Resolving UK Virgin Media issues: where are we now? May 2026

In this note, we set out: 

• A reminder of the “Virgin Media remedy”, under provisions in the Pension Schemes Act 2026;
• TPR's expectations of trustees, set out in its recent guidance;
• Points of interest from the FRC’s guidance on using the Virgin Media remedy; and
• A reminder of the Virgin Media case and the issues arising from it.

Reminder: how will the Virgin Media remedy work? 

The Virgin Media remedy provisions in the Pension Schemes Act 2026 will allow the retrospective validation of “potentially remediable alterations” (PRAs).

A previous rule amendment (or purported amendment) will be a PRA if:

• The amendment could not have been made unless the trustees obtained confirmation from the actuary (under regulation 42 of the Contracting-out Regulations 1996) that the scheme would continue to meet the contracting-out reference scheme test (RST);
• The trustees of the scheme treated the amendment as being valid after it was made;
• The trustees have not taken any “positive action” (please see below) on the basis that they considered the amendment to be void for failure to obtain regulation 42 confirmation; and
• The amendment’s validity on grounds of non-compliance with regulation 42 has not:
  • Already been determined by “qualifying legal proceedings” (please see below) before the remedy provisions come into force; or
  • On or before 5 June 2025 (when the government announced it would take steps to resolve the issues arising from the Virgin Media decision) been subject to “qualifying legal proceedings” (whether settled or still in issue).

Retrospective validation of PRAs

A PRA will be treated as always having been valid (and as having always met the requirements of regulation 42) if:

• The trustees make a written request to the scheme actuary to consider whether the amendment, if assumed to be valid, would have meant that the scheme no longer satisfied the RST; and
• The actuary has confirmed in writing that, in their opinion, it is “reasonable to conclude” that the amendment would not have prevented the scheme from “continuing to satisfy” the RST.

When deciding whether to give this confirmation, the actuary may:

• Act on the basis of the information available, provided that they consider it is sufficient to form an opinion; and
• Take any professional approach in all the circumstances of the case (including making assumptions or relying on presumptions).

What is “positive action”?

Trustees will be treated as having taken positive action (with the effect that the amendment cannot be a PRA) if they have notified the members in writing that either:

• They consider the amendment void and will administer the scheme as if the amendment has no legal effect; or
• They are taking any other step in relation to scheme administration which has the effect of altering payments to or in respect of members (because they consider the amendment void).

What are “qualifying legal proceedings”?

Proceedings will be “qualifying legal proceedings” if they are brought before a UK court and:

• The proceedings will determine a dispute about scheme rules; and
• The parties include the trustees or managers and at least one beneficiary (or a representative of the beneficiaries).

The explanatory statement to this provision makes clear that proceedings before a tribunal or a complaint to an ombudsman are not intended to be “qualifying legal proceedings”.

What about schemes in an assessment period?

Where a scheme is in a Pension Protection Fund (PPF) assessment period (or has come out of an assessment period and is being run as a closed scheme), the PPF Board may direct the trustees to request the scheme actuary for written confirmation about any PRAs and to take any action needed to facilitate this.

And schemes in the PPF, or which have wound up?

The good news extends to PRAs in schemes which have already wound up, transferred to the PPF, or come within the Financial Assistance Scheme (FAS) before 29 April 2026 (when the PRA remedy provisions came into force). In these cases, any PRAs will be treated as always having been valid, without the requirement to seek actuarial confirmation.

Return to Contents.

Pensions Regulator (TPR) guidance for trustees

TPR’s guidance is intended to remind trustees of their statutory duties and to set out its expectations of trustees using the PRA remedy.

Deciding whether to use the PRA remedy

TPR expects trustees to:

• Be familiar with their scheme’s trust deed and rules;
• Establish whether any past amendments to their scheme are affected by the Virgin Media judgments;
• If so, understand the Virgin Media judgments, the PRA remedy under the 2026 Act and other ways of addressing Virgin Media issues;
• Assess the cost/benefit of searching for historic actuarial confirmations compared to assuming that no past confirmation was given and moving more quickly to the PRA remedy;
• Take legal and other advice as needed to make an informed decision whether to use the PRA remedy;
• Discuss the decision with the sponsoring employer, where appropriate; and
• Record the factors considered in reaching a decision and maintain a clear audit trail throughout the process.

Instructing the actuary to use the PRA remedy

The trustees’ request to the actuary to use the PRA remedy must be in writing. TPR expects this to be a formal written instruction and to specify:

• The alterations to be considered; and
• Where multiple amendments were made at the same time, whether the actuary should: address these separately, consider the overall effect of the amendments together, or a combination.

TPR comments that trustees may need legal advice when drafting the instruction.

TPR considered that trustees could instruct their actuary to start work on using the PRA remedy even before the PRA provisions came into force on 29 April 2026.

