Virgin Media Limited v NTL Pension Trustees II Limited & Ors

Section 37 of the Pension Schemes Act 1993 rendered void any amendment to the rules of a contracted-out salary-related scheme relating to section 9(2B) rights where the actuarial confirmation required by Regulation 42(2)(b) had not been obtained. The protected rights included both past-service and future-service rights. The requirement for confirmation, and the resulting sanction of voidness, applied to all such amendments, not only amendments which might adversely affect members’ rights.

Virgin Media sought declarations concerning amendments made in 1999 to the revaluation provisions of an occupational contracted-out pension scheme. The parties proceeded on the assumption that the scheme actuary had not provided the written confirmation required by Regulation 42(2)(b) of the Occupational Pension Schemes (Contracting-out) Regulations 1996.

The court was asked to determine whether section 37 of the Pension Schemes Act 1993 made the amendments void; whether “section 9(2B) rights” included future-service rights; and whether the statutory sanction applied only to adverse alterations.

The court answered all three questions against the claimant.

1. Voidness. The amended wording of section 37(1), providing that the rules of a contracted-out scheme “cannot be altered” unless the statutory conditions are met, was clear and unambiguous. It meant that an amendment relating to section 9(2B) rights could not validly be made without the written actuarial confirmation required by Regulation 42(2)(b). Section 37(2), which referred to alterations otherwise void under the section, confirmed that construction.
2. Scope of protected rights. The definition of “section 9(2B) rights” in Regulation 1(2) imposed a temporal limit only by reference to service on or after 6 April 1997. It distinguished between immediate pension-payment rights and accrued rights to prospective pensions, rather than between past and future service. The surrounding Regulations also used the expression in contexts encompassing future benefits.
3. Legislative history. The 2013 amendments to Regulation 42 clarified and separated the treatment of accrued and future benefits. They did not establish that future-service rights had previously fallen outside the protection of Regulation 42(2).
4. Adverse alterations. Regulation 42(2) referred to alterations relating to “any section 9(2B) rights”. Unlike Regulations 42(2A) and 42(2B), it contained no adverse-effect qualification. Reading such a threshold into the provision would create uncertainty and undermine the straightforward actuarial-confirmation mechanism.

Accordingly, on the assumed facts, section 37 rendered the relevant amendment void in relation to both past-service and future-service section 9(2B) rights, and the rule applied to all alterations, whether adverse or beneficial.