Bringing much comfort to formerly contracted-out defined benefit pension schemes, the Government has confirmed that it will legislate to “deal with issues arising from” the Court of Appeal’s decision in the Virgin Media Ltd v NTL Pension Trustees II Ltd case that rule alterations made to members’ section 9(2B) rights between 6 April 1997 and 5 April 2016 without the necessary actuarial confirmation under section 37 of the Pension Schemes Act will be void. This will be done through legislation allowing schemes to “retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards”.
At the time of writing, we did not have further details as to the precise wording of the legislation or when it will be brought into effect. For the here and now, it will be enough for schemes to have clarity on the position and, even more importantly, to know that the Government is going to intervene to address the problem, for example, it should allow corporate and trustee accounting disclosures to reflect the neutralising effect that the legislation will have. Nevertheless, all those affected would welcome certainty sooner rather than later especially schemes that have had to delay projects such as completing buy-outs.
We will provide further updates when more information is available.