Government proposes fix for pension rule validity after virgin media ruling

At a glance

• The UK government has proposed amendments to the Pension Schemes Bill 2025 (Bill) to retrospectively validate certain pension scheme rule changes affected by the Virgin Media Ltd v NTL Pension Trustees decision.
• Trustees can seek actuarial confirmation that historic alterations met statutory requirements, even if confirmation wasn’t obtained at the time.
• Alterations involved in legal proceedings before 5 June 2025 or where trustees have treated them as void are excluded from the remedy.
• If a scheme has wound up or entered the Pension Protection Fund, and confirmation isn’t possible, the alteration will be deemed valid.
• Trustees are advised to review past amendments and consult legal and actuarial advisers ahead of the Bill’s expected mid-2026 Royal Assent.

On 1 September, the government published a series of amendments to the Bill. These amendments include new clauses implementing the government’s promised remedy following the Court of Appeal decision in Virgin Media Ltd v NTL Pension Trustees. The remedy will enable trustees to obtain retrospective actuarial confirmation that historic changes to contracted-out benefits met the relevant statutory requirements.

A new Chapter 1 in Part 4 of the Bill will implement the government’s remedy. These clauses will provide for the retrospective validation of certain 'potentially remediable alterations' to the rules of a former contracted-out salary-related scheme where certain conditions are met.

A potentially remediable alteration is one that fell within the scope of regulation 42(2) of the Occupational Pension Schemes (Contracting-out) Regulations 1996 when it was made, was subsequently treated as valid by the trustees, and is not otherwise excluded.

A potentially remediable alteration will 'be treated for all purposes' as having met the regulation 42(2) requirements if:

• the trustees have asked the scheme actuary in writing to consider whether, on the assumption it was validly made, the alteration would have prevented the scheme from continuing to satisfy the reference scheme test; and
• the scheme actuary has confirmed to the trustees in writing that it is reasonable to conclude that, on the assumption it was validly made, the alteration would not have prevented the scheme from continuing to satisfy the reference scheme test.

These conditions may be satisfied by steps taken before or after the provisions come into force.

An alteration will be outside the scope of the remedy if its validity was the subject of 'legal proceedings' begun on or before 5 June 2025 or if the trustees have taken 'positive action' by which they have treated the alteration as void. Where it is not possible to obtain the actuary’s confirmation of an alteration because the scheme has wound up or entered the Pension Protection Fund, the alteration will be deemed to be valid.

A perfect solution?

The new legislation is welcome news for schemes concerned by the implications of Virgin Media: most schemes with alterations which could have been certified by the actuary at the time but that may be void following the judgment because it has not been possible to trace the confirmation will now be able to validate those alterations retrospectively. The way in which the test has been framed is helpful for schemes, because the actuary should be able to confirm it is reasonable to conclude that an (unproblematic) amendment would not have prevented the scheme from continuing to meet the reference scheme test without reference to historic member data (which might have been the case had the test required the actuary to confirm that the reference scheme test would have been met at the time of the amendment).

However, as stated above, the legislation excludes from the remedy any alterations whose validity was the subject of legal proceedings on or before 5 June. Would this carve out then preclude schemes which have commenced professional negligence proceedings against advisers or schemes involved in litigation where subsidiary questions are being asked in relation to Virgin Media related points (such as in The Pensions Trust / Verity Trustees proceedings in the High Court). This remains unclear.

Also of concern are schemes that have already taken ‘positive action’ in relation to an alteration. This would include instances where trustees have notified members in writing that they think an alteration is void and that they will administer the scheme on that basis or indeed have taken steps to alter the payment of benefits.

We hope that some of these issues will become clearer as the Bill progresses through Parliament.

Next steps

Trustees who have not yet undertaken a review of relevant amendments may now wish to consider whether to engage their legal advisers and actuary to assess whether the conditions would be met in respect of any relevant amendment where it has not been possible to trace an actuarial confirmation (given that the remedy may be achieved by steps taken before the legislation comes into force) or whether to wait for the final form of the Bill to be published.

The government is currently proposing that the new provisions be brought into force two months after the Bill has received Royal Assent. The Government has previously suggested that the Bill will receive Royal Assent in mid-2026. We will, of course, keep you updated.

If you have any questions in relation to this alert or the amendments to the Bill, please speak to your usual DLA Piper pensions adviser.