Approach to the actuary’s work

TPR notes that there is no deadline under the 2026 Act for using the PRA remedy. Trustees are expected to agree a “practical and realistic timescale”, appropriate for the circumstances of their scheme and following discussion with the sponsoring employer. Trustees of a scheme approaching buyout are likely to want to progress more quickly than where a scheme is ongoing.

Information required for using PRA remedy

Trustees need not carry out exhaustive searches before instructing the actuary to proceed with the PRA remedy. However, TPR expects trustees to:

• Find out whether their actuary believes that s/he already has sufficient information, or will need further data, to support the PRA remedy assessment;
• Where further information is needed, work with the administrator and sponsoring employer to determine what information is readily available; and
• Carry out further investigation where readily available information is insufficient, which may include liaising with former administrators, sponsors and advisers.

Trustees should ensure that their document retention policy does not inadvertently cause the destruction of relevant records which may be helpful in the PRA remedy process.

Outcomes of PRA remedy process

Resolution of Virgin Media issues through the PRA remedy process does not have to be reported to TPR. TPR comments that a historic breach which can be resolved through the PRA remedy process is very unlikely to be materially significant in the carrying out of its functions.

Actuarial confirmations given under the PRA remedy should be stored safely with the scheme’s governing documents. Copies should be given to the sponsoring employer.

If the actuary cannot provide the PRA remedy confirmation requested (because of insufficient information or otherwise), trustees should take legal advice on their next steps and should consider any impact on the scheme’s funding position.

Communication with members

TPR suggested that, after the 2026 Act was passed, trustees might wish to prepare a “reactive response” to manage member queries consistently. The response may need updating once any remedial work has been completed.

Return to Contents.

Financial Reporting Council (FRC) guidance for actuaries

As explained above, a PRA may be validated retrospectively if the actuary considers it “reasonable to conclude” that the amendment would not have prevented the scheme from “continuing to satisfy” the RST.

The guidance considers how the following parts of the test should be approached:

• “reasonable to conclude”:
  • The actuary does not need to be certain that the amendment would not have prevented the scheme from continuing to satisfy the RST;
  • Instead, the actuary should take a proportionate approach to gathering data and should reach a “reasoned and justifiable conclusion”, taking account of all relevant factors identified; and
  • In taking a proportionate approach, the actuary does not need to: have the full data available at the time of the amendment; put themselves in the position of the scheme actuary when the amendment was made; or carry out calculations which the scheme actuary might have done in order to provide the regulation 42 confirmation; and
• “continuing to satisfy”:
  • The actuary should assume that the scheme satisfied the RST before the amendment.

Availability of data

The actuary is expected to exercise judgment over what information is sufficient to form an opinion for the purposes of the Virgin Media remedy. In particular, the actuary is encouraged to:

• Use information which is readily available without incurring disproportionate time and effort;
• Make appropriate assumptions about the scheme or information which is not available; and
• In most cases, form an opinion without having full individual membership data.

Deciding whether further information is needed

In some cases, once the actuary understands the effect of the PRA, they may give the confirmation requested without needing further information. Examples include amendments which:

• Are subject to an RST underpin;
• Affect only benefits outside the RST, such as children’s benefits;
• Alter pension increase provisions solely to reflect legislative changes; or
• Reduce the accrual rate for spouses’ pensions, but not below the level of the RST.

Where further information is needed

Where the actuary considers further information is required, they should focus on information which provides indirect evidence of compliance with the RST, recognising that individual member data may not be readily available. Examples of such indirect evidence include:

• Legal advice, trustee minutes and member communications relating to the PRA;
• Triennial and other RST certificates and contracting-out certificates produced after the PRA was purported to have effect;
• Subsequent valuation reports referring to the PRA, or to the RST continuing to be met; and
• Evidence of work, such as calculations, carried out at the time of the PRA.

Issues with definitions of earnings

The guidance recognises that challenges may arise where the definition of pensionable salary under scheme rules (which may be restricted to basic pay) differs from the pay used for the RST (which includes variable earnings such as overtime pay). Actuaries are encouraged to use indirect evidence when considering whether the RST continued to be met following the PRA. Such evidence may include:

• Information about general or average salary levels and variable pay across the scheme membership;
• General information about employment structures, including proportions of workers in different roles, who may have had differing proportions of non-pensionable pay;
• Pre-1997 earnings information for the purposes of providing guaranteed minimum pensions (GMPs), from which inferences may be drawn about earnings patterns after 6 April 1997;
• Information about typical earnings of employees in the same industry, including variable pay such as shift pay, drawing on the actuary’s experience;
• Confirmation by the employer that there were no significant changes in earnings patterns over the relevant period (for example, from the date of the PRA to the date of a subsequent RST certificate); and
• A descriptive statement about past earnings signed by the employer, from which the actuary may make reasonable assumptions.

