Chapter 1 Written Qs (CII) Flashcards Preview

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Flashcards in Chapter 1 Written Qs (CII) Deck (3)
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1
Q

1.1) State pensions are funded on a ‘pay as you go basis’ what does this mean?

A

‘Pay as you go’ means that the National Insurance contributions of the current working population pay for today’s pensioners’ State Pensions.

2
Q

1.) As well as life expectancy, annuity rates are based on returns of which type of underlying investment ?

A

Expected returns from gilts.

3
Q

Outline four taxation incentives of making pension contributions ?

A
  • income tax relief on contributions made by individuals;
  • contributions made by employers are treated as a business expense for corporation tax or income tax purposes;
  • the investment profits of the fund are exempt from income tax and capital gains tax; and
  • the ability to take part of the proceeds as a tax-free cash lump sum, known as the pension commencement lump sum.