Friday Five Focus on Pensions – 2 February – 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.
- A self-employed individual can obtain higher rate tax relief on personal pension contributions by
- reducing their first payment on account by the amount of tax relief.
- reducing their second payment on account by the amount of tax relief.
- reducing their balancing payment by the amount of the tax relief.
- paying the pension contributions net of higher rate tax.
- A pension in payment from a defined benefit scheme must escalate in line with CPI to a maximum of 2.5% for service
- before 6 April 1978.
- after 5 April 2005.
- before 5 April 1997.
- after 5 April 1997.
- Following the death of her husband, Mary has been advised that she may commute the survivor’s pension from his defined benefit scheme for a lump sum. Mary however is considering forsaking it in favour of her niece. The rules relating to this specify that
- the maximum that can be paid as a lump sum death benefit is £30,000 per scheme.
- the maximum lump sum commutable across all of her late husband’s schemes is £30,000.
- the lump sum payable is an uncrystallised funds pension lump sum (UFPLS).
- the lump sum can be paid to Mary’s niece as there are no restrictions on who can receive it.
- Kim is 60 and has no taxable income in 2023/24. She has a personal pension valued at £300,000 and she decides to take £40,000 of this fund as an uncrystallised funds pension lump sum (UFPLS). What is the net payment that Kim will receive?
- £30,000
- £32,000
- £36,384
- £36,514
- Saving for retirement through the use of a registered pension scheme provides your client with which of the following incentives?
- Half of the fund may be taken as a tax-free cash lump sum.
- Benefits available from age 50.
- Simplicity and ease of understanding.
- Tax relief for the member and any employer.
Answers
- C – See R04 Study Text, Chp 2
Grab our taster mock exam paper for CII R04. Click here to download.
- B – See R04 Study Text, Chp 5
Grab our taster mock exam paper for CII R04. Click here to download.
- A – See R04 Study Text, Chp 7
Grab our taster mock exam paper for CII R04. Click here to download.
- D – See R04 Study Text, Chp 3
Grab our taster mock exam paper for CII R04 Click here to download.
- D – See R04 Study Text, Chp 1
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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