The hotly anticipated (well amongst pension lawyers) revisions to the Pension Schemes Bill have landed! Key amongst those revisions is the new clause intended to retrospectively validate past alterations to salary-related contracted out occupational pension schemes following the decision of the Court of Appeal in Virgin Media Ltd v NTL Pension Trustees.
The headline issue
The Virgin Media case called into question the validity of certain alterations to pension schemes if they had been made without the prior actuarial confirmation required under pensions legislation. The case had potentially wide-ranging implications for many pension schemes and in a number of cases inadequate records meant that the trustees or managers of schemes couldn't confirm whether the necessary confirmation was given. The committee stage revisions to the Pensions Schemes Bill seek to build upon an earlier ministerial statement from the Government that it would take retrospective legislation action to address Virgin Media issues and retrospectively validate alterations where certain conditions are met.
The form of the remedy
The changes introduced at the committee stage introduce new clauses to allow the trustees or managers of a scheme to ask the scheme actuary to consider the position of an alteration when it was (purportedly) made. Assuming those changes make it to the statute book, if the actuary confirms that it is reasonable to conclude that at that time the alteration would not have prevented the scheme from continuing to meet the statutory standard for contracted-out schemes, then the alteration is retrospectively deemed by to have been validly made.
A panacea for all then?
Not quite...
The new clauses also provides that alterations whose validity was in issue in legal proceedings commenced on or before 5 June 2025 are outside the scope of remediation under the new provisions. This was the date when the Government published its ministerial statement.
Step forward Verity Trustees Limited v Wood, a seminal case affecting a significant number of charities and housing associations participating in pension schemes under the Pensions Trust umbrella of schemes. That case was heard in February this year with judgment expected to be handed down shortly. It included clarification issues related to the Virgin Media pension case, particularly concerning Section 37 of the Pension Schemes Act 1993. Those employers affected by the case won't be able to take the degree of comfort from the saving provisions under the revisions introduced to Pension Schemes Bill. Rather, they will have to wait and see the outcome of the Verity Trustees case to understand what additional liabilities (if any) may be coming their way.
