Audit and actuarial regulator the Financial Reporting Council (FRC) has issued new technical guidance to help actuaries assess schemes affected by the Virgin Media case.
The guidance was produced in conjunction with the Institute and Faculty of Actuaries and the Association of Consulting Actuaries (ACA), both of which have been calling for additional help since a Court of Appeal decision in 2024.
The case – involving Virgin Media and the National Transcommunications Limited (NTL) Pension Plan – could have required pension schemes that were contracted out of the state second pension to ensure they had written actuarial confirmation of any changes to benefits, as required under section 37 of the Pension Schemes Act 1993. Failure to locate confirmations could have cost schemes millions in retrospective payments and administration work.
The government sought to address the issue with a clause in the Pension Schemes Bill.
Today (23 January), the FRC said its new guidance would “help pension scheme actuaries provide retrospective confirmation to validate historic changes to pension scheme rules” and reflects the expected new legislation.
The regulator said the guidance would give actuaries “a practical framework to support the application of their judgment”, while also providing confidence that pension schemes have complied with their legal obligations. It is designed to be “non-prescriptive” and to allow actuaries to take a “proportionate approach”.
Mark Babington, the FRC’s executive director of regulatory standards, said: “The Virgin Media legal case has caused considerable concern across the pensions industry. Our guidance provides actuaries with clear, practical help on how to work proportionately when reviewing historic scheme changes. This will support sound judgement and strengthen confidence that pension schemes have complied with their legal obligations.
“In turn, this will provide pension holders with greater certainty that the investment decisions underpinning their retirement have been appropriately assessed, and the scheme will deliver the expected benefits for its members.”
Stewart Hastie, chair of the ACA, said his association had made “strong representations” relating to the Virgin Media case in an effort to address the “uncertainties and difficulties” it raised.
“We will, of course, closely scrutinise the guidance to make sure it is complete – it’s a great sign of how the industry can work with the government and regulators to iron out practical bumps in the road that can undermine good pension scheme governance and administration,” Hastie said.
Joey Patel, director of policy at the Pensions Regulator, added that her organisation would also issue guidance later in the year for trustees to help them navigate potential issues.
This article was updated on 23 January to add a comment from the ACA.
