The Government is aware that following last year’s Court of Appeal judgment in Virgin Media Limited v NTL Pension Trustees Limited, there is increased uncertainty in the pensions industry. We recognise that schemes and sponsoring employers need clarity around scheme liabilities and member benefit levels in order to plan for the future.
The Government will therefore introduce legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation that historic benefit changes met the necessary standards.
Scheme obligations will otherwise be unaffected and the Government will continue to maintain its robust framework for the funding of defined benefit pension schemes in order to protect people’s hard-earned pensions.
Anna Rogers, senior partner at Arc Pensions Law, said: "The industry will breathe a collective sigh of relief to hear that DB schemes with a section 37 problem will be allowed to fix it retrospectively. When it was obvious that the contracting-out test would be met, people didn’t always focus on getting the actuarial confirmation or keeping it safe. The DWP has just announced that schemes will be able to get this confirmation retrospectively. We assume it will be done by using the existing power to make regulations about contracting-out glitches. It’s been done before. There will still have to be a process and we await the details. It may not be easy to establish on the facts whether the test was met at the time, which could be the best part of 30 years ago. But at least the door is now open to a sensible solution that means DB schemes can get on with doing what they are supposed to do namely providing the promised benefits to members."
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