The October 2017 Exam Paper Review for CII AF3
It’s the turn of the (almost extinct) CII AF3 Pension Planning module and the scrutiny of the October 2017 exam paper. You’ll find this to be useful reading if you’re preparing for the next – and last – exam sitting for AF3.
This is the big 80-mark question and introduces us to a married couple, Anupa and Sanjay. It seems like quite a fair question. It starts off with Sanjay’s position and a couple of straightforward calculations – the tapered annual allowance and carry forward – and continues with questions that require careful analysis of the case study information. It continues with the lifetime allowance and a very straightforward question on the differences in tax treatment between an EIS and a GPP. We then move to Anupa, with questions on salary sacrifice, the default investment option on her GPP and the relevant factors to consider when recommending an investment fund for her, finishing with questions around her capped drawdown arrangement. Again, these seem quite straightforward for AF3!
The second question is the pension transfer question, and this time concerned an unmarried magazine editor, turned yoga instructor, called Ella. The questions ranged from having to explain how the level of revaluation applied to benefits in excess of GMP is more generous than the statutory minimum, an explanation of the impact a higher rate of future inflation would have had on the CETV, a bit on financial strength of the employer, how a State pension deduction is applied and finally for 10 marks, an outline of the additional information needed about Ella before advice could be given on whether she should transfer. This seemed to us to be a fair and straightforward test of pension transfer knowledge.Have you seen the Oct 17 exam paper for CII AF3 yet? Here's a question-by-question review of the exam paper. Click To Tweet
Onto Question 3, and this time the case study concerned an older couple, where the wife was already receiving State pension and the husband, who had a range of different pension contracts, would reach State pension age in 2020.
The first question was a fact finding question regarding advising the husband on consolidating his various pension contracts. Then, assuming he did consolidate his plans, candidates had to outline the main factors that should be taken into account when determining a sustainable level of income. The third question was around death benefits from a flexi-access drawdown plan and finally a question on both their State pensions.
This seems to us as if this paper should get better pass rates than we have seen in the past for AF3.
Let’s compare it with April of 2017 which can be found here.
This also seemed like a fair paper with the same topics being tested such as the LTA, transitional protection, death benefits, State pension, FAD, GMP re-valuation and factors to consider when transferring from a DB scheme into a PP.
As with all AF exams, the questions are based on the people in the case study, so candidates will do well to remember that examiners are looking for answers that specifically relate to the information they’ve been given and not just a regurgitation of technical information.
Historically, the pass rates for AF3 have been low and have in fact dropped consistently since 2012; in 2015 the pass rate was just over 30% so it will be interesting to see if candidates sitting both papers from last year were more successful, and how they compare with the pass rate for the new AF7 pension transfer paper, the first session of which was sat in October.
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