Case Law
Lack of actuarial confirmation rendered amendments to formerly contracted out scheme invalid - Virgin Media Limited v NTL Pension Trustees II Limited, Ross Russell Limited, John Jardine
In this claim the claimant asked the Court to determine the correct interpretation of historic provisions relating to contracting-out from the State Earnings Related Pension Scheme in relation to the National Transcommunications Limited Pension Plan (the "Plan").
The questions raised concern the interpretation of s. 37 of the Pension Schemes Act 1993 and Regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996. The Plan's Second Definitive Trust Deed and Rules dated 8 March 1999 (the "Deed and Rules") sought to amend the Plan’s revaluation provisions with effect from 6 April 1997. It was common ground that the parties had not located any confirmation from the Plan actuary that the alterations to revaluation made in the Deed & Rules would continue to satisfy the reference scheme test (as required by Regulation 42).
The essential question was whether the effect of s. 37 was to render the amendments void, and if so to what extent. The claimant arguing that s. 37 did not render the amendments void, but alternatively that Regulation 42 requirements only applied to past service benefits, and not to benefits arising from service after the date of the amendment; and that any sanction of voidness should only apply to adverse alterations.
The Court noted that the questions had been the subject of considerable uncertainty in the pensions industry for some time, but had not yet been determined in proceedings concerning other schemes.
The Court held on the questions that:
- s. 37 of the 1993 Act rendered void an amendment to the rules of a contracted-out scheme which related to s. 9(2B) rights, in so far as the amendment was introduced without the actuarial confirmation required by Regulation 42(2)(b).
- The words “section 9(2B) rights” as used in Regulation 42(2) included both past service rights and future service rights.
- Voidness under s. 37 applied to all alterations to s. 9(2B) rights and not merely to alterations that would or might adversely affect such rights.
New Law
Draft Pensions Dashboards (Amendment) Regulations 2023
The draft Pensions Dashboards (Amendment) Regulations 2023 were published on 8 June 2023.
These Regulations amend the Pensions Dashboards Regulations 2022 including by replacing the staging profile and staging deadlines (as set out in Schedule 2 to the 2022 Regulations) with a single “connection deadline” of 31st October 2026 for all relevant occupational pension schemes.
TPR has updated Pensions dashboards: initial guidance to reflect the changes to be introduced in terms of the draft regulations.
News
DWP Review of the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021
The DWP has reported on its review of the Occupational and Personal Pension Schemes (Conditions for Transfers) Regulations 2021 which was based on the following 3 principles:
- Are the regulations effective?
- Are there any unintended consequences of this legislation?
- What does the pension fraud landscape look like following the new legislation and as such are the red and amber flags still appropriate?
It is reported that feedback received has suggested that there are some areas of concern including:
- The overseas investment amber flag needs to be more clearly defined or removed. As it is structured it can mean that an amber flag needs to be raised, even when schemes have no concerns.
- The incentives flag is incorrectly blocking transfers due to the different interpretation of the flag by some providers.
- Transfers are taking longer due to the additional due diligence checks required and longer waiting times for MoneyHelper appointments.
- Several individuals are required to attend multiple safeguarding appointments, even if they are consolidating because individual schemes are identifying flags.
- Evidence requirements for an employment link can be excessive on pension members.
The report concludes that whilst the original policy intent remains appropriate, feedback from the pensions industry suggests the incentives and overseas investments flags are the main concerns with the application of the regulations.
It is confirmed that the DWP will therefore conduct further work with the pensions industry and the Pensions Regulator to consider if changes could be implemented to the regulations to improve the pension transfer experience, without undermining the policy intent.
