Friday Five Focus on Pensions – 28 May – 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. They do not relate to tax year 2021/22 which is only examinable by the CII from 1 September 2021.

1. When considering pension fund investment, fixed interest securities have certain key features, including: Tick all that apply.
   1. the fixed redemption value is known as the par value.
   2. the coupon represents the fixed rate of interest given.
   3. they all have a set redemption date.
   4.  they represent loans to various institutions.

2. It is possible that certain individuals may be entitled to a higher lifetime allowance. Who would not qualify for this?
   1. Non-UK residents
   2. All members of Public Service Schemes
   3. Those with benefits transferred in from a recognised overseas scheme
   4. Pre A-day divorcees, in receipt of a pension credit

3. Farley Ltd’s occupational pension scheme is underfunded and The Pensions Regulator has concluded they are insufficiently resourced, what measure can they issue?
   1. A contribution notice
   2. A financial support direction
   3. A financial penalty
   4. A restoration order

4. Saving for retirement through the use of a registered pension scheme provides your client with which of the following incentives?
   1. Half of the fund may be taken as a tax-free cash lump sum.
   2. Benefits available from age 50.
   3. Simplicity and ease of understanding.
   4. Tax relief for the member and any employer.

5. Where a SSAS makes a loan to the sponsoring employer, HMRC require that the loan: Tick all that apply.
   1. is no more than 50% of the net value of the scheme assets, excluding any monies transferred in to the SSAS from previous pension arrangements.
   2. is secured as a first charge.
   3. is repaid in equal instalments over a five-year period.
   4. can be rolled over for a further period (not exceeding five years) if the sponsoring employer has financial difficulties.

Answers

1. ABD – See R04 Study Text, Chp 10
   Grab our taster mock exam paper for CII R04. Click here to download.

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

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

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

5. BCD – See R04 Study Text, Chp 10
   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.