Financial Services and Markets Act 2000

[F1 117D Best interests test U.K.

(1) The provider of a pension scheme to which this Part applies may effect a unilateral change under section 117B(1) only if—

(a) the provider concludes, before doing so, that the best interests test is met in relation to the unilateral change, and

(b) it is reasonable for the provider to have reached that conclusion at that time.

(2) “The best interests test”, in relation to a unilateral change, is that it is reasonably likely that effecting it will achieve—

(a) a better outcome for the directly affected members of the scheme (taken as a whole), and

(b) no worse an outcome for the other members of the scheme (taken as a whole),

than the relevant alternative action or, where there is more than one alternative action, each of them.

(3) For the purposes of this Part, the members of a pension scheme who are “directly affected” by a unilateral change are the members for whom the scheme holds pension pots of the description in question.

(4) The following are “relevant alternative actions” for the purposes of subsection (2) in relation to a unilateral change—

(a) not effecting the unilateral change, and

(b) where the unilateral change is an internal change, each other internal change that could be made in accordance with this Part in relation to pension pots of the description in question.

(5) In subsection (4) “internal change” means a unilateral change that results in a description of pension pot held by the scheme being held—

(a) subject to a different arrangement under the same scheme, or

(b) subject to a particular arrangement under a different pension scheme operated by the same provider (including where there is only one arrangement under that scheme).

(6) The FCA must make general rules specifying considerations or information that must be taken into account in determining whether the best interests test is met.]

Textual Amendments

F1 Pt. 7A inserted (29.4.2026 for specified purposes) by Pension Schemes Act 2026 (c. 22), ss. 49(2), 133(1)(4)(e)