The CII J05 September 2024 Exam in Review

In this article, we’re looking at the CII’s Diploma in Financial Planning J05 exam paper that students sat in September – this is the exam on Pension Income Options. This will be useful reading for you if you are preparing to sit this exam in the near future; it will help you to focus your revision on the areas that are likely to be examined.

This article is correct as at 11 December 2024.

You can find a copy of the exam guide here.  

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

Question 1

Historically, the first question on J05 has always tended to be a lifetime allowance one. Therefore, following the abolition of the allowance, it was no great surprise to see a question on the lump sum and lump sum and death benefits allowances. This one also required candidates to determine whether a transitional tax-free amount certificate would be required. This was a tricky little number given the limited time that candidates have had to learn and understand the new allowances and the standard of answers provided varied. The CII commented that understanding of the new rules is paramount as lifetime allowance use was calculated by the provider, whereas the new allowances must be obtained and calculated by the adviser.

Question 2

This question asked about the factors that should be taken into account when advising whether to take a CETV and purchase an annuity rather than take the scheme pension and PCLS. This one was rather out of left field and might have seemed more at home in AF7, but J05 usually has one pension-transfer-related question in it. For ten marks, it could have been answered well by those who are familiar with this field, but others may have struggled. Some made the rather basic error of not reading the question properly and answering as if the CETV was to go into flexi-access drawdown.

Question 3

Question 3 concerned death benefit nominations and the reasons why they were advisable. This has been asked regularly over the years in both J05 and AF7. It was a small five-mark question and should not have proved taxing for well-prepared candidates.

Question 4

This one concerned pension switching. We were asked to justify the benefits of switching an existing capped drawdown fund into a new capped drawdown arrangement rather than a flexi-access one and the criteria that must be met. This has been asked previously. It is something that candidates may rarely come across in real life as there are relatively few capped drawdown arrangements remaining. However, the CII commented that it was answered better than in previous sittings.

Question 5

Next up, we had a question about death benefits and income tax treatment for a scheme pension and an uncrystallised personal pension. This question required knowledge of the new legislation. Some candidates struggled with failure to identify the lump sum and death benefits allowance and some also got confused between dependents, nominees, and successors. Death benefits are a staple diet of J05 and will inevitably be tested again and again, so candidates would do well to familiarise themselves with the new rules as 11 marks were available for this question.

Question 6

Question 6 covered the benefits of flexi-access drawdown as opposed to purchasing an annuity and drawbacks of phased flexi-access drawdown. This is a fairly straightforward question, though the second part may have proved challenging in terms of providing the required number of points to gain full marks.

Question 7

Here, we were treated to a question about investment pathways. The question asked the purpose of them and four objectives which are designed to be met by them. Whilst it was only six marks, this was something of a curveball and may therefore come up again in later sittings as the CII remarked that it was a requirement to consider them when advising on drawdown arrangements.

Question 8

This question was a fairly straightforward one regarding Hallie whose scheme had been taken into the PPFF and how her benefits would be impacted. This has been asked regularly over the years and on the whole, the CII considered it well answered.

Question 9

In Question 9 we met Matteo, aged 64, who did not have sufficient national insurance qualifying years to benefit from a full state pension. In part one, we were asked the possible reasons why he may have a gap, which was something of a curveball. Part two asked, more predictably, what actions he can take to fill the gaps and the relevant dates. The feedback was that some candidates lacked the required understanding.

Question 10

Next, candidates were asked to outline the important factors in assessing a client’s capacity for loss. The question offered ten marks and well-prepared candidates, which was most of them, should have been able to pick up some good marks here.

Question 11

This was an interesting one with two parts. Firstly, we were asked to explain why longevity risk was important to Anatole, who planned to access his benefits flexibly. Less predictably, we were then asked why his life expectancy probability should be used when assessing this rather than his average life expectancy. The CII commented, surprisingly, that part b) seemed to be better understood but not always that well-articulated. Unusually, the CII also commented on which of the bullet points in the model answer were missed most frequently by candidates.

Question 12

This question asked the factors to take into account when advising on whether to take a lump sum from a personal pension plan as an UFPLS or a PCLS. This sort of thing has been asked regularly over the years, including the previous sitting, and well-prepared candidates ought to have been able to pick up very close to the full 11 marks.

Question 13

This, again, was a relatively well-trodden question, with 14 marks over the two parts. Part a) asked about the factors that should be taken into account when producing a cashflow model for the client, Leon. Part b) asked for six scenarios which should be taken into account when stress testing his cashflow plan. Again, well-prepared candidates had some low hanging fruit to pick here and the majority did so. The CII did comment that candidates would be well advised to take note of previous papers and ensure they answer questions in the style expected.

Question 14

This was another regular question and covered the factors that should be taken into account when carrying out an annual review of flexi-access drawdown. This should have been straightforward and was, with ten marks available for it.

Question 15

Finally, we were introduced to Ivan, aged 69, who was considering withdrawing his entire pension fund as an UFPLS to purchase a buy-to-let property to provide his retirement income. We were asked to outline seven drawbacks of this course of action. Whilst the question itself was a somewhat unusual one, most of the answers were simple common sense and the CII commented that candidates scored well.

Overall, there were a couple of questions which were a bit out of left field, but many staple diet questions for good marks and which should not have proved too taxing for well-prepared candidates. Those sitting the exam in future would be well advised to ensure that they are familiar with the new rules (and with the new, new rules in light of the autumn budget) concerning tax treatment of death benefits.

Comparison with the February 2024 Exam Paper 

Let’s compare this paper with what was tested in February 2024. That exam guide can be found here. 

The topics covered were:  

• Enhanced protection
• 2028 early retirement protection
• Triviality and small pots
• Annuity versus drawdown
• Phased drawdown versus lifetime annuity
• Considerations for making income withdrawals
• Pension scams
• Calculation of state pension
• UFPLS versus PCLS
• Spousal bypass trusts
• ISA versus drawdown income
• Death benefits
• Cashflow modelling
• Earmarked investment strategies
• Pension sharing and earmarking.

As usual, there are a number of running these including death benefits, state pensions, cashflow modelling and stress testing and comparison of retirement income strategies. The new allowances and 2028 protection remain high on the list of likely topics and candidates should also aim to ensure that they are on top of the latest changes in light of the autumn budget.

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!