Friday Five Focus on Pensions – 21 June – 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. Which type of pension arrangement will always provide benefits via a scheme pension?
   1. A Retirement Annuity Contract.
   2. A defined benefit pension scheme.
   3. A Small Self-Administered Scheme.
   4. A defined contribution occupational scheme.

2. Rory, an additional rate taxpayer, has been given a refund of his employee pension contributions after leaving his company within six months of joining their defined benefit pension scheme. He receives a lump sum payment of £12,000. How much tax, if any, has been paid by the scheme administrator?
   1. None, Rory declares £12,000 through self-assessment and pays tax at 45%
   2. £3,000
   3. £9,818
   4. None, Rory declares £12,000 through self-assessment form and pays tax at 20%

3. From April 2010 and prior to April 2016, an individual qualified for the full basic State Pension if they had
   1. 30 years of payment (or credits) of National Insurance contributions (NICs).
   2. lived in the UK for 17 out of the last 20 tax years.
   3. earnings within the lower earnings limit and the upper accrual point.
   4. 35 years of payment (or credits) of NICs.

4. Sam has incurred an annual allowance excess tax charge, which his workplace scheme administrator has agreed to pay on a voluntary basis via an adjustment to the value of his benefits. This indicates that
   1. Sam’s total input into the scheme exceeds £10,000.
   2. Sam’s total input into the scheme exceeds £60,000.
   3. the scheme is a defined benefit one.
   4. he is subject to the tapered annual allowance.

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

Answers

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

2. B – 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 9
   Grab our taster mock exam paper for CII R04. Click here to download.

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

5. A – See R04 Study Text, Chp 3
   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.