True/False Flashcards by James Wilkinson

With regards to Pension Contribution Insurance, you advise a client that:

premiums will be eligible for tax relief.

True/False?

False

BS3

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With regards to Pension Contribution Insurance, you advise a client that:

in the event of illness, the PCI will make contributions to the client’s scheme.

True/False?

True

BS3

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With regards to Pension Contribution Insurance, you advise a client that:

both member and employer contributions can be covered.

True/False?

True

BS3

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With regards to Pension Contribution Insurance, you advise a client that:

payments will begin after an agreed deferred period.

True/False?

True

BS3

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With regards to using trivial commutation, you advise your client that:

she will not be able to unless she is aged at least 60.

True/False?

False

BS3

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With regards to using trivial commutation, you advise your client that:

there is a 12-month commutation period.

True/False

True

BS3

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With regards to using trivial commutation, you advise your client that:

the commutation limit is £30,000 across all schemes.

True/False

True

BS3

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With regards to using trivial commutation, you advise your client that:

all of the resulting proceeds will be tax-free.

True/False

False

BS3

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Your client wants to leave his DB scheme. You advise him that this will normally mean giving up:

a lump sum death benefit based on a multiple of salary.

True/False?

True

BS3

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Your client wants to leave his DB scheme. You advise him that this will normally mean giving up:

a pension based on a percentage of salary.

True/False?

True

BS3

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Your client wants to leave his DB scheme. You advise him that this will normally mean giving up:

a guaranteed income for life.

True/False?

True

BS3

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Your client wants to leave his DB scheme. You advise him that this will normally mean giving up:

the prospect of investment growth.

True/False?

False

BS3

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Your client is entering into FAD. You advise him that:

Any pension commencement lump sum must be taken at outset.

True/False?

True

BS3

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Your client is entering into FAD. You advise him that:

The minimum income requirement for flexi-access drawdown is £10,000.

True/False?

False

BS3

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Your client is entering into FAD. You advise him that:

Taking more than the maximum permitted income will trigger the money purchase annual allowance.

True/False?

False

BS3

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Your client is entering into FAD. You advise him that:

A flexi-access drawdown pension can take the form of a short-term annuity.

True/False?

True

(“i.e. part fo the funds can be used to buy an income for a short time”)
BS3

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With regard to critical yields, a financial adviser should be aware that:

there is no explicit regulatory requirement to produce critical yields on a drawdown illustration.

True/False?

True

[You don’t need to put critical yields on drawdown illustrations]
BS3

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With regard to critical yields, a financial adviser should be aware that:

type A critical yield is the growth rate needed to provide an income equal to that under an equivalent immediate annuity.

True/False?

True

BS3

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With regard to critical yields, a financial adviser should be aware that:

type B illustrations must be accompanied by a type A illustration.

True/False?

True

BS3

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With regard to critical yields, a financial adviser should be aware that:

type B illustrations must show annuity purchase at ages 70 and 75

True/False?

False

Type A are required to show annuity purchases at ages 65, 70, and 75
BS3

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Your client was in capped drawdown before April 2015. The following information is available:

Fund, after PCLS, is £300,000
GAD rate is £56 per £1,000
Gilt yield on 15th of previous month = 2.37%

You should advise him that:

the gilt yield used when calculating maximum withdrawal rate will be 2.25%.

True/False?

True

BS3

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Your client was in capped drawdown before April 2015. The following information is available:

Fund, after PCLS, is £300,000
GAD rate is £56 per £1,000
Gilt yield on 15th of previous month = 2.37%

How is the basis amount calculated from this information?

£300,000 * (£56/£1,000)

BS3

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Your client was in capped drawdown before April 2015. The following information is available:

Fund, after PCLS, is £300,000
GAD rate is £56 per £1,000
Gilt yield on 15th of previous month = 2.37%

You should advise him that:

the minimum income available to him is zero.

True/False?

True

BS3

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Your client was in capped drawdown before April 2015. The following information is available:

Fund, after PCLS, is £300,000
GAD rate is £56 per £1,000
Gilt yield on 15th of previous month = 2.37%

You should advise him that:

his income reviews must be conducted annually.

True/False?

False

“[His] income will be reviewed every 3 years as he is under age 75”
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Your client is thinking of designating funds into FAD. You should make him aware that: the underlying annuity rate will increase during a period of deferral. True/False?

False ## Footnote BS3

Your client is thinking of designating funds into FAD. You should make him aware that: there are potentially high charges for administration and reviews. True/False?

True ## Footnote BS3

Your client is thinking of designating funds into FAD. You should make him aware that: the value of his pension fund can go down as well as up. True/False?

True ## Footnote BS3

Your client is thinking of designating funds into FAD. You should make him aware that: there is a potential of fund depletion through high-income withdrawals. True/False?

True ## Footnote BS3

Your client is approaching retirement. She should be made aware that it is usually the case that expenditure will: continue for National Insurance contributions. True/False?

False ## Footnote BS3

Your client is approaching retirement. She should be made aware that it is usually the case that expenditure will: cease for on-going pension contributions. True/False?

