Court of Appeal decision in Virgin Media

The Court of Appeal has recently handed down its judgment in Virgin Media Ltd v NTL Pension Trustees II Limited and others concerning amendments made to benefits in schemes which were previously contracted-out of the State Second Pension on a salary related basis. This judgment has cast doubt on the validity of amendments made if certain procedural requirements were not met.

The High Court previously found that an amendment would be invalid and void if there was no written confirmation from the actuary under section 37 of the Pensions Schemes Act 1993. The High Court also found that the actuary’s written confirmation was required for changes to future service benefits and past service benefits (including changes that introduced improvements to future service benefits).

The Court of Appeal upheld the High Court decision and concluded that the actuary’s written confirmation was required for changes to both future service benefits and past service benefits and any amendment to benefits would be void without it.

Further appeal to the Supreme Court?

The Court of Appeal judgment was handed down on 25 July 2024. Virgin Media had until 22 August 2024 to apply to the Court of Appeal for permission to appeal to the Supreme Court. This deadline has passed, and Virgin media did not apply for permission to appeal. Virgin Media may be able to apply directly to the Supreme Court, but we consider it unlikely given the clarity of the Court of Appeal decision.

Intervention by the Government

The Government has the power to bring forward regulations to validate amendments which don’t satisfy legislative procedural requirements. A number of industry organisations including the Association of Consulting Actuaries (ACA), the Association of Pension Lawyers (APL) and the Society of Pension Professionals (SPP) have formed a working group and are engaging with the Department for Work and Pensions (DWP) about the possibility of bringing forward such regulations.

What action are we taking now?

We are now waiting to see whether Virgin Media appeals directly to the Supreme Court or whether the DWP will bring forward regulations to validate amendments now deemed invalid following the judgment.

In the meantime, we are working with the legal advisers for our schemes to review the amendments made during the relevant period to establish whether they met the necessary legislative procedural requirements. Not all amendments are affected. Only those which sought to amend section 9(2B) rights are affected by the Court of Appeal judgment.

For some schemes where we are in the process of securing members’ benefits with an insurer, we are investigating this issue and engaging with our risk transfer advisers, brokers, and prospective insurers. For our ongoing schemes we are considering the potential impact whilst we wait for news of a possible appeal to the Supreme Court or intervention from the DWP.