Pensions Bulletin 2026/06

Employment Rights Act 2025 – fire and rehire and pensions 

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. It is a lengthy piece of legislation – 160 sections and 12 schedules – implementing various Labour Party 2024 manifesto commitments on employment law. One of these is ending “fire and rehire”, the practice of dismissing employees to re-engage them on worse terms.  

Section 28 of the Act makes certain dismissals automatically unfair through a new mechanism of “restricted variations” to employment contracts. If an employer seeks to vary a contract and the variation is a restricted one then, if the employee does not agree, the dismissal is automatically unfair. Automatic unfairness also arises if the employer is seeking to employ another person, or to re-engage the employee under a varied contract to carry out the same or similar duties and one or more of the variations in the contract is a restricted variation. The only exception in both instances is where the reason for the restricted variation is due to the employer being in extreme financial distress. 

A “variation of any term or condition relating to pensions or pension schemes” will be a restricted variation. 

We expect that section 28 will come into force in January 2027. Consultation has now begun on the implementation of section 28, initially on the scope of certain restricted variations. 

FRC confirms no changes to AS TM1 assumptions following annual review

On 6 February 2026 the Financial Reporting Council confirmed that there will be no changes to the assumptions set out in the actuarial standard – Technical Memorandum 1 (AS TM1) – that governs statutory money purchase illustrations (SMPIs). This followed a consultation launched last November (see Pensions Bulletin 2025/44).

As a consequence, AS TM1 v5.2 – which will be effective for SMPIs with an illustration date on or after 6 April 2026 – contains only minor wording amendments relating to fund volatility calculation dates to clarify the FRC’s policy intention and ensure that providers’ volatility calculations are consistent for a given illustration date.

The FRC conducts annual reviews of AS TM1 to ensure its assumptions remain appropriate. The proposal in November 2025 to make no significant amendments to the standard was met with general support among the 10 respondents to the consultation.

Several respondents did however comment on the suitability of using volatility groups to assign an accumulation rate assumption for certain funds, including index linked gilts and illiquid assets. The FRC will consider these concerns when conducting the next periodic review of AS TM1 where methodology will be in scope.

PASA publishes Q&A on Dashboard Guidance and Toolkit

The Pensions Administration Standards Association has published a set of questions and answers on dashboards data matching and its Dashboard Toolkit, collating questions received from a webinar held in September 2025.

PASA’s new Q&A aims to “provide clear, practical clarification and to support proportionate, well-informed decision-making as schemes continue their dashboards preparations”, and sets out concerns raised by schemes such as identity and fraud, OneLogin, data matching, and member experience.

FRC proposes amendments to actuarial standard for new multi-employer CDC pension schemes

The Financial Reporting Council has published a consultation to amend the Technical Actuarial Standard for collective defined contribution schemes (TAS 310), which would enable actuaries to advise on the “actuarial equivalence” requirement that unconnected multi-employer CDC schemes (UMES) need to satisfy. This follows the DWP’s decision to leave the details of the test to be set out in guidance provided by the FRC (see Pensions Bulletin 2025/43).

The purpose of actuarial equivalence is to avoid excessive cross-subsidies between different participating employers or members. The FRC splits cross-subsidies into three categories: those that are expected and accepted into the scheme design, such as unisex accrual rates; those that are expected but unintended, such as when unisex accrual rates affect male- and female-dominated workforce differently; and experience cross subsidies, that naturally occur due to actual experience differing from assumptions. The FRC expects actuaries to provide scheme trustees and proprietors with enough information for them to understand the impact of these cross subsidies when designing the scheme and reduce the risk of unintended cross subsidies. 

The TAS also covers areas such as the “relevant period” set out in legislation, consistencies between different actuarial factors, and viability assessments.

The consultation closes on 23 March 2026. The FRC proposes that the new version 1.1 of TAS 310 apply to in scope technical actuarial work completed on or after 31 July 2026 when regulations come into force and expects to publish it in final form before then.