Friday Five Focus on Pensions – 5 Questions in 5 Minutes – 10 Apr 2026

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 2025/26, examinable by the CII until 31 August 2026.

1. What is the correct description of ‘in-specie’ pension contributions?
   1. They are pension contributions in the form of an asset such as shares.
   2. The rules only apply to pension contributions of over £10,000.
   3. The scheme administrator recovers 40% tax from HM Revenue & Customs (HMRC).
   4. They can only be made to unapproved schemes.

2. Nigel, age 66, had been in flexi-access drawdown for 18 months when he died suddenly in June 2025. Nigel was a basic rate taxpayer in the year of death. The death benefit is £50,000. If his widow, Debbie, a higher rate taxpayer, decides to take this as a lump sum, what is the net amount she will receive?
   1. £27,500
   2. £30,000
   3. £40,000
   4. £50,000

3. Amanda has recently joined her employer’s qualifying workplace pension. What is the current total minimum level of contribution under auto-enrolment?
   1. 13% of total earnings.
   2. 10% of qualifying earnings.
   3. 9% of total earnings.
   4. 8% of qualifying earnings.

4. A defined benefit pension scheme would not be able to pay what type of death benefit?
   1. A defined benefits lump-sum death benefit.
   2. A pension protection lump-sum death benefit where the member dies before age 75.
   3. A pension protection lump-sum death benefit where the member dies after age 75.
   4. An annuity protection lump-sum benefit.

5. The main assumptions for a Statutory Money Purchase Illustration would include
   1. an accumulation rate of 5% for volatility group 4.
   2. conversion into today’s terms based on inflation at 2%.
   3. retirement expenses of 4% of the annuity value.
   4. payment of a 25% lump sum at retirement.

Answers

1. A; See R04 Study Text, Chp 6; Rationale: In-specie contributions are contributions to a registered pension scheme in the form of an asset such as shares.
2. D; See R04 Study Text, Chp 3; Rationale: Debbie’s net benefit will be £50,000; there is no tax payable as Nigel died before the age of 75. As the funds were crystallised prior to 6 April 2024, there is also no test against Nigel’s lump sum and death benefits allowance (Note: the death benefit must be paid within the 2-year window, or it would be taxable as Debbie’s pension income via PAYE).
3. D; See R04 Study Text, Chp 4; Rationale: The total minimum level of contribution for auto-enrolment purposes since 6 April 2019 is 8% of qualifying earnings. Qualifying earnings are not total earnings, they are earnings between £6,240 and £50,270 (2024/25) in respect of basic salary, commission, overtime, bonuses, and statutory pay e.g., maternity pay, but not P11D benefits (taxable benefits in kind).
4. D; See R04 Study Text, Chp 7; Rationale: An annuity protection lump sum is only available from defined contribution schemes. Only a defined benefit scheme can pay death benefits in the form of a lump-sum death benefit or a pension protection lump-sum death benefit, which can be payable at any age.
5. C; See R04 Study Text, Chp 6; Rationale: Assumptions include an accumulation rate of 7% for volatility group 4, inflation of 2.5%, retirement expenses of 4% of the annuity value and no lump sum payable at retirement.

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