Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors
[2024] EWCA Civ 843
Virgin Media Limited v NTL Pension Trustees II Limited & Ors
16 June 2023
[2023] EWHC 1441 (Ch)
High Court
A company changed its pension plan rules without getting the necessary approval. The court said the changes were illegal because the rules clearly state that you need approval before making changes that affect pensions. The company has to fix the problem, even the parts of the plan change that looked good on paper.
Key Facts
- •Virgin Media Limited (claimant) sought clarification on the interpretation of historic provisions regarding contracting-out from the State Earnings Related Pension Scheme (SERPS) in relation to the National Transcommunications Limited Pension Plan.
- •The case centered on the interpretation of s. 37 of the Pension Schemes Act 1993 (1993 Act), as amended by the Pensions Act 1995 (1995 Act), and Regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996.
- •The 1999 Deed & Rules amended the Plan's revaluation provisions, reducing the revaluation rate of deferred pensions. It's assumed no actuarial confirmation (required by Regulation 42) was obtained.
- •The claimant argued s. 37 didn't render the amendments void, or alternatively, that Regulation 42 applied only to past service benefits.
- •The third defendant argued the amendments were void due to the lack of actuarial confirmation, that Regulation 42 applied to both past and future service benefits, and that voidness applied to all alterations, not just adverse ones.
Legal Principles
Section 37 of the 1993 Act, as amended, prohibits alteration of contracted-out scheme rules unless the alteration is of a prescribed description.
Pension Schemes Act 1993, s. 37
Regulation 42 specified the 'prescribed circumstances' and 'prescribed description' for alterations to contracted-out schemes, requiring actuarial confirmation for alterations to section 9(2B) rights.
Occupational Pension Schemes (Contracting-out) Regulations 1996, Regulation 42
Regulation 1(2) defined 'section 9(2B) rights' as rights to pensions and accrued rights to pensions attributable to an earner's service on or after 6 April 1997.
Occupational Pension Schemes (Contracting-out) Regulations 1996, Regulation 1(2)
Section 9 of the 1993 Act set out requirements for contracted-out schemes, including conditions relating to GMP accrual (pre-6 April 1997) and the reference scheme test (post-6 April 1997).
Pension Schemes Act 1993, s. 9
Section 12A of the 1993 Act required schemes to satisfy the 'statutory standard' (reference scheme test), certified by an actuary.
Pension Schemes Act 1993, s. 12A
Outcomes
Section 37 rendered void amendments made without the required actuarial confirmation under Regulation 42(2)(b).
The court found the phrase 'cannot be altered' in s. 37 unambiguous, implying invalidity for non-compliant amendments. The possibility of retrospective validation in s. 37(2) further supported this.
'Section 9(2B) rights' in Regulation 42(2) encompassed both past and future service rights.
The court rejected the claimant's argument that 'section 9(2B) rights' only included past service benefits, finding nothing in the definition to restrict it to past service. The purpose of the actuarial confirmation was to ensure ongoing compliance with the statutory standard.
Voidness under s. 37 applied to all alterations to section 9(2B) rights, not just adverse ones.
Regulation 42(2) lacked any limitation to adverse alterations, unlike other sections. A threshold test of adverse effects would have created impracticality and uncertainty.