Friday Five Focus on Pensions – 8 April – 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 2021/22, examinable by the CII until 31 August 2022. They do not relate to tax year 2022/23 which is only examinable by the CII from 1 September 2022.

1. John will reach his State pension age in December 2021, but he is considering deferring this. He should be aware that in order to receive any increase in the pension he receives, he will need to defer for at least:
   1. 9 weeks.
   2. 6 weeks.
   3. 5 weeks.
   4. 4 weeks.

2. Under his capped drawdown arrangement Terry is now considering the purchase of a short-term annuity. He should be aware that: Tick all that apply.
   1. they will only be available from the provider of his capped drawdown fund.
   2. the annuity must be paid at least annually.
   3. the annuity cannot have a term longer than five years.
   4. the annuity can be guaranteed during its term.

3. Kamil has been advised that he will be subject to a reduced annual allowance rather than the full £40,000. This is because he has:
   1. net income of £190,000.
   2. adjusted income of £245,000.
   3. threshold income of £180,000.
   4. gross income of £235,000.

4. Simon, whose relevant UK earnings for 2021/22 are £90,000, wishes to contribute to a personal pension. As Simon is self-employed, tax relief will be given by contributions:
   1. paid gross and claimed as an expense against profits.
   2. paid net of 40%, as Simon is a high-rate taxpayer.
   3. paid net of 20% and Simon claims extra relief via self-assessment.
   4. deducted from income before tax is levied; the net pay system.

5. Based on Ali’s objectives and attitude to investment risk, a financial adviser has recommended he purchase a lifetime annuity with the accumulated fund of his Stakeholder pension. Under HMRC rules, Ali should be aware that the annuity can: Tick all that apply.
   1. be payable annually in arrears.
   2. provide a survivor pension, no greater than 50% of the member’s pension.
   3. be payable for a maximum period of 10 years.
   4. include an annuity protection capital lump sum.

Answers

1. A – See R04 Study Text, Chp 9
   Grab our taster mock exam paper for CII R04. Click here to download.

2. CD – See R04 Study Text, Chp 8
   Grab our taster mock exam paper for CII R04. Click here to download.

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

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

5. AD – See R04 Study Text, Chp 7
   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.