FRC issues guidance for actuaries ahead of Virgin Media override
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The Financial Reporting Council has published new guidance to help actuaries provide confirmation to validate historic changes to pension scheme rules. It comes as the pension schemes bill is set to include retrospective validation of scheme changes that could otherwise be unlawful and add millions to sponsor obligations.
The legislative change is being made in response to intense industry lobbying after, in 2024, the Court of Appeal upheld the ruling in Virgin Media v NTL Pension Trustees, saying actuarial confirmation is needed for changes in a contracted-out scheme to be valid.
"The Virgin Media legal case has caused considerable concern across the pensions industry. Our guidance provides actuaries with clear, practical help on how to work proportionately when reviewing historic scheme changes. This will support sound judgment and strengthen confidence that pension schemes have complied with their legal obligations,” said the executive director of regulatory standards at the FRC, Mark Babington.
The Pensions Regulator’s director of policy, Joey Patel, said: “This guidance will be valuable in supporting actuaries to help affected scheme members without disproportionate cost to schemes. We will also issue guidance on this issue in spring to support trustees to navigate this issue while ensuring that schemes are continuously in compliance with legal requirements.”
The FRC’s new guidance is issued ahead of the legislation receiving Royal Assent to provide preparation time, and could still be updated. It “gives actuaries a practical framework to support the application of their judgment and strengthen confidence that historic changes made to UK pension schemes have complied with legal requirements”, the body said.
The non-prescriptive guide contains examples illustrating how to apply a proportionate approach in collecting information and forming judgments when historic records are incomplete. It has been developed in collaboration with industry, including the Institute and Faculty of Actuaries and the Association of Consulting Actuaries.
The ACA welcomed the publication, with chair Stewart Hastie saying the industry body, along with the IFoA, has made “strong on the shape the guidance should take".
He added: “We will of course closely scrutinise the guidance to make sure it is complete – it’s a great sign of how the industry can work with the government and regulators to iron out practical bumps in the road that can undermine good pension scheme governance and administration.”
The legislative change is being made in response to intense industry lobbying after, in 2024, the Court of Appeal upheld the ruling in Virgin Media v NTL Pension Trustees, saying actuarial confirmation is needed for changes in a contracted-out scheme to be valid.
"The Virgin Media legal case has caused considerable concern across the pensions industry. Our guidance provides actuaries with clear, practical help on how to work proportionately when reviewing historic scheme changes. This will support sound judgment and strengthen confidence that pension schemes have complied with their legal obligations,” said the executive director of regulatory standards at the FRC, Mark Babington.
The Pensions Regulator’s director of policy, Joey Patel, said: “This guidance will be valuable in supporting actuaries to help affected scheme members without disproportionate cost to schemes. We will also issue guidance on this issue in spring to support trustees to navigate this issue while ensuring that schemes are continuously in compliance with legal requirements.”
The FRC’s new guidance is issued ahead of the legislation receiving Royal Assent to provide preparation time, and could still be updated. It “gives actuaries a practical framework to support the application of their judgment and strengthen confidence that historic changes made to UK pension schemes have complied with legal requirements”, the body said.
The non-prescriptive guide contains examples illustrating how to apply a proportionate approach in collecting information and forming judgments when historic records are incomplete. It has been developed in collaboration with industry, including the Institute and Faculty of Actuaries and the Association of Consulting Actuaries.
The ACA welcomed the publication, with chair Stewart Hastie saying the industry body, along with the IFoA, has made “strong on the shape the guidance should take".
He added: “We will of course closely scrutinise the guidance to make sure it is complete – it’s a great sign of how the industry can work with the government and regulators to iron out practical bumps in the road that can undermine good pension scheme governance and administration.”