True ## Footnote BS3

Your client is approaching retirement. She should be made aware that it is usually the case that expenditure will: cease for income protection insurance. True/False?

True ## Footnote BS3

Your client is approaching retirement. She should be made aware that it is usually the case that expenditure will: be directed more towards savings. True/False?

False ## Footnote BS3

Your client has chosen fixed interest securities as a major component of their pension fund investment portfolio. She should be aware that: all fixed interest securities provide a guarantee of capital at maturity and during their term. True/False?

False ## Footnote I can only guess that it's to do with the part in the explanation that says: "They are redeemed at their nominal value at the fixed redemption date *and any sale before this date might not be at this value*" BS3

Your client has chosen fixed interest securities as a major component of their pension fund investment portfolio. She should be aware that: annuity rates are generally backed by gilts. True/False?

True ## Footnote BS3

Your client has chosen fixed interest securities as a major component of their pension fund investment portfolio. She should be aware that: they offer a fixed rate of interest. True/False?

True ## Footnote BS3

Your client has chosen fixed interest securities as a major component of their pension fund investment portfolio. She should be aware that: all fixed interest securities have a redemption date. True/False?

False ## Footnote BS3

Your client’s fund is invested in with profits. You advise him that: a terminal bonus is guaranteed to be paid on crystallisation or earlier death. True/False?

False ## Footnote It is not guaranteed although it is possible BS3

Your client’s fund is invested in with profits. You advise him that: once added, reversionary bonuses cannot be taken away. True/False?

True ## Footnote BS3

Your client’s fund is invested in with profits. You advise him that: the fund will only invest in cautious/low risk investment areas. True/False?

False ## Footnote BS3

Your client’s fund is invested in with profits. You advise him that: annual bonuses are aimed at "smoothing" returns over the term. True/False?

True ## Footnote BS3

Your client has decided to save for his retirement using a Self-invested personal pension (SIPP). You advise him that: loans to an employer cannot exceed 50% of scheme assets. True/False?

False ## Footnote "Loans to employers are not permitted" BS3

Your client has decided to save for his retirement using a Self-invested personal pension (SIPP). You advise him that: assets such as wines and antiques could give rise to tax charges. True/False?

True ## Footnote BS3

Your client has decided to save for his retirement using a Self-invested personal pension (SIPP). You advise him that: the SIPP could be used to buy a commercial property from a "connected person". True/False?

True ## Footnote BS3

Your client has decided to save for his retirement using a Self-invested personal pension (SIPP). You advise him that: loans to an employer are permitted. True/False?

False ## Footnote BS3

Client 1 is a member of a DB pension and Client 2 is a member of a DC pension scheme. In relation to their respective pension benefits, you advise them that: there is no guarantee as to the amount of pension benefit that client 1 will receive. True/False?

False ## Footnote BS2

Client 1 is a member of a DB pension and Client 2 is a member of a DC pension scheme. In relation to their respective pension benefits, you advise them that: client 2 can take benefits in the form of an income and/or as a lump sum. True/False?

True ## Footnote BS2

Client 1 is a member of a DB pension and Client 2 is a member of a DC pension scheme. In relation to their respective pension benefits, you advise them that: client 1 will be exposed to investment risk. True/False?

False ## Footnote BS2

Client 1 is a member of a DB pension and Client 2 is a member of a DC pension scheme. In relation to their respective pension benefits, you advise them that: the benefits available to DC client depend on the size of the fund that is built up. True/False?

True ## Footnote BS2

Your client has a stakeholder pension invested in the default investment fund with a lifestyle arrangement. You advise them that: switching begins between 15 and 20 years before their selected retirement age. True/False?

False ## Footnote 5-10 years BS2

Your client has a stakeholder pension invested in the default investment fund with a lifestyle arrangement. You advise them that: as she approaches her selected retirement date her fund is moved away from riskier investments such as equities into more secure investments such as gilts. True/False?

True ## Footnote BS2

Your client has a stakeholder pension invested in the default investment fund with a lifestyle arrangement. You advise them that: She will need to remember to switch her funds as her retirement date approaches. True/False?

False ## Footnote BS2

Your client has a stakeholder pension invested in the default investment fund with a lifestyle arrangement. You advise them that: switching occurs at pre-set times and does not allow for market conditions. True/False?

True ## Footnote BS2

Your client has several personal pension plans with small fund values. In relation to the small pots payments rules, you advise them that: he can take a maximum of three small pots payments from non -occupational schemes. True/False?

True ## Footnote BS2

Your client has several personal pension plans with small fund values. In relation to the small pots payments rules, you advise them that: he can take an unlimited number of small pots payments from non-occupational schemes. True/False?

False ## Footnote BS2

Your client has several personal pension plans with small fund values. In relation to the small pots payments rules, you advise them that: small pots payments must be less than £10,000. True/False?

True ## Footnote BS2

Your client has several personal pension plans with small fund values. In relation to the small pots payments rules, you advise them that: Sacha must be over the age of 50 to commute his pension benefits for a lump sum. True/False?

False ## Footnote False - he must be over the age of 55 BS2

Your client has recently died having been a member of a DB pension for 25 years. Following his death, his beneficiaries should be aware that the scheme can provide benefits: as a dependant's scheme pension. True/False?

