The CII J05 October 2017 Exam in Review

In this article, we discuss the questions set in the October 2017 exam paper for CII J05 – Pension Income Options.  This will be useful for you if you are preparing to sit J05; it will help you to focus your revision on the areas that are likely to be examined.

You can find a copy of the October paper here.

Two hours are given to answer 15 short-answer questions for a total of 130 marks; a pass gives students 20 Diploma credits.

The October exam began with a seven-point question to calculate a LTA tax charge. This topic was the start of April’s exam as well albeit tested in a different way.  But a good start. Question 2 was a very straightforward pensions question on a scheme entering the PPF.  Other areas included the circumstances when someone’s LTA could be greater than the standard LTA; the benefits of using flexi-access drawdown and why withdrawals to provide extra income should come from one of the client’s personal pension rather than the other client’s group personal pension.

The calculation questions in this paper included having to work out the revised income from a capped drawdown fund and (for 12 marks) the amount of fund which must be crystallised to provide a net amount as an UFPLS.

The exam continued with questions on using a lifestyle approach; death benefits and their taxation from a scheme pension and an uncrystallised personal pension; the benefits of deferring receipt of a State pension; serious ill health lump sums; the factors that should be taken into account when carrying out an annual review of a phased capped drawdown plan; the risk factors when advising on pension decumulation (for 10 marks) and the exam finished with a question asking for  8 factors that influence lifetime annuity rates, what mortality drag is and the effects of it on flexi-access drawdown pension and finally 4 benefits and 4 drawbacks of using a PCLS to buy a rental property compared to using the entire fund to buy a lifetime annuity.

All in all, it seemed like a fair test of the syllabus with no particular curve balls.

Comparison with the April 2017 Exam Paper

Let’s consider the exam from the session before this one – April 2017 – which can be found here.

This covered the following subjects:

• The factors to consider when taking an UFPLS
• The foundation amount for the single tier State pension,
• Conditions for Fixed Protection
• Using an ISA rather than a dependants’ FAD plan
• Working out a net UFPLS
• The options available to a non-dependant son for a pension in capped drawdown
• The safe withdrawal rate
• Statutory levels of escalation for a PIE offer
• The pros and cons of electing for PIE
• TPR steps that scheme members can take to protect their pension from a scam
• Equity release
• Death benefits from a DB scheme
• Calculation of a maximum PCLS
• Pros and cons for using phased flexi access drawdown
• State pension benefit statement

J05 usually proves itself to be a fair exam, and we hope this continues!

Grab the resources you need!

If you’re studying for your CII J05 exam, and you want to be fully prepared, grab our free taster to try out one of Brand Financial Training’s resources for yourself.  Click the link to download the J05 mock paper taster now!