New figures for calculating retrospective access to occupational pension schemes have been released by HMRC for May 2026. The 'Preston factors' are crucial in determining how much part-time workers must pay to acquire pension service for past periods, ensuring fair treatment and rectifying historical inequalities.
The introduction of these factors was mandated by landmark decisions from the European Court of Justice and the House of Lords in 2000 and 2001. These rulings stated that part-time employees meeting specific criteria should have access to occupational pension schemes, sparking a significant shift towards addressing past injustices faced by this group.
Employers use the Preston factors to calculate the actuarially fair cost for individuals to 'buy back' pension service. This process aims to place eligible workers in a financial position that's as close as possible to if they had contributed to the scheme from the start, without unduly favouring or disadvantage them.
The Preston factors have been critical in enabling part-time employees to access pension schemes and address historical exclusions. Regular updates to these calculations reflect the ongoing commitment to addressing legacy issues and ensuring long-term financial security for this group of workers.