UK Pensions Briefing | Pension Schemes Bill amendments include mitigation provisions for Virgin Media issues

Background

The judgment concluded that all amendments to the benefits provided by contracted-out DB schemes between April 6, 1997, and April 5, 2016, needed written actuarial confirmation that the legal standard of the reference scheme test continued to be satisfied, as required by section 37 of the Pensions Schemes Act 1993.

Where scheme amendments were made without written confirmation, or where that confirmation could not be found, the amendments would be void. This would be the case whether the amendments related to past or future service benefits, even where such changes were benefit improvements. Our September 2024 briefing looked at the Court of Appeal decision upholding the earlier High Court judgment.

The DWP was lobbied by the pensions industry for a legislative solution to avoid the foreseen increase in workload for scheme trustees and administrators as well as potential additional liabilities for sponsoring employers. Following a ministerial statement on June 5, 2025, that legislation would be introduced to deal with issues arising from the judgment, pensions minister Torsten Bell tabled the Government’s amendments to the Bill on September 1, 2025.

Which rule amendments are “potentially remediable alterations” within scope of the new provisions?

The key amendments to the Pension Schemes Bill provide a solution for “potentially remediable alterations”, provided certain conditions are met.

Rule changes to schemes that have been wound up, or those that are now part of the Pension Protection Fund or Financial Assistance Scheme, will automatically be deemed valid under one of the tabled amendments.

However, certain scheme amendments will be outside the scope of remediation under the new provisions. These are:

• Where “positive action” has already been taken by the trustees on the basis:
  • That they consider the scheme amendment to be void for non-compliance with the legal requirements and the scheme has been administered on that basis.
  • That they have taken any other step in relation to the administration of the scheme (in consequence of considering the amendment to be void) that has the effect of altering benefit payments from the scheme.
• Where the validity of a rule amendment has ready been determined by a court in proceedings to which trustees were a party, or which remain the subject of legal proceedings started on or before June 5, 2025 (the date of the ministerial statement), when the legislation comes into force.

Amendments to the Bill leave open the possibility for future legislation. An amendment is included currently for regulations to disapply the validation of otherwise void provisions to further categories of scheme alterations if required.

The remediation process

Where a scheme amendment meets the conditions above and is “potentially remediable”, it will be treated as always having met the regulatory requirements if:

• The trustees have made a written request to the scheme actuary to consider whether or not the alteration to the rules would have prevented the scheme from continuing to satisfy the reference scheme test.
• The scheme actuary has confirmed that, in their opinion, it is reasonable to conclude that the scheme continued to satisfy the reference scheme test.

The actuary is free to take any professional approach that is open to them in all the circumstances of the case, including making assumptions or relying on presumptions. They may act on information available, as long as they consider it sufficient to form an opinion.

Timescales for taking action

The Bill’s amendments do not set any time limit for trustees to consider which of their scheme’s rule changes fall within scope. The request and confirmation steps above may be taken before or after the legislation comes into force. The relevant amendments are due to come into force two months after the Pension Schemes Bill receives Royal Assent, which is due in early 2026.

Comment

The Virgin Media case called into question amendments made to many contracted-out schemes. In most cases it would have been a monumental administrative task to unpick past actions, either conferring a windfall benefit on members, or in some cases resulting in a benefit reduction.

Schemes have been waiting for news on whether the Government would legislate to provide a solution to the problems caused by the Court of Appeal’s judgment in July 2024. These welcome amendments to the Bill will be greeted with relief from many affected scheme trustees, as well as employers whose liabilities could have substantially increased without the proposed changes. 

The exemption of schemes which have wound up or been transferred into the PPF or FAS is a practical solution. However the exclusion from these provisions of schemes which commenced proceedings prior to the ministerial statement is a sting in the tail.