The Virgin Media “fix” is coming – but not for all schemes

On 2 September 2025, the UK government introduced an amendment to the forthcoming Pension Schemes Bill which seeks to address the concerns that arose following the decision in the Virgin Media v NTL case. The amendment was accepted during the Committee Stage in the House of Commons and has been included in the amended Bill published on 18 September. 

Our previous blog posts cover the developments following the Virgin Media judgment (see here and here) in greater detail. In brief, the case concerned whether amendments made to a defined benefit pension scheme with contracted-out benefits were compliant with section 37 of the Pension Schemes Act 1993 (section 37)and Regulation 42 of the Occupational Pension Schemes (Contracting-out) Regulations 1996 (regulation 42). In August 2024, the Court of Appeal held that the wording in section 37 was clear: in order for a relevant amendment to have been validly made in accordance with section 37, the trustees must have obtained written actuarial confirmation that, after the amendment took effect, the statutory standard would still be met. Without such confirmation having been obtained, any amendment which was required to have been made in accordance with section 37 would be void.  

Following the Court of Appeal’s judgment, and in response to significant consternation in the pensions industry, the government announced in June 2025 that it would introduce legislation to address the issues created by the Virgin Media case. This draft legislation was not included in the first draft of the Pension Schemes Bill, but has been added to the Bill at the Committee stage. 

Retrospective validation

Potentially remediable alterations

The new provisions will allow schemes to validate retrospectively any pension scheme amendments that affected contracted-out benefits, provided specific criteria are met. The Bill defines a “potentially remediable alteration”, i.e. one which can be retrospectively validated, as one that: 

• required actuarial confirmation under section 37 and regulation 42; 
• was treated by the trustees of the scheme as having been validly made;
• has not been the subject of any “positive action” by the scheme’s trustees or managers (see further below), on the basis that they considered the original alteration to be void for non-compliance with the relevant requirements of regulation 42; and
• is not excluded from the scope of the remediation power under clause 101 and 102 of the (revised) Bill (see further below). 

“Positive action” for these purposes means that the trustees or scheme managers have either:

• sent a written notification to scheme members that they consider the relevant alteration(s) to be void due to non-compliance with regulation 42, and that the scheme will be administered on the basis that the relevant alteration(s) had no legal effect; or 
• taken steps to alter payments to or in respect of scheme membersin respect of the alteration(s) (i.e. to treat members as if the alteration(s) were void). 

Clause 100(8) of the Bill limits the scope of the remediation power. Amendments to scheme rules will not be remediable if questions regarding their validity under section 37:

• have been determined by a court in legal proceedings to which the trustees are a party before the remediation power comes into force; or
• were in issue on or before 5 June 2025 (the date on which the government announced its intention to legislate) in legal proceedings to which the trustees were a party which either have been settled or are continuing when the section comes into force. 

This means that any schemes which have already sought clarification on potential section 37 issues from the court prior to 5 June 2025 (whether or not those issues have been finally determined) will potentially be unable to benefit from the remediation power. We note there is no definition of “legal proceedings” in the Bill for this purpose, so the application of this exclusion is potentially extremely broad.    

How will the new power operate?

The Bill also sets out the steps that scheme trustees and managers will need to take in order to make use of the remediation power. 

Clause 101(3)(b) outlines the applicable test for subsisting schemes. If the scheme actuary (following a request by the trustees) confirms that in their opinion it is reasonable to conclude that the alteration in question would not have prevented the scheme from meeting the statutory standards of contracted-out schemes under section 12A of the Pension Schemes Act 1993, the alteration will be treated as having always been valid. 

This test is helpfully framed, as it provides a clear standard by which scheme actuaries can evaluate alterations to scheme trust deeds and rules. It is also important to note that this process is designed to be trustee-led rather than employer-led, and will be carried out amendment by amendment, rather than deed by deed. In theory, this approach could be helpful for trustees, as it means they can be specific as to which alterations the test is applied to, in circumstances where it might be doubtful whether other alterations in the same deed would pass the actuarial test (provided the effect of different alterations in the same deed could easily be separated). It is also helpful that the test is framed by reference to the actuary’s opinion as to what is reasonable to conclude, which gives the actuary more flexibility – there is no requirement to give an absolute determination that the statutory standard would certainly have been met. 

Clause 101(5) also helpfully confirms that steps taken to resolve any issues in respect of potentially remediable alterations before the Bill has come into force (for example if the trustees have already asked the actuary to investigate) can be effective to secure remediation. 

For schemes that are wound up,  for which the Pension Protection Fund (PPF) has assumed responsibility, or in respect of which payments are being made under a  Financial Assistance Scheme, potentially remediable alterations are to be treated as if they met the requirements in Regulation 42 before it was made, and as such as if they have always been a valid alteration. In other words, neither the former trustees, nor the PPF or any provider of buyout policies will be required to follow any process to fix these alterations. This is a helpful solution for fully wound-up schemes, and in respect of bulk transfers from schemes that have been wound up (ie. following a full scheme merger). However, it is less clear how these provisions will operate in the context of a partial scheme merger, where the original scheme continues to run on. 

Next steps 

For many in the pensions industry, the government’s proposals are a welcome addition to the Pension Schemes Bill. The proposals are expected to provide trustees with significant assistance in retrospectively validating amendments, provided that the scheme actuary can be satisfied it is reasonable to conclude that the statutory standard was met at the time the amendment was made. This will also be welcome news for the sponsoring employers of affected schemes. 

However, for any schemes that have raised these issues in legal proceedings or taken positive actions which may have excluded their scheme amendments from the scope of the remediation power, the risks associated with potential section 37 issues seem likely to remain. Schemes should also consider whether work needs to be done in due course to identify potential issues and to consider whether the statutory process should be followed to correct them.

The Bill is still a work in progress and may be further amended (notably when it moves to the House of Lords). The Bill is not expected to receive Royal Assent until 2026. Looking ahead, we can expect the provisions regarding the remediation power to come into force two months after the Bill has received Royal Assent. 

If you would like to discuss in further detail any of the points raised in this blog post, please speak to your usual Freshfields contact.