Friday Five Focus on Pensions – 29 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 2023/24, examinable by the CII until 31 August 2024.

1. Denise had an uncrystallised defined contribution pension fund when she died in 2022. Denise had nominated her husband David and her daughter Molly to each receive half of her fund. If Molly was aged 30 when Denise died, she is considered to be a
   1. dependant.
   2. nominee.
   3. successor.
   4. beneficiary.

2. Guaranteed minimum pension (GMP) benefits for members of contracted-out defined benefit schemes between April 1978 and April 1988 who reached State pension age before 6 April 2016 were
   1. fully inflation proofed, paid entirely by the State.
   2. fully inflation proofed, with the State paying any RPI in excess of 3%.
   3. fully inflation proofed, paid entirely by the Scheme.
   4. inflation proofed, with the scheme paying up to a maximum of 2.5%.

3. Which of the following is a minimum standard on a recently established Stakeholder pension?
   1. The maximum initial charge is 1.5%.
   2. The scheme must accept transfer payments from another pension source.
   3. Transfer charges, out of the scheme, must not be more than 10%.
   4. The minimum permitted contribution cannot be higher than £25 net.

4. Craig is a UK ex-pat resident in Portugal. During the 2023/24 tax year, he transfers his UK pension scheme to a Gibraltar based scheme. This would mean that he would be subject to
   1. no tax charge.
   2. a 25% tax charge.
   3. a 40% unauthorised payment charge.
   4. UK income tax at his marginal rate.

5. Sally was in capped drawdown on 5 April 2015. She took the maximum PCLS from a fund that was worth £385,000. Sally’s government actuarial department (GAD) rate is £53 per £1,000, what is the maximum income Sally is entitled to?
   1. £15,304
   2. £18,365
   3. £22,956
   4. £30,608

Answers

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

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

3. B – See R04 Study Text, Chp 6
   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. C – See R04 Study Text, Chp 8
   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.