The Court of Appeal has ruled that all rule amendments to contracted-out DB schemes between 1997 and 2013 do need written actuarial confirmation that the reference scheme test continues to be satisfied.
The decision in Virgin Media Limited v NTL Pensions Trustees II Limited means amendments could be void whether they related to past or future service benefits, and even where such amendments were benefit improvements.
Comment
It is unclear whether there will be a further appeal by the employer to the Supreme Court. Meanwhile, the decision is likely to cause major issues for contracted-out DB schemes unless the DWP steps in urgently to provide a solution.
The DWP has the power to validate scheme amendments retrospectively, which could be the swiftest and most satisfactory resolution to what will otherwise be a huge and wide-ranging problem.
Without intervention from the DWP, the ramifications of calling into question past amendments are likely to create an enormous work overload for scheme trustees and administrators who are already dealing with major projects such as the scheme funding regime, GMP equalisation and dashboard implementation.
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