The CII AF3 Exam: Plan Carefully to Tackle this Challenge – April 2016 Exam Review
Last updated on March 17th, 2021 at 10:24 pm
In 2015, the CII reported that just over 31% of delegates passed the AF3 exam; 2014 wasn’t much better with just under 41% passing. It’s clearly a tough exam. Let’s have a look at the exam paper from the exam sitting in April.
If you haven’t seen it, here is the link:
As always, Question 1 requires a varied amount of knowledge to answer all the different parts. In this exam, we had two directors with a SSAS but who also had other schemes. The first one had been a member of a former employer’s DB scheme, and the second had a dependant’s capped drawdown plan. The DB scheme was tested first, so questions were around revaluation of benefits, how the CETV was calculated. Both were 10-mark questions so needed a fair bit of detail to get maximum marks. The scheme was also underfunded, so there were 8 marks for the details of the Pension Protection Fund, and we think most delegates would have been happy with this question. In fact, the R04 manual clearly states that revaluing benefits in a DB scheme are usually tested and indicate that the table given should be revised fully so there are no excuses!
Other questions which should not have caused too many problems included five points for explaining what critical yield is; why a Money Purchase (MP) scheme might not provide equivalent benefits, risk factors and capacity for loss and why the death benefits are more favourable under a MP scheme if the client dies before reaching normal pension age. All in all these seemed like fair questions.
The paper then continued with testing knowledge around a SSAS making a loan to the business, with Question 1 finally finishing with 12 marks given for questions around the dependant’s capped drawdown plan – we feel that delegates would have studied both these areas well.
Once Question 1 was out of the way, delegates must have breathed a sigh of great relief. The next two questions were shorter and to the point.
Question 2 involved calculating unused annual allowances and how tax relief is awarded and, for these, half of the 40 marks were awarded with the rest of the question around the NEST 2029 retirement date fund and the factors to consider when recommending an investment fund.The #CII #AF3 exam is a tough one - here's a review of the April 16 paper. Click To Tweet
This question concerned a recently divorced couple, so the questions were around the application of the pension debit, taking a PCLS from an AVC fund and working out how much of the LTA would be utilised on crystallisation. It concluded with a couple more questions on LTA and the deferral of the State pension.
Comparing to the October 2015 Exam
When we compared this paper with the one delegates sat in October 2015, we couldn’t help but feel this one had been kinder. It just seemed more straightforward, but then last year was a year of change so that paper had to reflect this. Having said that, in October there were the usual questions around DB schemes and workplace pensions which would have made the well-prepared student happy.
If you haven’t seen this exam paper you can find it by clicking on this link:
A Tough Exam Requiring Careful Planning
AF3 is, like all of the AF exams, a toughie and to pass, students need to give it the right amount of respect and plan carefully. The R04 manual is well written but with eight chunky chapters, it needs careful preparation with enough time to give each chapter the attention it needs.
The CII does provide some of the old exam guides to help in this preparation and these can be found on the unit’s page on the CII website.
Grab the resources you need!
If you’re studying for your CII AF3 exam, and you’re wanting to overcome that feeling of dread about exam day, you’ll need to practise, practise, practise! Grab our free taster to try out one of Brand Financial Training’s resources for yourself. Click the link to download the AF3 mock paper taster now!