The Department for Work and Pensions (DWP) should provide "urgent" clarity on issues arising from the Virgin Media and NTL case, the Pensions and Lifetime Savings Association (PLSA) has said, with some schemes now receiving member inquiries on the ruling.
In June 2023, the High Court ruled that a lack of evidence of actuarial confirmation would render relevant amendments to affected contracted-out defined benefit (DB) pension schemes’ rules invalid and void.
This ruling was also upheld by the Court of Appeal in July 2024, with industry experts warning at the time that this could have far-reaching implications for many DB schemes.
In particular, the PLSA said that the ruling could lead to pension schemes having to undertake a highly resource-intensive exercise to uncover records going back many years that provide historical evidence of actuarial confirmations.
Recent media attention surrounding the case has also prompted savers to contact their scheme to inquire as to whether they would be entitled to improved benefits, according to research from the associaiton.
The survey of PLSA members found that nearly three quarters (73 per cent) of DB scheme respondents are ‘moderately concerned,’ ‘very concerned’ or ‘extremely concerned’ by the ruling.
A quarter said they had identified potential issues for their scheme, while around a third (35 per cent) of whom reporting a "very significant" potential impact.
In addition to this, just over half (53 per cent) said that the may have some impact on their ability to buyout.
Whilst 84 per cent of those surveyed have sought legal advice on the matter, the PLSA found that the "overwhelming majority" of schemes are seeking urgent clarity from the government through legislation (81 per cent) or guidance (8 per cent).
PLSA deputy director of policy, Joe Dabrowski, said: “The decision in the Virgin/NTL case has caused a great deal of uncertainty which could lead to schemes and employers having to re-visit decisions and changes made many years ago.
"This is potentially an enormous and costly task with a host of unintended consequences for employers, pension schemes, the Pension Protection Fund (PPF) and insurers.
“It is important that the DWP acts to provide clarity through legislative change or through guidance as soon as possible. The PLSA and others have proposed solutions to government, including regulatory amendments, which could provide a workable route forward.”
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