Friday Five Focus on Pensions – 9 December – 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.

1. Steven is interested in using his trust-based SIPP for investing in shares in his employer. The company is unlisted. As his adviser, you should be aware of the possible dangers which include: (Tick all that apply.)
   1. Steven’s employment and retirement income would be largely dependent on the fortunes of one company.
   2. Steven would be restricted to investing no more than 15% of the value of his SIPP in his employer.
   3. As his employer is an unlisted company, the shares may be difficult to sell at his time of choosing.
   4. Steven would be forced to sell the shares in the event of his leaving the company.

2. 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.

3. A contract-based pension scheme has which advantage over a trust-based pension scheme?
   1. Member contribution refunds for early leavers.
   2. Member contributions deducted from gross pay before tax and National Insurance contributions are applied.
   3. Less costly and time-consuming administration.
   4. Protection for the members, with their interest being safeguarded by Trustees.

4. Which of the following would HMRC accept as an authorised payment under a registered pension scheme?
   1. A loan to the employer company of the Managing Director who has a SIPP.
   2. Payment of a 30% PCLS where no transitional protection exists.
   3. Purchase of a commercial property by a SSAS from the Managing Director owner.
   4. Purchase of expensive wines and antique furniture as assets of a SIPP.

5. A Statutory Money Purchase Illustration (SMPI) for a married person/civil partner requires benefits to be projected to scheme retirement age, taking into account what level of compulsory spouse’s/civil partner’s pension?
   1. It is compulsory for a spouse’s/civil partner’s pension not to be included.
   2. It is compulsory to include a 50% spouse’s/civil partner’s pension.
   3. It is compulsory to include a 100% spouse’s/civil partner’s pension.
   4. The inclusion of a spouse’s/civil partner’s pension is at the provider’s discretion.

Answers

1. AC – See R04 Study Text, Chp 10
   Grab our taster mock exam paper for CII R04. Click here to download.

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

3. C – See R04 Study Text, Chp 6
   Grab our taster mock exam paper for CII R04. Click here to download.

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

5. D – See R04 Study Text, Chp 6
   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.