Pensions

Written by Kerone Thomas

Key developments in 2024 

A key development in 2024 has been the Court of Appeal's ruling in Virgin Media v NTL Pensions Trustees II Ltd [2024] EWCA Civ 843, which has significant implications for contracted out final salary pension schemes. The court confirmed that any amendments affecting guaranteed minimum in these schemes must be accompanied by a so-called Section 37 actuarial conformation. Without this confirmation, the amendment is deemed void, regardless of whether such confirmation would have been granted had it been sought at the time of the amendment.

In practical terms, this could lead to schemes identifying that incorrect benefits have been paid which may increase deficits and lead to claims against actuaries, lawyers, administrators and auditors.

For insurers this is a risk to consider for PTL policies (or ML where there is a PTL section) given the risk that members challenge their benefits or that trustees look to various extensions under PTL policies to address potential issues arising from the judgment (for example court application costs to determine if a Section 37 confirmation obtain after the effective date of an amendment is effective so as to remedy any defect from at least the date of the amendment).

In light of this ruling, pension professionals are considering how best to manage the retrospective implications, with the possibility that the government may introduce new legislation to address some of the adverse consequences of the decision.

What to look out for in 2025 

2025 is shaping up to be a big year for pensions, with several key changes on the horizon. A major trend will be the push for consolidation of multi-employer defined contribution schemes into large "mega-funds" of at least 25bn as outlined in the Chancellor's Mansion House speech. The goal is to improve value for money (VFM) for members and give pension funds the scale they need to make a bigger impact on the UK economy.  However, ensuring strong governance and returns as these funds grow will be a key focus. The government has set a target of having these mega-funds in place by 2030 – so expect to see action in 2025 to meet this deadline.

Another key development will be the Pension Scheme Bill, which is set to bring about changes in how DC schemes are managed. It will refine the VFM framework, potentially requiring employers to take VFM into account when selecting or reviewing pension schemes. This could have a big impact on the way pension providers, claims managers and underwriters approach pension scheme selection. 

With increasing gilt yields buy-outs are likely to become an increasingly attractive option and often in the run-up to buy-outs issues with the governing documentation of pension schemes is identified leading to claims against pension professionals where issues are identified.

Explore Annual Insurance Review 2025