It has now been some months since the Court of Appeal decision in the case of Virgin Media Ltd v. NTL Pension Trustees II Ltd – arguably one of the most significant cases in pensions law in recent years, due to its potential implications for defined benefit  (DB) pension schemes that were contracted out of the state pension at any time between 1997 and 2016.

To briefly recap, the decision of the Court of Appeal was that any amendments to scheme benefits made during that period will be void unless the scheme actuary had confirmed (typically through what is commonly referred to as a "s.37 certificate"), when the amendment was made, that the pension scheme would continue to satisfy the statutory standard for contracted-out schemes. For a more detailed overview and analysis, please see our previous article covering this decision here.

The decision has wide consequences for the industry, and scheme trustees and scheme sponsors alike are continuing to grapple with the question of what those consequences might be for their schemes and whether there are any ways in which potential liabilities might be mitigated. This has sparked discussions on whether trustees and sponsors might be able to rely on some established legal principles as mitigation, and this is discussed further below.

The presumption of regularity

The decision in the Virgin Media case aligns with a broader trend in pensions case law emphasising compliance with regulatory requirements and processes in pension scheme documentation. Generally speaking, it also fits with well-established, strict evidential requirements that run across English case law.

However, a question that was not before the court was whether, in the absence of express actuarial confirmation, the actuarial confirmation could instead be inferred from the fact that the parties knew of the legal requirements for making amendments to contracted-out schemes?

TThis is where the presumption of regularity comes in. In short, this is a presumption which assumes that all things have been done properly on a regular basis and in accordance with the required formalities, unless there is contrary evidence. This presumption is potentially relevant to schemes affected by the Virgin Media judgment and where documentation may be incomplete – it "fills in the gap" and can support the validity of actions taken by trustees or sponsors in the past. 

The general view, however, is that it would be risky to rely on this presumption in an English law pensions context, although, interestingly, the position is different north of the border in Scotland, due to a line of judgments from the Scottish courts concerning cases of missing pension scheme documentation. There is, for example, the case of Trustees of the Scottish Solicitors' Staff Pension Fund v. Pattison & Sim (2016),¹ where the Outer House of the Court of Session confirmed that there could be an assumption that all necessary procedures had been properly followed, in the absence of evidence showing that the scheme's amendment provisions had been complied with. As such, whilst the coast may be clearer for schemes governed by Scots law, the same cannot be said for schemes governed by English law.

Secondary and circumstantial evidence

As noted above, a key question that was not before the court was what is actually required to constitute a valid actuarial confirmation. This raises the question of whether something "less" than a s.37 certificate could be acceptable, and so whether parties could rely on secondary or circumstantial evidence to ascertain that the actuarial confirmation had been validly provided at the time. For example, could trustees or sponsors rely on written evidence (such as correspondence from the time, indicating that the actuary had considered and had concluded that the statutory standard would continue to be met) and/or maybe also on oral evidence from someone who had worked on the scheme amendment, confirming that the required confirmation had been provided? 

Again, it is difficult to determine whether the courts would admit such evidence as proof of a valid actuarial confirmation. Perhaps it is worth considering a High Court decision from January this year involving the Radley College Pension and Assurance Scheme² where secondary evidence was accepted as proof of the existence of missing documents. This could indicate that the courts would favour a similar approach for schemes affected by the Virgin Media decision. However, until this is properly "tested" by an affected scheme in front of the courts, the position remains uncertain.

Is regulatory intervention on the horizon?

With that being said, the above considerations may be irrelevant if the Department for Work and Pensions (DWP) decides on regulatory intervention. It remains to be seen whether the government will take steps to implement what has been requested by the industry – on 21 February this year, Torsten Bell (the Pensions Minister) acknowledged through written questions tabled in Parliament that whilst "no final decisions" have been made, the DWP is "actively considering" its next steps, including whether regulations will be introduced to retrospectively validate scheme amendments made void by Virgin Media.

There may also be further judicial guidance provided. In late February, the High Court heard a Part 8 application (Verity Trustees Ltd v. Wood)³ by parties seeking directions in relation to scheme amendments. It is possible that the judgment will clarify some of the issues left unanswered by the Virgin Media decision.

Whilst the possibility of governmental intervention remains uncertain, what is clear is that affected schemes should ensure that they, and their professional advisers, continue to keep an eye out for developments in this area.

1. [2017] CSOH 21 ↩
2. [2024] EWHC 2765 (Ch) ↩
3. PE-2023-000004 ↩