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Friday Five Focus on Pensions – 16 October – 5 Questions in 5 Minutes

Friday Five Focus on Pensions – 16 October – 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 2020/21, examinable by the CII until 31 August 2021.

  1. A significant reason for the fall in annuity rates over recent years has been:
    1. an increase in equity yield projections.
    2. an increase in long-term gilt yields.
    3. a decrease in equity yield projections.
    4. a decrease in gilt yields.
  1. Being “fit and proper” to undertake the role is a test that could be used by the Pension Regulator in assessing the appropriateness of the:
    1. Scheme Administrator.
    2. Scheme Trustee.
    3. Employer.
    4. Scheme Actuary.
  1. Sam is a member of his employer’s defined benefit pension scheme which has a normal retirement age of 65. Scheme details are:
    1/60th accrual rate
    24 years’ service at early retirement date
    Final salary of £15,000
    Early retirement factor of 0.5% per month
    If Sam is retiring exactly 2 years earlier than the scheme’s normal retirement age, his pension will be:

    1. £6,000 p.a.
    2. £5,280 p.a
    3. £6,500 p.a.
    4. £5,720 p.a.
  1. At A-day, Don’s total benefits were valued at £2m and he had entitlement to £600,000 of this in the form of a pension commencement lump sum. Don registered for enhanced protection. Drawing benefits in 2020/21 with an increased fund of £2.6m will provide him with a PCLS of:
    1. £312,500.
    2. £600,000.
    3. £720,000.
    4. £780,000.
  1. Sally was in capped drawdown on 5 April 2015. She took the maximum PCLS from a fund that was worth £385,000. Sally’s GAD rate is £53 per £1,000, what is the maximum income Sally is entitled to?
    1. £15,304
    2. £18,365
    3. £22,956
    4. £30,608

 

Answers

  1. D – See R04 Study Text, Chp 1
    Grab our taster mock exam paper for CII R04. Click here to download.
  1. B – See R04 Study Text, Chp 4
    Grab our taster mock exam paper for CII R04. Click here to download.
  1. B – See R04 Study Text, Chp 5
    Grab our taster mock exam paper for CII R04. Click here to download.
  1. D – See R04 Study Text, Chp 3
    Grab our taster mock exam paper for CII R04 Click here to download.
  1. C – See R04 Study Text, Chp 8
    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?

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