Friday Five Focus on Pensions – 19 March – 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. Which of the following actions could be deemed an offence for Trustees of an occupational scheme?
   1. Recommending employees join the scheme
   2. Giving advice on a provider’s personal pension
   3. Promoting an in-house AVC
   4. Criticising, in generic terms, an individual pension

2. Bob reaches State pension age in October 2020 but doesn’t think he will need the income from his State pension. Bob should be advised that:
   1. he will only be able to defer once.
   2. any deferred income will be tax-free.
   3. benefits need to be deferred for at least a year to qualify for an increased income.
   4. he can elect to take his deferred benefits as a lump sum.

3. John’s pension fund is invested in with profits. John should be aware that: Tick all that apply.
   1. a terminal bonus is guaranteed to be paid on crystallisation or earlier death.
   2. once added, reversionary bonuses cannot be taken away.
   3. the fund will only invest in cautious/low-risk investment areas.
   4. annual bonuses are aimed at “smoothing” returns over the term.

4. Having opted for flexi-access drawdown your client will draw income which is paid:
   1. as earned income via PAYE.
   2. tax-free.
   3. gross but taxable via self-assessment.
   4. as part capital (tax-free) and part interest (taxable).

5. To qualify for the new State pension an individual must: Tick all that apply.
   1. have a minimum of 10 qualifying years to receive any new State pension.
   2. have at least 35 qualifying years to receive a full new State pension.
   3. reach their State pension age on or after 6 April 2016.
   4. have been employed or self-employed for at least 10 years.

Answers

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

2. A – See R04 Study Text, Chp 9
   Grab our taster mock exam paper for CII R04. Click here to download.

3. BD – See R04 Study Text, Chp 10
   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. ABC – See R04 Study Text, Chp 9
   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.