The government has published amendments to the Pension Schemes Bill that set out the proposed legislative "fix" for issues arising out of the Virgin Media case. The legislation will enable trustees to obtain retrospective actuarial confirmation that historic changes to contracted-out benefits met the relevant statutory requirements. For more information on the Virgin Media ruling, please see our legal update.
Retrospective actuarial confirmation
The legislation provides that a "potentially remediable alteration" is to be treated as having met the relevant statutory requirements and so as having always been a valid alteration as far as those requirements are concerned, if the following conditions are met:
- The trustees have made a written request to the scheme actuary for the actuary to consider whether the alteration would have prevented the scheme from continuing to satisfy the reference scheme test.
- The scheme actuary has provided written confirmation to the trustees that it is reasonable to conclude that the alteration would not have prevented the scheme from continuing to satisfy the reference scheme test.
Potentially remediable alterations
An alteration will be potentially remediable if the following conditions are met:
- It could not be made unless the relevant statutory requirements (as they then had effect) had been met.
- The trustees treated it, after it was purportedly made, as a valid alteration.
- The trustees have not taken any positive action on the basis that they consider the alteration to be void by reason of non-compliance with the relevant statutory requirements.
- It is not excluded from the scope of remediation.
Excluded alterations
An alteration will be excluded from the scope of remediation if any question relating to the validity of the alteration has been, or is, the subject of legal proceedings on or before 5 June 2025 to which the trustees were or are a party.
Schemes that have been wound-up
Where a scheme has wound up before the legislation comes into force, any potentially remediable alteration is to be treated as having met the relevant statutory requirements and so as having always been a valid alteration as far as those requirements are concerned.
Next steps
The broad scope of the legislation (as currently drafted) should mean that most schemes with alterations that may be void following the Virgin Media case will be able to retrospectively validate those alterations. The provision regarding schemes which have already been wound-up is very welcome and will provide comfort to trustees and employers of such schemes.
It is not clear when the legislation will come into force. The Bill is currently going through Parliament and further amendments may be made as it progresses. Even once the Bill has received Royal Assent, the relevant provisions will still need to be brought into force and the government has not indicated when it plans to do this. Trustees and employers should therefore monitor the Bill's progress and any further government announcements.
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