Pension scheme trustees and managers are continuing to consider the consequences of a recent High Court ruling that may have an impact on the status of amendments made to contracted-out defined benefit (DB) pension schemes, even though the contracting-out option was ended seven years ago.
The case of Virgin Media versus NTL Pension Plan was considered under a number of rules and regulations governing UK pension schemes. These included the focus of the court’s attention, section 37 of the 1993 Pension Schemes Act, which sets out the provisions for altering the rules of a contracted-out DB scheme.
After consideration of the case put before her, the judge ruled that amendments to the conditions of a contracted-out scheme were void without “written actuarial confirmation”, often referred to as a “section 37 certificate”, but with no clear definition of the form this should take. The judge also ruled that such a status applied to both past service rights and future service, which could have huge implications for the NTL Pension Plan and other schemes.
The case may not be over. There is the possibility of an appeal, which aside from being a lengthy process, may also bring clarity and/or fresh consequences for the pensions industry depending on the final outcome.
What does this mean in practice?
It is too soon to say and the prospect of an appeal means it may be best to wait before taking any action. The wait and see approach is probably OK unless your scheme is already in the process of winding up, in which case it would be worth raising the issue with your legal adviser sooner rather than later.
For further information or to discuss the position for your scheme, contact Steve Button on 01423 229029 or by email to steve.button@mhmtrustees.co.uk.
Back