Friday Five Focus on Pensions – 5 Questions in 5 Minutes – 6 Nov 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 2026/27, examinable by the CII until 31 August 2027.

1. Chan is 59 and approaching retirement. He is considering his options regarding his pension arrangements and is interested in phasing benefits. Which approach would he NOT be able to take when seeking to do this?
   1. Phased flexible annuity purchase.
   2. Phased capped drawdown.
   3. Phased flexi-access drawdown.
   4. The phased taking of UFPLS.

2. What type of payment would be classed as an authorised employer payment?
   1. an authorised surplus payment.
   2. a lump sum death benefit.
   3. a recognised transfer.
   4. an administration payment.

3. The International Accounting Standards 19 (IAS 19) laid down a requirement for defined benefit schemes that any scheme surplus or deficit must be shown on the company
   1. balance sheet and the present value of past service liabilities should reflect equity yields rather than high quality bond yields.
   2. profit and loss account and the present value of past service liabilities should reflect high quality bond yields rather than equity yields.
   3. balance sheet and the present value of past service liabilities should reflect high quality bond yields, rather than equity yields.
   4. profit and loss account and the present value of past service liabilities should reflect equity yields, rather than high quality bond yields.

4. In assessing her eligibility for State Pension Credit, Molly has declared savings of £14,000. This means that, on this information alone, she will be
   1. unable to claim any Pension Credit.
   2. assumed to have, from own sources, a weekly income of £8.
   3. assumed to have, from own sources, a weekly income of £14.
   4. assumed to have, from own sources, a weekly income of £28.

5. Having opted for flexi-access drawdown your client will draw income which is paid
   1. as earned income via PAYE.
   2. free of any income tax.
   3. gross but taxable via self-assessment.
   4. as part capital (tax free) and part interest (taxable).

Answers

1. B; See R04 Study Text, Chp 8; Rationale: Phased capped drawdown is only available for individuals in a capped drawdown pre-6 April 2016. The other answers are all viable options for phasing pension benefits.
2. A; See R04 Study Text, Chp 3; Rationale: An authorised surplus payment would be classed as an authorised employer payment. All of the others are authorised member payments.
3. C; See R04 Study Text, Chp 5; Rationale: The aim of IAS 19 was to make the cost to a company of running its pension scheme more transparent. It laid down the requirement for a company to show any scheme surplus or deficit in their balance sheet with the present value of past service liabilities calculated using a discount rate based on high quality bond yields rather than equity yields. The pension scheme cost should be included in the profit and loss account.
4. B; See R04 Study Text, Chp 9; Rationale: To calculate eligibility for State Pension Credit, any savings are deemed to provide an income of £1 for each £500 of savings over £10,000. Therefore, Molly is deemed to have an income of (£14,000 – £10,000) /£500 = £8 per week from her savings.
5. A; See R04 Study Text, Chp 3; Rationale: All income from flexi-access drawdown is paid as earned income via PAYE.

Grab the resources you need!

If you want clarity on what exam-level R04 questions look like, structured mock exams make the difference. Our full R04 E-Mocks are built to reflect the real assessment. Access the free taster to preview the question style and layout for yourself.

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