Sometimes the pensions profession gets a bad name – including the lawyers - and sometimes that bad name is perfectly justified.

Trustee and employer veterans of Guaranteed Minimum Pension (“GMP”) equalisation projects who have paid six-figure sums in adviser fees only to be told that the majority of their members could be due back-payments of less than £100 may certainly wonder whether the Lloyds cases (which confirmed the requirement for pension schemes to equalise GMPs) ought to have reached a more pragmatic or proportionate outcome. Not least because the inequalities these judgments sought to address were caused by inequalities in government legislation, not poor scheme governance.

For those trustees hoping that once GMP equalisation projects are completed the adviser gravy train might finally stop chugging its way over their carefully managed scheme budgets, the court’s recent judgment in Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors will no doubt blare a warning horn for more potential difficulties down the line.

In short, the Virgin Media case confirmed that any purported amendments to a contracted-out scheme post-1997 are void unless the scheme actuary first certified in writing that the amended scheme would continue to meet certain quality standards required under legislation – even if that fact was evident from the amendments themselves. In this case, the parties had been unable to locate the scheme actuary’s certification of the amendment in question – they could not evidence that this step had been taken.

The court’s decision itself is hardly surprising as the historic legislative requirements for making amendments to contracted-out schemes are fairly clear cut.

However, perhaps because of the well-established and strict evidential requirements under English law, the court was not asked to - and did not - consider whether actuarial certification might be inferred from the fact that the parties (including the actuary) knew the requirements of the law for making amendments to contracted-out schemes.

As the court was only asked whether certification was strictly required, trustees of English schemes might now feel obliged to consider the Virgin Media decision in light of the existing strict evidential requirements, and that might lead them to the conclusion that if they cannot find an actuary’s certificate for a particular amendment then that amendment must be treated as void.

Of course the case could very well be appealed, so there is no need to dust off the project plans just yet. However, it is certainly a case to be aware – dare I say frightened – of.

Under Scots law we regularly rely on a handy maxim called the presumption of regularity. This can be used to infer that certain procedural steps have been taken when there is no evidence to indicate they haven’t been. One might wonder whether it would be useful to apply this maxim more often in pensions cases south of the border.

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