Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors

Under the Pension Schemes Act 1993 and the Contracting-out Regulations, the expression section 9(2B) rights included pension rights attributable to both past and future contracted-out service. The requirement for written actuarial confirmation therefore applied to an alteration affecting future-service benefits, as well as benefits already earned. The statutory purpose was to ensure that a scheme receiving the benefits of contracting out continued to provide the required level of pension protection. An amendment made without the required confirmation was void. The appeal was dismissed.

Virgin Media appealed from the decision of Bacon J in [2023] EWHC 1441 (Ch). A 1999 deed had altered the Scheme’s rules concerning revaluation of deferred pensions, including benefits attributable to service after the date of amendment. No written actuarial confirmation under section 37 of the Pension Schemes Act 1993 and regulation 42 of the Contracting-out Regulations had been found.

The High Court held that section 9(2B) rights included both past-service and future-service rights. The appeal concerned only that construction issue: whether the actuarial confirmation requirement applied to an alteration affecting benefits to be earned by future service.

1. Disposition. The appeal was dismissed. Lord Justice Nugee delivered the judgment, with which Lady Justice Asplin and Lord Justice Peter Jackson agreed.
2. Statutory purpose and context. The provisions governing contracted-out schemes formed part of a protective legislative scheme. Their purpose was to ensure that schemes enjoying reduced National Insurance contributions continued to provide members with the required pension benefits. The predecessor restriction in section 50 of the Social Security Pensions Act 1975, and section 37 of the Pension Schemes Act 1993, contained no indication that protection was confined to benefits already earned. A restriction limited to past service would leave future accrual vulnerable to changes undermining the statutory scheme.
3. Construction of the regulations. The ordinary meaning of accrued rights ordinarily points to benefits earned by service to date. However, statutory language must be read in its legislative context and in light of purpose. In regulation 1(2) of the Contracting-out Regulations, accrued rights identified the type of pension rights protected, rather than imposing a temporal limit. The definition therefore included rights attributable to contracted-out service after 5 April 1997, whether already earned or capable of being earned by future service.
4. Effect of regulation 42. Regulation 42(2) required the scheme actuary’s written confirmation that the scheme would continue to satisfy the statutory standard if an alteration affecting section 9(2B) rights were made. That forward-looking requirement applied to future-service benefits. The absence of the required confirmation rendered the amendment void under section 37, a conclusion not challenged on appeal.
5. Other arguments. Bradbury v BBC and Wedgwood Pension Plan Trustee Ltd v Salt concerned different statutory or scheme wording and did not establish a general rule limiting rights to past accrual. The principle against doubtful penalisation did not apply because the statutory regime did not remove the employer’s power to amend; it imposed a protective procedural requirement attached to contracting out.

• Court of Appeal (Civil Division). In [2024] EWCA Civ 843, the appeal was dismissed.
• High Court of Justice, Business and Property Courts, Chancery Division. Bacon J decided in [2023] EWHC 1441 (Ch) that section 9(2B) rights included past-service and future-service rights and that an amendment made without the required actuarial confirmation was void.