Justin McGilloway
- Partner
- Pensions & Employee Benefits
Part 1 – Virgin Media: an update
The Court of Appeal’s decision in Virgin Media Ltd v NTL Pension Trustees II Ltd (July 2024) (Virgin Media) has dominated pensions law commentary over the past year. It triggered widespread concern regarding the validity of historic scheme amendments and the potential scale of resulting liabilities. Legislative intervention and further case law are now expected to provide much-needed clarity during 2026.
Key Points
- The Pension Schemes Bill (2025) is the legislative vehicle for the Virgin Media remediation provisions, which will take effect immediately on Royal Assent.
- The Bill introduces a statutory process enabling trustees to retrospectively validate historic amendments that may otherwise be void following Virgin Media.
- The Financial Reporting Council has developed technical guidance for actuaries, to be finalised when the new legislation comes into force.
- The forthcoming judgment in Verity Trustees may clarify when section 37 certificates are required and could reduce reliance on the new statutory remediation process.
Virgin Media Ltd v NTL Pension Trustees II Ltd
The Court of Appeal’s ruling in Virgin Media sent shockwaves through the pensions industry. The Court confirmed that any amendment to a contracted-out salary-related scheme made between 6 April 1997 and 6 April 2016 is void unless, before the amendment took effect, written actuarial confirmation had been obtained that the scheme would continue to satisfy the statutory reference scheme test. Crucially, this requirement applied not only to adverse changes, but to any amendment affecting accrued and future service rights.
As a result of the Virgin Media decision, the validity of a wide range of historic amendments has been called into question. Schemes with incomplete records face particular uncertainty, as they may be unable to evidence whether the necessary actuarial confirmations were obtained at the relevant time. For some schemes, the potential funding implications are significant.
Pensions Scheme Bill
The Pension Schemes Bill, currently going through Parliament, is intended to address these concerns. In this context, its primary purpose is to provide a statutory mechanism for remediating amendments that may be void for failure to obtain actuarial confirmation under section 37 of the Pension Schemes Act 1993 and regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996. The Bill’s Virgin Media remediation provisions appear in sections 100–107, with sections 100 to 102 being of particular significance.
Section 101: Remediation of Potentially Void Amendments
Under section 101, trustees may ask the current scheme actuary to review a historic amendment and provide a written opinion as to whether, had the amendment been validly made, the scheme would have continued to satisfy the statutory reference scheme test.
This remediation route is subject to important limitations. It is only available where the amendment:
- has not already been ruled on by a court;
- is not subject to legal proceedings commenced before 5 June 2025; and
- has not been positively treated as void by the trustees.
Trustees will therefore need to exercise caution before taking any formal position on the status of affected amendments.
Section 102: Schemes in Wind-Up or PPF
For schemes that have wound up or entered the Pension Protection Fund before the new law takes effect, section 102 provides a more straightforward solution. Any affected amendments are automatically deemed compliant, without the need for retrospective actuarial sign-off.
Immediate Effect on Royal Assent
A key government amendment at the Report Stage in December 2025 removed the original two-month delay. As a result, the Virgin Media provisions will take effect immediately upon Royal Assent, enabling trustees to begin considering remediation without waiting for a transitional period.
Technical Guidance for Actuaries
On 3 October 2025, the Financial Reporting Council also announced it would develop technical guidance to support scheme actuaries in providing the retrospective confirmations enabled by the Bill.[1] The guidance, being produced in collaboration with the Institute and Faculty of Actuaries, is intended to promote a consistent and robust approach across the industry. The provisional guidance was published in January 2026 and will be finalised when the new legislation comes into force.
The Verity Trustee Case: Awaiting Judgment
Alongside the legislative response, the Verity Trustees litigation represents one of the most significant pensions cases currently before the courts. The High Court hearing lasted 32 days in early 2025, with judgment still awaited.
Key Issues Before the Court
The case is expected to address several critical questions, including:
- Section 37 scope: which types of amendment require section 37 confirmation, and whether closure of a scheme to future accrual is itself an alteration requiring confirmation.
- Timing and Cure: whether a later actuarial confirmation (e.g., at the next triennial valuation) can retrospectively cure a failure to obtain section 37 confirmation.
- Partial Invalidity and Severance: whether invalid provisions can be severed from otherwise valid amendments, or whether the entire deed is rendered void.
- Amendment Power Restrictions: whether restrictions on detrimental changes protect only past service rights or also future service, following the BBC and Virgin Media decisions.
The judgment, expected in the first half of 2026, may clarify the circumstances in which a section 37 certificate is needed and could reduce the need to rely on the new legislative remediation provisions. However, if legal proceedings were commenced before 5 June 2025, as in Verity Trustees, the amendments in question may be excluded from the scope of the legislative fix.
Practical Steps for Trustee and Employers
- Audit historic amendments: If not already done, trustees should review all amendments made between 1997 and 2016 to identify those potentially affected by the Virgin Media decision.
- Engage early with actuaries: Early engagement is essential to prepare for retrospective certification under the Bill, once the FRC guidance is published.
- Take legal advice: Trustees should obtain legal advice before taking any positive action regarding potentially void amendments, as this could exclude them from the Bill’s remediation process.
- Monitor litigation: Schemes involved in ongoing legal proceedings should be aware that such proceedings may exclude them from the statutory fix.
Summary
The Virgin Media decision has created material uncertainty for trustees and scheme sponsors. The Pension Schemes Bill offers a practical route to remediation, while the forthcoming Verity Trustees judgment may further clarify the scope and operation of section 37. In the meantime, trustees should act proactively to understand their exposure and prepare for the new legislative regime.
[1] FRC to develop technical guidance for pension scheme actuaries to respond to forthcoming legislation
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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Alice Anderson
- Trainee Solicitor
- Pensions & Employee Benefits
