The government has tabled several amendments to the Pension Schemes Bill aimed at addressing issues around the so-called “Virgin Media issue”, relating to historical changes made to schemes contracted out of the state second pension.
Trade bodies, including the representative groups for actuaries and pension lawyers, have been lobbying the Department for Work and Pensions for months in relation to the issue, which relates to the interpretation of section 37 of the Pension Schemes Act 1993.
A Court of Appeal decision issued last year meant that scheme rule amendments made between 1997 and 2016 could have been deemed void if no written sign-off from a scheme actuary could be found.
Pensions minister Torsten Bell has tabled amendments to the bill that will “provide for the retrospective validation” of any scheme rules passed in this period for which an appropriate actuarial sign-off cannot be found.
Amendments include a rule allowing an affected rule change to be deemed valid “if the actuary confirms that it is reasonable to conclude that at that time the alteration would not have prevented the scheme from continuing to meet the statutory standard for contracted-out schemes”.
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.
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David Everett, partner and head of pensions research at LCP, said: “This is a well-thought-through intervention that should enable a comprehensive resolution to be achieved, as well as enabling further legislation to be produced should the need arise. The clauses providing for the new actuarial confirmation reflect the need for a pragmatic approach and, as such, are most welcome.
“However, the new test will not be a silver bullet in all cases and actuaries called upon by trustees to give the new confirmation will need to tread carefully.
“Trustees can take comfort that the government has not set any time limit within which alterations within scope need to be considered under this legislation. How and when trustees choose to address any Virgin Media issues can be driven by other considerations, but until they use this legislation, any Virgin Media benefit uncertainty will continue to exist within their scheme.”
The people helping shape the Pension Scheme Bill
The UK parliament website has published a list of 23 people who will be giving evidence to the bill committee on Tuesday 2 September.
These include pensions minister Torsten Bell, the policy leads at Pensions UK and the Association of British Insurers (ABI), and the chief executives of the Pension Protection Fund, Nest and People’s Partnership.
The first people questioned by the committee will be Rob Yuille of the ABI and Zoe Alexander of Pensions UK, at around 9:25am. The full schedule is available on the parliamentary committee’s webpage.
