Specifically, the case is relevant to rule amendments relating to section 9(2B) rights made between 6 April 1997 and 5 April 2013, plus any amendments to future service rights between 6 April 2013 and 5 April 2016 (when salary-related contracting-out was abolished).

Reminder: what are section 9(2B) rights?

“Section 9(2B) rights” are rights built up by members of salary-related contracted-out occupational pension schemes in respect of pensionable service between 6 April 1997 and 5 April 2016.  Members’ benefits built up in this period must be at least as good as those provided by a reference scheme statutory standard (the so-called “reference scheme test”).

What procedural requirement did Virgin Media consider?

From 6 April 1997 to 5 April 2013, rule amendments in relation to any section 9(2B) rights required confirmation from the scheme actuary that the scheme would still meet the reference scheme test following the alteration.  From 6 April 2013 to 5 April 2016, similar confirmation from the actuary was needed in relation to amendments to future service rights.  None of the parties in the Virgin Media case had located confirmation from the scheme actuary in relation to rule amendments in 1999, and the court was asked to decide the position on the assumption that no such confirmation had been issued.   On that basis, the High Court held that amendments in relation to section 9(2B) rights were void where there was not the required confirmation from the actuary. 

Do trustees and sponsoring employers need to take any action?

Trustees and sponsoring employers of schemes which were contracted-out on a salary-related basis and which underwent rule amendments between April 1997 and April 2016 may wish to check their records for written confirmation from the scheme actuary in relation to the amendment.    There may also be evidence of confirmation having been given, for example in the recitals to the deed of amendment, or there may be correspondence asking the scheme actuary to consider the deed  in draft.   In practice, scheme actuaries were usually kept in the loop in relation to scheme amendments – not least because amendments to benefit rules often required an actuarial certificate under section 67 Pensions Act 1995, and also as an actuary’s certificate was needed every three years confirming that the scheme continued to satisfy the reference scheme test.

If you do look back at previous rule changes, please bear in mind that no actuarial confirmation was needed for administrative or other amendments unrelated to section 9(2B) rights, for example the addition of a power to agree an apportionment of past service liabilities to a different participating employer, or a change to the scheme’s name.

We are monitoring for any appeal of the Virgin Media judgment and are assessing the position for our clients.