Friday Five Focus on Pensions – 5 Questions in 5 Minutes – 19 Jul 2024

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. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.
- Desmond dies at the age of 68 in receipt of a scheme pension. If the scheme continues to pay an income after his death, his wife Debbie will receive a
- dependant’s scheme pension paid tax-free.
- lifetime annuity paid tax-free.
- dependant’s scheme pension taxed as her pension income under PAYE.
- dependant’s lifetime annuity taxed as her pension income under PAYE.
- When the administrators of a defined benefit scheme calculate an early leaver transfer value, the process of converting the lump sum value of pension benefits at retirement to a capital value in today’s terms is known as
- discounting.
- revaluing.
- capitalising.
- securitising.
- Tom is paying secondary Class 1 National Insurance contributions (NICs) as well as Class 2 and Class 4 NICs. This would indicate that Tom is
- currently employed but has been self-employed in the last tax year.
- making good any NIC shortfall.
- over State pension age.
- self-employed and has employed staff.
- All of the following are conditions required for a pension commencement lump sum (PCLS) to be paid except that the
- member must have reached the normal minimum pension age, a protected early retirement age or be retiring early through ill health.
- payment must be made during a period of less than 12 months before or 6 months after becoming entitled to the relevant pension.
- lump sum must not be from a bridging pension set up with the sole intention of increasing PCLS entitlement.
- lump sum entitlement must be connected to the arising of a relevant pension entitlement under the same registered pension scheme.
- 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
- no tax charge.
- a 25% tax charge.
- a 40% unauthorised payment charge.
- UK income tax at his marginal rate.
Answers
- C – 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.
- D – See R04 Study Text, Chp 9
Grab our taster mock exam paper for CII R04. Click here to download.
- B – 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.
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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