HL UK Pensions Law Digest 29 May 2026

Welcome to our latest update, in which we cover: 

Virgin Media remedy: the Financial Reporting Council publishes updated guidance

• The Financial Reporting Council (FRC) has published updated guidance for actuaries dealing with historic amendments to pension scheme rules following the Virgin Media judgement;

Pensions Ombudsman (TPO): building on solid foundations

• TPO’s chair reflects on progress made and challenges ahead;

Pensions Policy Institute (PPI): Unlocking DB surpluses

• A report from the PPI analyses the potential for extraction of defined benefit (DB) surpluses.

The Financial Report Council publishes updated guidance on implementing the Virgin Media remedy

On 22 May, the Financial Reporting Council (FRC) published its updated guidance to support pension scheme actuaries in providing retrospective confirmation to validate historic changes to pension scheme rules, following the Virgin Media case.

This follows Royal Assent for the Pensions Schemes Act 2026, which allows trustees to use the "potentially remediable alteration" (PRA) remedy, where there is doubt about the validity of certain past amendments to pension schemes as a result of the Virgin Media judgement. That case cast doubt on the validity of past amendments to pension schemes which were formerly contracted-out, if certain procedural requirements were not met. The issues arising from Virgin Media and the implementation of the PRA remedy are considered in our recent briefing.

Originally published earlier this year, the updated guidance sets out a practical, non-prescriptive framework for actuaries when reviewing past amendments. The guidance demonstrates how a proportionate approach may be applied when gathering evidence and exercising professional judgement, particularly where historical records are incomplete.

The updated version of the guidance introduces minor amendments to wording and references, to ensure clarity and alignment with the enacted legislation.

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Pensions Ombudsman: building on solid foundations

Deborah Evans, chair of the Pensions Ombudsman (TPO), has reflected on progress made and challenges ahead, following the publication of TPO’s Corporate Plan for 2026/27.

Points to note include the following.

• Like other Ombudsmen, TPO has seen continued growth in demand for its services. Complaint volumes to TPO increased by 14% in the past year, and 58% over the past two years.
• Since launching its Operating Model Review two years ago, TPO has seen a 63% increase in closures of complaints, with nearly 11,000 complaints closed in 2025/26.
• TPO comments that its three-year funding settlement with the DWP will enable expansion of its workforce, but it will take time for new staff members to develop the skills and experience needed for complex cases.
• As flagged in the Corporate Plan, TPO intends to launch an AI pilot this year to enable more effective processing of cases, while retaining human decision-making.

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Pensions Policy Institute: Unlocking DB surpluses

The Pensions Policy Institute (PPI) has issued a report exploring the opportunities, risks and practical realities of extracting surplus from defined benefit (DB) arrangements.

The report considers: the drivers behind the increase in DB funding levels; the resilience of current DB surpluses under different economic and scheme-specific scenarios; how surplus may be accessed and appropriate safeguards for addressing risk; and the implications of surplus extraction for productive finance and investment in the wider economy.

Key points include the following.

• Funding positions (and the level of any surplus) vary significantly depending on how liabilities are measured. In March 2025, DB schemes reported an average funding ratio of 125%, with an aggregate surplus of £214bn, on the s179 (Pension Protection Fund) basis. In contrast, on a buyout basis, in March 2025 schemes had an average funding ratio of around 95.8% with a substantial minority of schemes being materially underfunded.
• The level of surplus which could realistically be released is likely to be lower than suggested by headline estimates, including the £160bn figure estimated by the DWP. Schemes aiming for buyout may wish to retain surplus to cover insurance pricing and to be ready to transact; while schemes intending to run on may see surplus as a buffer to increase resilience, allow flexibility, maintain member security and enable benefit improvements.
• The PPI’s modelling illustrates the probability of schemes currently in surplus falling into deficit in future years. For example, the probability of a scheme with 105% funding falling below 100% in the next 25 years is nearly 7 in 10, without allowing for any extraction of surplus. For a scheme funded at 120%, the probability would be lower, at over 1 in 4.
• The PPI found, however, that above a certain level of funding, additional surplus may give only diminishing risk protection.
• In the current absence of legislation, regulation or formal guidance on release of surplus, factors for trustees to take into account when considering surplus release are likely to include: funding headroom; downside risk; covenant strength; and the scheme’s ability to manage volatility without increased reliance on the sponsoring employer.

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Authored by Jill Clucas and Susanne Wilkins.