Government moves to fix the impact of the Virgin Media decision

On 1 September 2025, the UK government tabled a series of amendments (Amendments) to the Pension Schemes Bill currently in progress. The Amendments are subject to debate and could change (or removed altogether) before the Bill becomes law. Given the importance of certain Amendments tabled to address the issues raised by the Court of Appeal in Virgin Media Ltd v NTL Pension Trustees (Virgin Media), we provide a summary of how those Amendments could help trustees (and employers).

Background

The Virgin Media decision confirmed that amendments to contracted-out salary-related occupational pension schemes (Scheme Alterations) made without written actuarial confirmation (often referred to as "a section 37 certificate") between 1997 and 2016 are void. This ruling created significant uncertainty across the pensions industry. The issues were summarised in our previous articles here and here.

Government response

The government states the purpose of the relevant Amendments is "to address issues arising from the decision of the Court of Appeal in Virgin Media Ltd v NTL Pension Trustees. This decision called into question the validity of past alterations to salary-related contracted out occupational pension schemes. It appears that a number of schemes were purportedly altered without the prior actuarial confirmation required (under regulation 42(2)(b) of the Occupational Pension Schemes (Contracting-Out) Regulations 1996) being given. In other cases inadequate records mean that the current trustees or managers of some schemes cannot tell whether the necessary confirmation was given. The [Amendments] will provide for the retrospective validation of such alterations where certain conditions are met."

The fix

The Amendments introduce the concept of a "Retrospective Validation Mechanism" which could retrospectively validate certain Scheme Alterations that would be invalid due to the absence of actuarial confirmation following the Virgin Media decision.

If the Amendments, as drafted, become law, many trustees (and employers) may be relieved, however there are a number of exceptions and certain conditions need to be met, before the fix would take effect.

Trustees would need to make a written request to the scheme actuary asking for confirmation that the Scheme Alteration would not have prevented the scheme from meeting the statutory standard for contracted-out salary-related schemes. Subject to exceptions, if the scheme actuary provides the requested confirmation, the Scheme Alteration would be valid.

Limitations

• The fix only validates those Scheme Alterations which would be invalid due to the lack of actuarial confirmation at the heart of the Virgin Media decision. The government has not provided a general "fix-all", if the Scheme Alteration is void or voidable due to an additional and / or different reason, the fix would not make the Scheme Alteration valid.
• The Scheme Alteration must have been treated by the trustees as a valid alteration. In practice this condition is very likely to have been met in most cases because a significant number of schemes have been impacted by the Virgin Media decision explaining the lobbying and government's decision to provide a retrospective solution.
• The trustees must not have taken any positive action on the basis that the Scheme Alteration is void. "Positive action" includes notifying members that the trustees consider the Scheme Alteration to be void and the trustees deciding to alter payments to members to take account of a Scheme Alteration being void. For those trustees who have refrained from taking "positive action" but have merely kept a watching brief, this condition should be met. However, this limitation could preclude any proactive trustees from using the fix depending on what action they have taken following the Virgin Media decision. In a similar vein, the fix cannot be used if the Scheme Alteration is (or has been) subject to court proceedings.

Finally, if any scheme has been wound up or entered the PPF or FAS and it is impractical to obtain actuarial confirmation, the alteration will be deemed valid.

Commentary

The fix is welcome, and we hope that the Amendments (as drafted) become law. However, we caution clients from taking any substantial steps on the assumption that the Amendments will become law. It is not possible to estimate when the passage through Parliament will be completed, whether any changes will be made or when the Amendments will come into force. Indeed, the weekend cabinet re-shuffle is only likely to delay the Parliamentary timetable.

We also note that the fix may not validate all Scheme Alterations that could fall in scope because the scheme actuary may not be able to give the confirmation requested. No doubt approaches will differ, and we may see some professional guidance emerge.

Next steps

Unless there is an approaching deadline (such as completing a buy-out) or another pressing reason there is no need to spring into action. Once the wording of the Bill is finalised and we have confirmation of a commencement date, trustees will need to consider whether they have any alterations that could be void following the Virgin Media decision and whether they can be "fixed" using the government's Retrospective Validation Mechanism.