TPR takes 'pragmatic' stance in Virgin Media remedy guidance
Image: isoman72/Pixabay
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
The Pensions Regulator has issued guidance to schemes on whether and how to apply the legislative override of the Virgin Media judgment. Industry representatives have welcomed TPR’s approach of allowing work to begin before the pension schemes bill is enacted and that schemes will not need to notify it.
New legislation – which follows intense lobbying – is being introduced that will retrospectively validate changes to contracted-out schemes made without obtaining written actuarial confirmation, or where the confirmation can no longer be found.
The change, part of the pension schemes bill 2025, is being brought in after court rulings in Virgin Media v NTL Pension Trustee II raised fears that employers could be on the hook for millions of extra liabilities.
The remediation guidance published by TPR on Thursday advises trustees to check which of the alterations to their scheme’s rules between 6 April 1997 and 5 April 2016 required a section 37 confirmation – not all changes did – and if, for any of the alterations in scope, they are unable to find proof that a section 37 confirmation was obtained.
TPR recommends that if that is the case, trustees should then “weigh up the cost/benefit of devoting resource to tracking down evidence of past certification versus assuming there was no certification and moving directly to remediation”.
The guidance is a reminder of trustees’ duties in relation to assessing the impact of the Virgin Media judgment on their own scheme by taking advice, making informed decisions and ensuring there is a clear audit trail, said Sonya Fraser, a partner at Arc Pensions Law.
Remediation will not be available until the pension schemes bill has received Royal Asset, but trustees can already instruct their actuaries to start the work, although TPR said the guidance could change depending on what is enacted.
“That is consistent with what we are seeing, particularly for schemes that are preparing for buy-in or buyout,” said Fraser.
She said TPR's approach “builds on the pragmatic stance” the industry and the Financial Reporting Council have taken to date.
“For example, it states that the regulator does not expect trustees to 'carry out exhaustive searches before your actuary undertakes the remediation work'. The regulator also does not expect to receive reports from trustees regarding the actions that they have taken in respect of remediation,” she noted.
The guidance was welcomed by Mark Tinsley, principal at Barnett Waddingham, who said that after a state of limbo, “the message is clear and simple: there is no need to wait for the bill to be enacted to start moving forward”.
He added that TPR was right to highlight legal advice as well as clear audit trails: “That will hopefully save schemes having to revisit these rule changes in another 20 years.”
Has your scheme started checking for s37 confirmation of changes before 2016?
