Friday Five Focus on Pensions – 30 September – 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 2022/23, examinable by the CII until 31 August 2023.
- Which of the following is a correct statement regarding ‘in-specie’ contributions?
- They are pension contributions in the form of an asset such as shares.
- The rules only apply to pension contributions of over £10,000.
- The scheme administrator recovers 40% tax from HM Revenue & Customs (HMRC).
- They can only be made to unapproved schemes.
- James is a member of a defined benefit pension scheme and Gina is a member of a defined contribution pension scheme. In relation to their respective pension benefits, James and Gina should be aware that: Tick all that apply.
- there is no guarantee as to the amount of pension benefit that James will receive.
- Gina can take benefits in the form of an income and/or as a lump sum.
- James will be exposed to investment risk.
- the benefits available to Gina depend on the size of the fund that is built up.
- Kim is 60 and has no taxable income in 2022/23. 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
- At age 52, Craig has died before drawing any benefits from his registered pension schemes. His personal pension fund and lump sum death benefit from the plans total £1.75m in the 2022/23 tax year of death. Assuming all benefits are to be paid in the form of a cash lump sum, his widow can expect to receive a net amount of:
- £1,377,705
- £1,580,775
- £1,625,000
- £1,750,000
- Brian has just reached his normal retirement age of 63 and is about to take benefits from his DB scheme. From the information below, calculate the reduced annual pension Brian will receive on the basis that he takes the maximum pension commencement lump sum.
1/60th final salary accrual rate 3/80ths PCLS definition 15:1 commutation factor £30,000 final pensionable remuneration 24 years of pensionable service - £10,200
- £12,000
- £1,800
- £9,000
Answers
- A – See R04 Study Text, Chp 6
Grab our taster mock exam paper for CII R04. Click here to download.
- BD – See R04 Study Text, Chp 6
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.
- A – See R04 Study Text, Chp 3
Grab our taster mock exam paper for CII R04 Click here to download.
- A – See R04 Study Text, Chp 5
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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