The CII AF7 March 2025 Exam in Review
We’re looking at the exam guide from the CII’s March 2025 sitting of AF7 – the Pension Transfers exam.
This article is correct as at 29 May 2025.
You can find the exam guide here.*
In this paper, Section A had an unusually high 36 marks allocated to it, and Section B had 64 marks.
Section A
As is usually the case, Section A consisted of four questions. Interestingly, the weighting was unusually high, with 36 marks allocated towards this section. The first question, as always, was a regulatory one and required candidates to name the four drivers of vulnerability in customers and give an example of each. This is not a question specific to pension transfers. However, the FCA continues to carry out thematic work in this area, and it is something which is occasionally examined in written CII papers regardless of the specialist subject of the exam. Candidates who are well versed in compliance matters could have picked up some good marks here and did, however, the CII noted that there were some who did not perform so well.
Question 2 was also compliance-related and asked candidates to outline the elements that the FCA expects an adviser to consider when carrying out an appropriate pension transfer analysis (APTA). This question has been asked regularly in AF7 over the years and should have been money for old rope for those who were well prepared. The CII, though, commented that performance was mixed, with a number of candidates scoring highly, but some scoring poor, or even zero, marks. The CII also commented that some candidates simply named generic factors that an adviser would consider when giving advice rather than the specific APTA requirements as set out in COBS 19 Annex 4A. Candidates would do well to focus on this area in their revision; it has come up regularly in this exam, will do so again, and could have provided 20% of the marks required to pass the exam for what essentially amounted to a memory test.
In Question 3, we met Kemi, aged 57, single and a deferred member of her former employer’s defined benefit pension scheme. This question asked us to outline the information we would consider in respect of GMP benefits when evaluating the scheme for a transfer. This has also been asked previously, however, it is a tricky little question with GMP being largely a historic issue, having ceased accrual in 1997. The CII commented that some candidates showed very little knowledge of GMP, whilst some answers contained errors in revaluation/escalation rates despite those rates being provided in the tables. This highlights the importance of working with the information you have been provided.
Finally, in Question 4, 63-year-old Rob had been advised to apply for a transitional tax-free amount certificate and we were asked to outline the process for applying for one. This is a relatively new development arising from the abolition of the lifetime allowance and highlights the importance of keeping on top of current affairs. It is something which it is imperative from a practical perspective that advisers have an understanding of in order to identify situations where a client should apply for a certificate. It is a right that is lost once a relevant benefit crystallisation event takes place. It is also a question which most candidates were stated as performing well on.
Here's a review of the Mar 25 exam paper for #CII #AF7. Share on X
Section B
Case Study 1
In the first case study, we were introduced to Mia and Jonah, aged 48 and 41 respectively. They are in excellent health with two dependent children aged 14 and 11. Mia had a deferred scheme pension of £10,600 with a cash equivalent. Mia was a low-risk investor and Jonah a medium-risk one. Their priority was providing death benefits for their children until they are financially independent. Neither had decided on a retirement date. They wished to consider whether they should transfer into her workplace pension plan for the purposes of flexible access and providing death benefits.
In the first question, we were asked to state the additional information which the adviser would require from the scheme administrators to advise Mia on the potential suitability of such a transfer. This is a standard fact-finding question, the likes of which we see regularly in AF7 and other written CII exams. The CII stated that most candidates did well on it, but some stated things which would be general fact-finding as opposed to information specific to the scheme administrator. This does highlight the importance of reading the question carefully, since general fact-finding questions can, and do, come up regularly as well.
Next up, we were asked to outline the death benefit options available to Jonah and Mia should she transfer her benefits to a personal pension plan and subsequently die before State Pension Age. This question contained a slight curveball in that State Pension Age, in itself, is not actually a factor in determining the death benefits available from a personal pension or their tax treatment. This is determined by vesting status and whether the member died before or after the age of 75. However, the question tested ability to analyse a situation and apply practical knowledge. Where candidates were able to look through the window-dressing, then this was a fairly routine question for nine marks and, indeed, most scored well on it.
Finally, for this section, we were asked to explain the factors which would support a recommendation for Mia to retain her scheme benefits. Again, recommendation questions are a staple diet of the case study section of AF7. Sometimes candidates are asked to make their own recommendation, and sometimes they are given one and asked to justify it as was the case here. Regardless of how the question is worded, again, this is a regular feature of AF7 and tended to be answered well, with the CII commenting that most candidates achieved six or more of the ten marks available, which is pass standard.
