Case Law
Virgin Media Limited v NTL Pension Trustees II
As reported in our Pensions Insights July 2024 the Court of Appeal in Virgin Media vs NTL Pension Trustees II Limited has dismissed the appeal.
Since the High Court decision in the Virgin Media case a working group of representatives from the Association of Pension Lawyers, the Association of Consulting Actuaries and the Society of Pension Professionals has been engaging with the Department for Work and Pensions (DWP). It is understood the DWP is alive to the issues many schemes face as a result of the High Court’s ruling, now upheld by the Appeal Court, which questions the validity of certain past amendments made to the rules of then contracted out schemes.
The working group has proposed that the Secretary for State should make regulations that would remove this uncertainty by validating retrospectively any amendment that is held to be void solely because a written actuarial confirmation was not received before the amendment was made (or where such a confirmation cannot now be located).
The working group has highlighted that there is a specific power in Section 37(2) of the Pension Schemes Act 1993 for Regulations to validate, retrospectively, amendments that would otherwise be void. Any such regulations would need to have appropriate safeguards.
We understand the working group has shared its thinking with the DWP and the DWP is considering any wider effects for both schemes and scheme members as it explores the implications of the judgment. At this stage the DWP has not indicated what, if any, resolution to the issue it may take.
New Law
New DB Funding Code
The Pensions Regulator’s (TPR’s) new DB Funding Code has been laid in parliament.
The new DB Funding Code:
- aims to encourage good long-term planning and risk management behaviours;
- includes guidance on how trustees can set funding plans in line with the support their sponsors can provide and how maturing schemes can move to a point of low dependency on their sponsor; and
- gives guidance on setting recovery plans in line with what is reasonably affordable for their sponsor.
Once in force the code will replace the existing DB Funding Code for valuations with effective dates on or after 22 September 2024.
The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 that align with the DB Funding Code, came into force in April this year and apply to valuations with effective dates on or after 22 September 2024.
TPR recognises there will be a gap between when the requirements of the Funding and Investment Strategy Regulations start applying and the new DB Funding code is in force. Schemes with valuation dates in this period can use the new DB Funding Code as the base for their approach. TPR notes that it will be communicating with affected schemes and will take a reasonable regulatory approach to them.
News
TPR reports minimum compliance with ESG duties
According to a recent TPRs report, while most trustees are meeting environmental social governance (ESG) duties, many achieve only minimum compliance.
A check of around 3,500 scheme returns from defined contribution, defined benefit and hybrid schemes found only around 1% failed to provide weblinks to relevant ESG disclosures – statements of investment principles (SIPs) and implementation statements (IS).
However, the report notes that:
- too many smaller schemes opted for minimum compliance with ESG aspects of SIPs and IS;
- if trustees believe they lack the expertise or scheme governance scale to be able to manage financially material ESG risks effectively, they should consider whether consolidating their schemes could improve the way in which these risks are managed for their members; and
- TPR wants to see more evidence of trustee oversight where management of financially material risks, engagement and voting had been delegated to an investment manager.
TPO outlines key priorities for 2024-2025
The Pensions Ombudsman (TPO) has published its 2024/25 Corporate Plan, which outlines key priorities and areas of work for the year.
The plan outlines TPO’s Operating Model Review that explored potential options for improved efficiency across the ‘customer journey’ following which TPO is implementing a package of changes aiming to transform its service and improved the experience for future customers.
TPO’s priorities for the year are to:
- Make changes to processes to reduce waiting times;
- Deliver a reduction in the number of older, complex cases from historical caseload;
- Improve signposting and pre-application journey, with more self-service information, so that the ‘right’ complaints come to TPO;
- Secure long-term funding of the Pensions Dishonesty Unit, to ensure it can continue its work;
- Expand and build TPO’s specialist pensions expertise; and
- Review current systems to ensure TPO has a clear view of requirements to deliver further efficiencies and meet the projected increase in demand.