The guidance suggests that a “contradiction approach” may also be used: the actuary may form a view on the pay structures which would have resulted in the RST not being met, and may consider that those circumstances were unlikely to have existed at the relevant time.

Requirement for individual member data

Individual member data is likely to be needed only in a minority of cases. An example would be where:

• The accrual rate is reduced to 1/80 (the RST minimum);
• Only basic pay is pensionable; and
• There is no information about the RST being considered after the PRA was made.

The RST requires that at least 90% of members’ benefits satisfy the RST. If potentially more than 10% of members would have scheme benefits below the RST minimum, the actuary may need data about individual members’ benefits before reaching an opinion for the purposes of the remedy.

Where the actuary cannot provide the confirmation requested

Where the actuary is unable to provide confirmation for the purposes of the remedy, they may choose to include details of the investigation and analysis which led to this conclusion.

The actuary may also let the trustees know what additional information, if any, might enable a remedy confirmation to be given.

Amendments potentially outside the scope of the Virgin Media remedy

An amendment will only be a PRA, and so within scope of the remedy, if it could not have been validly made without a regulation 42 confirmation. The guidance recognises current legal uncertainty over whether certain types of amendment required regulation 42 confirmation.

In such a case, the actuary may suggest that that the trustees seek legal advice on whether it is appropriate to seek actuarial confirmation under the remedy provisions. However, the guidance recognises that it is the trustees’ decision whether to seek actuarial confirmation.

If the actuary considers it reasonable to conclude that the amendment would not have affected whether the scheme continued to meet the RST, the actuary may confirm this opinion to the trustees. (Giving the opinion will not, in itself, bring the amendment within the remedy provisions but may give comfort to the trustees.)

Return to Contents.

Reminder: the Virgin Media case 

In a nutshell

On 25 July 2024, the Court of Appeal dismissed the employer’s appeal against a High Court decision in June 2023 that historic amendments to members’ contracted-out rights were void. This increased the value of accrued benefits under the pension scheme by £10m.

The judgment threw into question the validity of past amendments to pension schemes which were formerly contracted-out, if certain procedural requirements were not complied with.

Specifically, the case is relevant to rule amendments relating to “section 9(2B) rights” made between 6 April 1997 and 5 April 2013, plus any amendments to future service rights between 6 April 2013 and 5 April 2016 (when salary-related contracting-out was abolished).

Reminder: what are section 9(2B) rights?

“Section 9(2B) rights” are rights built up by members of salary-related contracted-out occupational pension schemes in respect of pensionable service between 6 April 1997 and 5 April 2016. Members’ benefits built up in this period must be at least as good as those provided by a reference scheme statutory standard (the so-called “reference scheme test” (RST)).

What procedural requirement did Virgin Media consider?

From 6 April 1997 to 5 April 2013, rule amendments in relation to any section 9(2B) rights required confirmation from the scheme actuary (under regulation 42 of the Contracting-out Regulations 1996) that the scheme would still meet the reference scheme test (RST) following the amendment.

From 6 April 2013 to 5 April 2016, similar confirmation from the actuary was needed in relation to amendments to future service rights. None of the parties in the Virgin Media case had located confirmation from the scheme actuary in relation to rule amendments in 1999, and the court was asked to decide the position on the assumption that no such confirmation had been issued.

What did the Courts decide?

In June 2023 the High Court judge interpreted the legislation strictly, holding that where there was not the required confirmation from the actuary, the amendments were void in respect of both past and future service. It made no difference that the purported amendments would not have any adverse effect on section 9(2B) rights.

The Court of Appeal held that the High Court judge had reached the right conclusion in her “impressive judgment” and dismissed the appeal.

Was regulation 42 confirmation always needed?

Having carried out a number of regulation 42 confirmation reviews for clients, we are comfortable that in some circumstances a confirmation was not needed, even where amendments were made to members’ benefits. For example, in our view no regulation 42 confirmation was required when introducing new member choices at retirement (such as a pension increase exchange (PIE) option); or when extending the categories of individuals to whom survivors’ benefits may be paid when the member is not married.

We also consider that where a change to pension benefits was agreed with members outside the rules (an “extrinsic contract”), this agreement may still be relied on, even if a rule amendment to document the agreement is subsequently found to be invalid because a regulation 42 confirmation was not obtained.

In addition, no regulation 42 confirmation was needed for administrative or other amendments unrelated to section 9(2B) rights, for example the addition of a power to agree an apportionment of past service liabilities to a different participating employer, or a change to the scheme’s name.

However, now that the Pension Schemes Act 2026 provides a process for putting PRAs beyond doubt, trustees may like to ask for actuarial confirmation for the sake of prudence. The FRC guidance comments on the position with amendments for which regulation 42 confirmation may not have been needed (please see above).

Return to Contents.

Authored by Jill Clucas.