During this period, many schemes made significant changes to their member benefits. In general, the terms of the schemes were made less generous in an attempt to save money on pensions that had become unaffordable.

However, following a landmark decision in a High Court case entitled Virgin Media v NTL Pension Trustees II, many of these changes could now be void.

In the original case in 2023, the judge ruled that the changes were only valid if the scheme in question received ‘Section 37’ (S37) confirmation at the time, either by way of a certificate or a written confirmation. This had to be signed off by the scheme actuary to ensure that the changes complied with the rules governing contracting.

In the absence of S37 confirmation, any change to a scheme is void. This could restore benefits that were previously removed or reduced, leading to an increased pension for many of those affected. The court also held that this applies to past and future benefits.

Virgin Media appealed, but this was unanimously dismissed by the Court of Appeal in July this year.

In the judgment, it was estimated that the decision affected between 430 and 450 members, at a cost of £10 million to the scheme. This could mean an average pension increase of between £22,000 and £23,000.

“The only ones who will benefit will be the lawyers”

Richard Gibson, of consultancy Barnett Waddingham, said more than nine million private and public sector workers were members of schemes that had been contracted out in the past. He said the Department for Work and Pensions (DWP) must act.

“The Virgin Media decision has left pensions law in disarray. Based on what we know today, some members may be in line for a significant gain, but most will be affected minimally or not at all. But the law is still catching up, and more court cases will emerge over the next few years to help clear up this confusing legal jumble.

“Curiously, Section 37 includes a power to allow the DWP to fix problems retroactively. Surely the most sensible course is for the DWP to use this power to clarify the spirit of the regulations to avoid reversing changes where certificates could reasonably be expected at the time.

“Until the DWP does that, I’m afraid the only ones who will benefit will be the lawyers.”

Michael Hayles, of law firm Burges Salmon, said the decision could affect “hundreds of thousands”. public sector workers.

He said: “A careful analysis of S37 of the Pension Schemes Act 1993 and related secondary legislation, now repealed, reveals no obvious reason why the provisions should not also apply to public service pension schemes.

“I have heard through the grapevine that investigations have been undertaken to find historic S37 certificates for some of the civil service pension schemes.”

According to the Pensions and Lifetime Savings Association (PLSA), there are around 5,000 private sector defined benefit pension systems and the ruling has already had an impact on the industry.