Friday Five Focus on Pensions – 12 April – 5 Questions in 5 Minutes

Friday Five Focus on Pensions – 5 Questions in 5 Minutes Every Friday

What’s this all about?

Each week, we ask questions relating to one of these topics: Investments, Taxation, Pensions, Protection, or Regulation. This week, our Friday Five is relevant to Pensions; this is useful as you prepare for the CII’s R04, AF7, or J05 exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

IMPORTANT! These questions relate to examinable tax year 2023/24, examinable by the CII until 31 August 2024. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.

1. Cyril, a higher rate income taxpayer aged 68, is looking to make a personal pension contribution to offset his tax liability. He has been informed that his annual allowance will be reduced to £10,000. This is because he
   1. has accessed benefits flexibly.
   2. is subject to the tapered annual allowance.
   3. was the subject of a pension debit following his divorce.
   4. is past state pension age.

2. Alan’s 61st birthday is tomorrow. He has 25 years’ service in a 1/60th defined benefit pension scheme. His pensionable salary is £40,000. The scheme’s normal retirement age is 65. If Alan retires tomorrow and the scheme reduces his pension by 0.5% per month for early retirement, his pension will be
   1. £12,666.67
   2. £14,000.00
   3. £16,333.34
   4. £16,666.67

3. Susan is considering purchasing a lifetime annuity. HM Revenue & Customs (HMRC) requires that the annuity must be
   1. payable for the member’s life.
   2. purchased from a list of HMRC approved annuity providers.
   3. paid at least once a year in advance.
   4. capable of assignment and surrender in any circumstances.

4. On 5 April 2006, David was a member of an executive pension plan (EPP) which gave him an entitlement to a tax-free cash lump sum in excess of 25%. He has NOT applied for transitional protection. David will lose his scheme specific pension commencement lump sum (PCLS) protection if he
   1. transfers on an individual basis to his current employer’s pension scheme.
   2. takes his PCLS and designates the funds into flexi-access drawdown.
   3. transfers to a deferred annuity because of scheme wind-up.
   4. transfers his benefits as part of a bulk transfer.

5. Pension input periods run from
   1. 5 April – 6 April.
   2. 1 March – 29 February.
   3. 30 April – 29 March.
   4. 6 April – 5 April.

Answers

1. A – See R04 Study Text, Chp 2
   Grab our taster mock exam paper for CII R04. Click here to download.

2. A – See R04 Study Text, Chp 5
   Grab our taster mock exam paper for CII R04. Click here to download.

3. A – See R04 Study Text, Chp 7
   Grab our taster mock exam paper for CII R04. Click here to download.

4. A – See R04 Study Text, Chp 3
   Grab our taster mock exam paper for CII R04. Click here to download.

5. D – See R04 Study Text, Chp 2
   Grab our taster mock exam paper for CII R04. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.