3

Question 2

Where are benefits set out?

Answer 2

Occupational trust deeds and rules

Question 3

Who decides what benefit package to use?

Answer 3

Employer

Question 4

What are the scheme restrictions?

Answer 4

Registered pension must comply with finance act.
DB contracted out members complete RST after April 1997.
Statutory requirements, e.g., annual increase inflation, automatic enrolment, minimum contributions, and eligibility, discrimination.

Question 5

What is the default retirement age?

Answer 5

Retirement had to be 65. Abolished in Oct 2011. Employees now choose.

Question 6

Why was the default retirement age abolished?

Answer 6

Discrimination. SPA is higher = 66.

Question 7

What is the state pension age?

Answer 7

66

Question 8

What is NMPA?

Answer 8

55

Question 9

What is NPA?

Answer 9

Commonly between 60 and SPA. No earlier than 55.

Question 10

What benefits do occupational schemes offer?

Answer 10

Early retirement pension, ill health early retirement, late retirement, increases - discretionary or mandatory, tax-free commutation - up to 25% cash instead of pension.

Question 11

What is bridging?

Answer 11

NPA. Pension begins when member retires until their SPA. Top up payment.

Question 12

What is early retirement pension?

Answer 12

A pension taken before the normal retirement age.

Question 13

What is ill health early retirement?

Answer 13

Retirement due to health issues before the normal retirement age.

Question 14

What is late retirement?

Answer 14

Retirement taken after the normal retirement age.

Question 15

What is tax ease commutation?

Answer 15

A way to exchange part of a pension for a lump sum without tax penalties.

Question 16

What is bridging?

Answer 16

A temporary payment until the main pension starts.

Question 17

What is NPA?

Answer 17

Normal Pension Age.

Question 18

When does a pension begin?

Answer 18

When a member retires until their State Pension Age (SPA).

Question 19

What is a top-up payment?

Answer 19

An additional payment to increase pension benefits.

Question 20

What happens when SPA is reached?

Answer 20

Pension may reduce or stop.

Question 21

When can pension payments be different?

Answer 21

Depending on member categories.

Question 22

What happens before pension is paid before NMPA?

Answer 22

Unauthorised payment charge may apply.

Question 23

Who can retire earlier than NMPA?

Answer 23

Transitional members in scheme rules as of 10/12/2003.

Question 24

At what age can one take pension?

Answer 24

From age 50.

Question 25

What age will NPA increase to?

Answer 25

57.

Question 26

What protections exist with unqualified rights and uniformed occupations?

Answer 26

Specific protections for certain job categories.

Question 27

How are DB schemes calculated?

Answer 27

Accrual rate x pensionable salary x pensionable service.

Question 28

What are CARE schemes?

Answer 28

Career Average Revalued Earnings schemes based on average salary.

Question 29

Which is more popular, DB or CARE?

Answer 29

DB schemes are generally more popular.

Question 30

What is the only type of pension that can be drawn from a registered DB scheme?

Answer 30

Scheme pension.

Question 31

What are the requirements of scheme pension?

Answer 31

Payable for the life of the member and paid annually without reduction.

Question 32

How are DC schemes calculated?

Answer 32

Pension pot accrued from contributions, investment returns minus charges.

Question 33

When will DC pension be released?

Answer 33

At Normal Pension Age (NPA).

Question 34

What benefits do DC schemes offer?

Answer 34

Lifetime annuity, scheme pension, and flexi access drawdown.

Question 35

What is a lifetime annuity?

Answer 35

Purchased with an insurance company or scheme.

Question 36

What happens if a member dies before 10 years of a lifetime annuity?

Answer 36

Remaining payments are made to beneficiaries.

Question 37

What is scheme pension?

Answer 37

A pension pot where an annuity is offered first.

Question 38

What is flexi access drawdown?

Answer 38

Members can access their pension flexibly.

Question 39

What is the reform to age 75?

Answer 39

Both DC and DB members had to buy an annuity by age 75.

Question 40

What happens if they don't buy an annuity by age 75?

Answer 40

They face charges and tax penalties; lump sums cannot be paid.

Question 41

When did this change?

Answer 41

On 6/4/01.

Question 42

What benefits do annuities include?

Answer 42

Single/joint life, level or escalating, enhanced or impaired life.

Question 43

What is a single life annuity?

Answer 43

Pension only paid to the member.

Question 44

What is a joint life annuity?

Answer 44

Pension paid to the spouse upon the member's death.

Question 45

What is a level annuity?

Answer 45

Same income year after year.

Question 46

What is an escalating annuity?

Answer 46

Annuities increasing year by year or fixed rate by index.

Question 47

Who qualifies for an enhanced or impaired life annuity?

Answer 47

Individuals with ill health or smokers.

Question 48

What other options can members choose?

Answer 48

Guarantee period and annuity protection lump sum benefit.

Question 49

What is a guarantee period?

Answer 49

Annuity paid if the member dies within a specific number of years from retirement, up to 10 years.

Question 50

What is annuity protection lump sum?

Answer 50

A lump sum paid if the member dies after 06/04/2011, subject to a 45% charge.