Friday Five Focus on Pensions – 24 December – 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 2021/22, examinable by the CII until 31 August 2022.

1. Susan, age 62, crystallises all her pension benefits in 2021/22. Her benefits comprise:
   

   Personal Pension fund	£850,000
   Retirement Annuity fund	£250,000
   Defined benefit pension	£60,000 p.a.

   If the lifetime allowance has been exceeded, and the excess is taken as a lump sum, the lifetime allowance charge will be:
   1. £26,900.
   2. £207,295.
   3. £306,725.
   4. £674,795.

2. Jita wants to take a tax free ‘pensions advice allowance’ from her SIPP. She should be aware that:
   1. the financial advice must be regarding her SIPP only.
   2. she can take £150 in a tax year subject to a maximum of three payments.
   3. she can take £500 each tax year until her selected retirement age.
   4. the payment must be paid directly to the financial adviser.

3. Following 18 months of membership, Neil is leaving his firm’s defined benefit pension scheme. At the point of leaving, he had contributed £24,000 gross – a figure matched by his employer. Neil, a higher rate taxpayer, may be offered a net refund of:
   1. £18,000.
   2. £14,400.
   3. £28,800
   4. £36,000.

4. Which of the following would HMRC accept as an authorised payment under a registered pension scheme?
   1. A loan to the employer company of the Managing Director who has a SIPP
   2. Payment of a 30% PCLS where no transitional protection exists
   3. Purchase of a commercial property by a SSAS from the Managing Director owner
   4. Purchase of expensive wines and antique furniture as assets of a SIPP

5. A Statutory Money Purchase Illustration (SMPI) for a married person/civil partner requires benefits to be projected to scheme retirement age, taking into account what level of compulsory spouse’s/civil partner’s pension?
   1. It is compulsory for a spouse’s/civil partner’s pension not to be included.
   2. It is compulsory to include a 50% spouse’s/civil partner’s pension.
   3. It is compulsory to include a 100% spouse’s/civil partner’s pension.
   4. The inclusion of a spouse’s/civil partner’s pension is at the provider’s discretion.

Answers

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

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

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

4. C – 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 6
   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.