Case Study 2
The second case study concerned Jin and Katya, aged 59 and 64. Jin had recently been made redundant, whilst Katya was retired. Both had a medium attitude to risk, though Katya had had a few health issues. Both had deferred defined benefit pensions and no other pension entitlement. They had asked for advice on whether they should transfer one (or both) of their deferred entitlements. They wished to leave any residual funds to family, but having a comfortable retirement was more important and in particular, they wished to ensure their essential expenditure of £2,000 per month, with lifestyle expenditure of £1,800.
Question 8, again, was a type of question which has arisen regularly over the years, with both having defined benefit schemes and the question asking us to justify which one to transfer. In this instance, we were again given the recommendation, which was to transfer Katya’s scheme, and explain why we would make it. This question presented a hefty 15 marks. Answers covered both personal factors, such as Katya’s health, and features of the schemes themselves, such as Jin’s scheme covering their essential expenditure in full and having better inflation protection. Interestingly, it was commented that performance was disappointing, with a failure to link the features to client objectives.
The next question concerned use of cashflow modelling. This was not specifically linked to Jin and Katya but asked us to explain why we would use this as part of our suitability assessment when advising Jin and Katya. Again, AF7 regularly tests both the reasons for cashflow modelling and the assumptions and/or stress tests that would be used when carrying it out. Interestingly, again, the CII commented that performance felt worse than in previous sittings, with few candidates gaining high marks and many providing multiple examples of stress tests which would be carried out. This was not what the question asked and highlights again the importance of reading it closely.
Finally, we were asked about the investment strategy for the transferred funds and the factors we would consider when designing one. This falls into the category of a fairly regular AF7 question but again did not seem to be answered well with the CII commenting that the question ‘was not well answered by most candidates, which was surprising as it is an area that has been frequently tested before’. Again, feedback was also given that less well-performing candidates failed to link their answer to the specific circumstances set out in the case study.
GMP aside, there did not seem to be anything here that well-prepared candidates should not have been expected to be able to provide a solid answer for. However, the comments regarding the answers given on cashflow modelling and investment strategies make us think that both of these are likely to be tested again in upcoming sittings. In addition, transitional tax-free amount certificates are likely to be an issue for some time to come and are also a good bet for a repeat outing in future papers.
As AF7 is a specialist paper we thought it might be useful to see what has been tested over the previous papers starting with the sitting in May 2022.
| May 2022 | Steps in the transfer process Security of scheme benefits Transitional protection Reasons for CETV increase 32 marks | Additional information re: circumstances Cashflow modelling Class 3 NICs 28 marks | Benefits and drawbacks of transfer Death benefits Sustainability Investment strategies Flexi-access drawdown 40 marks |
| September 2022 | APTA Guaranteed annuity rates Risks of transfer Transfers and IHT 34 marks | Ill health early retirement Lifetime allowance Death benefits Reasons not to transfer The PPF 31 marks | Additional information from the scheme Capacity for loss Reasons for transfer 35 marks |
| March 2023 | Contingent charging CETV calculation Employer covenant Sequencing 34 marks | Death benefits Reasons to transfer Cashflow modelling Investment strategy 33 marks | Information regarding the scheme Factors to consider Spousal bypass trusts 33 marks |
| September 2023 | Personalised charges communication GMP benefits Statement of entitlement Factors that impact transfer values 31 marks | Fact finding (client) Recommendation not to transfer Cashflow/stress testing. 32 marks | Which pension to transfer Annuity purchase Death benefits Class 3 national insurance 37 marks |
| March 2024 | Triage services Capacity for loss considerations Pension protection fund Guaranteed annuity rates 31 marks | Additional information from scheme administrator Appropriate pension transfer analysis Reasons for retain recommendation Ways to meet income shortfall 36 marks | Reasons to transfer one scheme over the other Flexi-access drawdown vs short-term annuity Spousal bypass trusts Class 3 NICs 33 marks |
| September 2024 | Abridged advice Employer covenant Attitude to transfer risk Statutory timescales 32 marks | Additional information from the client Other ways to meet objectives Death benefits and tax treatment 29 marks | Vulnerable clients Investment strategy fact finding Reasons to make a recommendation Sequencing risk Expression of wish forms 39 marks |
We offer resources to support you as you revise for the AF7 Pension Transfers exam. AF7 has a large number of ‘staple questions’ which come up time and again in the exam paper.
Our ‘Core Knowledge’ resource focuses on these ‘staple questions’ and includes questions, answers, detailed explanations, and cross-references to the CII study text. The resource also includes some of the core calculation questions you would be expected to understand. This is a resource that we developed specifically for the AF7 exam.
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If you’re studying for your CII AF7 exam, and you’re wanting to feel confident on exam day, grab our free taster to try out one of Brand Financial Training’s resources for yourself. Click the link to download the AF7 Core Knowledge Taster now!
* The CII has updated their retention policy and now only provides the last two exam papers. Older papers referenced in this article may no longer be available on the CII website.
