuary confirming the that they would have provided an actuarial confirmation at the time.

DWP's intervention

Earlier this year, the Minister for Pensions, Torsten Bell, confirmed in a written answer to Parliament that the government was considering available options arising from the Virgin Media decisions.

The government confirmed on 5 June 2025 that legislation will be introduced to allow affected schemes to have the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards at the time.

The news will be welcome for schemes which may have Section 37 issues.  Additionally, the news will be welcome to professional advisors that may have been dragged into considering the impact of not having an actuarial confirmation as needed at the time of an amendment.  We wait to see the details and the proposals may not cure all issues (for example if an actuarial confirmation would not have been given or could not have been given that the time). But for now some good news.