Pensions - Articles - TPR guidance on retrospective actuarial s37 confirmations

In the Virgin Media Ltd vs NTL Pension Trustee II Ltd case, the High Court and the Court of Appeal both confirmed that an affected alteration made without this written actuarial confirmation would be void.

This case created uncertainty across the pensions industry. Some salary-related contracted-out schemes may not be able to find such written actuarial confirmation, or evidence that it was obtained, for all the relevant alterations to their rules made during this period. As a result, the validity of those alterations is in doubt. The affected schemes and their sponsoring employers may have significantly higher or lower liabilities than they expected and may have underpaid or overpaid benefits and continue to do so, even though they may have continued to satisfy the statutory standard.

The government has acknowledged that schemes and employers need clarity on this matter. To resolve the uncertainty, it has included remediation measures in the Pension Schemes Bill 2025 (the Bill). These will allow the governing bodies of salary-related contracted-out schemes to validate the affected alterations that are potentially remediable.

An affected alteration is potentially remediable if:

Schemes that have not fully wound up before Royal Assent will need to obtain written confirmation from their actuary that, in their opinion, it is reasonable to conclude that the affected alteration would not have prevented the scheme from continuing to satisfy the statutory standard. In some cases, this will be straightforward given the nature of the alteration, but in others the actuary will need further evidence. Where this confirmation is provided, the alteration is to be treated as having met the requirements of the regulations from its original effective date and so is to be treated as valid.

The Financial Reporting Council (FRC) has provided guidance to actuaries on how to undertake this remediation work in a proportionate and pragmatic manner.

As the Bill has not yet received Royal Assent and remains in draft, this guidance will change. We will update it to reflect the version that receives Royal Assent.

Who this guidance is for

Under the Bill, all the affected alterations of schemes that have been fully wound up or transferred to the PPF or the FAS at the date the Bill receives Royal Assent, will be treated as having met the requirements of the regulations from their original effective date and so are to be treated as valid.

This guidance aims to remind you of your statutory duties and to set out our expectations of the standards required to achieve compliance.

You should establish whether your scheme is affected by the judgments in the Virgin Media case and, if so, decide whether you will use the potential remediation available under the Bill.

You should ensure that you understand the Virgin Media judgments, the potential remediation available in the Bill and the other options for addressing the issue available to your scheme. You may find it helpful to receive training on all this.

You will normally need to seek advice and information from your legal adviser and may need advice and information from your actuary and information from your administrator. This will help you make an informed decision on whether to use the potential remediation available under the Bill and fulfil your fiduciary duties. You may also need to discuss it with the sponsoring employer(s).

If you decide to use the potential remediation available under the Bill, you will need to provide a formal written instruction to your current actuary to undertake the work. This should include the scope of the work that specifies:

You may need legal help to write this instruction.

Occupational pension schemes are under a duty to appoint a scheme actuary under section 47(1) of the Pensions Act 1995. However, if your scheme does not have an actuary, you can appoint a Fellow of the Institute and Faculty of Actuaries to undertake the remediation work.

The Bill does not give a deadline for using the potential remediation available under the Bill. You should agree a practical and realistic timescale for the work with your actuary, according to your scheme’s specific circumstances. For example, it may be beneficial for schemes that are starting a buy-out process to proceed with the remediation work urgently, while others may adopt a timetable that is most efficient and cost effective for them.

You should also discuss the timing with the sponsoring employer(s) as they may have views on when the remediation work should be carried out.

Though the remediation will not be available until Royal Assent is given, you can provide a written instruction to your actuary to start the work now.

If you decide not to proceed with the remediation work immediately, you should ensure that document retention policies will not cause the destruction of relevant records until the matter can be resolved.

The Bill allows the actuary to act on the basis of the information available to them if they consider it sufficient for the purpose of forming an opinion. At the outset, you should speak to your actuary to establish whether they believe they already have sufficient information. We do not expect you to carry out exhaustive searches before your actuary undertakes the remediation work. However, your actuary may request additional information to support their assessment. Depending on the circumstances, this may take many forms, from records of trustee decisions and advice received to historic individual membership data. You should work with your current administrator and the sponsoring employer(s) to determine what information is readily available and discuss with your actuary whether it is likely to be sufficient. You may also need to decide on its format and how it is shared.

There will be situations where your actuary, after conducting the work, cannot currently provide the retrospective confirmation for all the affected alterations you asked them to cover. You should consider the reasons your actuary may have set out for why they cannot provide the confirmation and decide what to do next.

If your actuary needs further information, explore how you could obtain it and the best way to do so. This may include liaising with your scheme’s previous administrators, actuaries, legal advisers, sponsoring employers, trustees and scheme managers.

If it is not possible to provide your actuary with the additional information they need or that is not why they cannot provide the confirmation, you should seek legal advice on the appropriate next steps, considering your actuary’s reasons and your scheme’s specific circumstances.

You do not need to report your remediation actions on this matter to us. We have no statutory functions in relation to the section 37 remediation. If and to the extent it is established that there had been a failure to obtain a section 37 confirmation, but the matter can now be resolved through an actuarial confirmation, any historic breach is very unlikely to be materially significant to us now in carrying out any of our functions.

You should make all the decisions relating to this issue in line with the decision-making procedures in your scheme’s governing documents and record the factors that influenced your decisions. You can find out more about decision-making in our trustee guidance.

You should maintain a clear audit trail for all the decisions, actions and the results of this exercise.

The section 37 confirmations for the changes to the rules should be held with the alterations by whoever holds your scheme’s formal documentation, such as its deed and rules. Any actuarial confirmations obtained under the remediation exercise should also be held by them.

You should keep the sponsoring employer(s) informed of your decisions and provide them with copies of any actuarial confirmations.

As good practice, after Royal Assent is given, you may want to prepare a reactive response on this issue to manage member queries in a clear and consistent way. You may need to update this response once the work is completed.

Where your actuary requires member data to reach an opinion, you may also use this opportunity to assess the quality of your scheme data and improve the data where appropriate. Our ‘Scheme member data quality guidance’ sets out the practical steps and good practice that you can take to meet the expectations set out in the data monitoring and improvement module of our general code of practice.

You should also consider the extent to which any findings in relation to the validity of any affected alteration may affect the funding position of the scheme, in relation to the requirements of the Pensions Act 2004 or otherwise.

Useful links

FRC technical actuarial guidance – This guidance is issued by the FRC to assist the scheme actuary when doing the remediation work.