True ## Footnote BS2

Your client has recently died having been a member of a DB pension for 25 years. Following his death, his beneficiaries should be aware that the scheme can provide benefits: through a guarantee period. True/False?

True ## Footnote The period which the DB death benefits could pay out for depending on your relationship to the member BS2

Your client has recently died having been a member of a DB pension for 25 years. Following his death, his beneficiaries should be aware that the scheme can provide benefits: as a pension protection lump sum. True/False?

True ## Footnote BS2

Your client has recently died having been a member of a DB pension for 25 years. Following his death, his beneficiaries should be aware that the scheme can provide benefits: as an annuity protection lump sum. True/False?

False ## Footnote The lump sum paid out to dependants if your annuity was guaranteed. Although this is available in some scheme pensions, it is not an option with DB pensions. BS2

Under his capped drawdown arrangement your client is now considering the purchase of a short-term annuity. He should be aware that: they will only be available from the provider of his capped drawdown fund. True/False?

False ## Footnote BS2

Under his capped drawdown arrangement your client is now considering the purchase of a short-term annuity. He should be aware that: the annuity must be paid at least annually. True/False?

False ## Footnote "the annuity has flexibility over the level of payments where income can be reduced to zero." BS2

Under his capped drawdown arrangement your client is now considering the purchase of a short-term annuity. He should be aware that: the annuity cannot have a term longer than five years. True/False?

True ## Footnote BS2

Under his capped drawdown arrangement your client is now considering the purchase of a short-term annuity. He should be aware that: the annuity can be guaranteed during its term. True/False?

True ## Footnote BS2

Your client has crystallised funds in a FAD pension. In relation to potential death benefits, he should be aware that: someone who isn't a dependant can continue in FAD. True/False?

True ## Footnote Yes nominees can receive a survivor's FAD BS2

Your client has crystallised funds in a FAD pension. In relation to potential death benefits, he should be aware that: the fund can be returned tax-free where Shakil dies after age 75. True/False?

False ## Footnote BS2

Your client has crystallised funds in a FAD pension. In relation to potential death benefits, he should be aware that: if there are no dependants the beneficiary can leave the fund on their death to charity. True/False?

True ## Footnote BS2

Your client has crystallised funds in a FAD pension. In relation to potential death benefits, he should be aware that: the beneficiary can leave the FAD fund on their death to a successor. True/False?

True ## Footnote BS2

Your client is self-employed and is wondering whether to purchase a buy-to-let property to help supplement his future retirement income. When considering what action to take, he should be aware that: tax relief on mortgage interest is available at basic rate. True/False?

True ## Footnote BS2

Your client is self-employed and is wondering whether to purchase a buy-to-let property to help supplement his future retirement income. When considering what action to take, he should be aware that: he could suffer capital gains tax on a future sale. True/False?

True ## Footnote BS2

Your client is self-employed and is wondering whether to purchase a buy-to-let property to help supplement his future retirement income. When considering what action to take, he should be aware that: the property will not form part of his estate for inheritance tax purposes. True/False?

False ## Footnote BS2

Your client is self-employed and is wondering whether to purchase a buy-to-let property to help supplement his future retirement income. When considering what action to take, he should be aware that: the rate of stamp duty land tax is 3% above standard rates. True/False?

True ## Footnote "You’ll usually have to pay 3% on top of SDLT rates if buying a new residential property means you’ll own more than one." https://www.gov.uk/stamp-duty-land-tax/residential-property-rates BS2

Sybil's cousin has invested directly in commercial property through her SIPP. When considering whether to do the same, Sybil should be aware that: property is useful for diversification as this asset class often moves in a different direction to equities. True/False?

True ## Footnote BS2

Sybil's cousin has invested directly in commercial property through her SIPP. When considering whether to do the same, Sybil should be aware that: Sybil would not be able to invest in commercial property for the benefit of her own business. True/False?

False ## Footnote BS2

Sybil's cousin has invested directly in commercial property through her SIPP. When considering whether to do the same, Sybil should be aware that: property has the potential to produce a positive real return over the longer term. True/False?

True ## Footnote BS2

Sybil's cousin has invested directly in commercial property through her SIPP. When considering whether to do the same, Sybil should be aware that: the rental payments could provide Sybil with an income from the investment. True/False?

True ## Footnote BS2

Sybil's cousin has invested directly in commercial property through her SIPP. When considering whether to do the same, Sybil should be aware that: Sybil should be prepared for the investment to take some time to complete. True/False?

True ## Footnote BS2

Your client has a SIPP as he likes to make his own investment decisions. Your client should be aware that this allows him to use the plan as:  a route to invest in commercial property. True/False?

True ## Footnote BS2

Your client has a SIPP as he likes to make his own investment decisions. Your client should be aware that this allows him to use the plan as:  a way of making loans to his limited company. True/False?

False ## Footnote "[...] but residential properties and loans to employers are not permitted" BS2

Your client has a SIPP as he likes to make his own investment decisions. Your client should be aware that this allows him to use the plan as: a platform to operate income withdrawals through flexi-access drawdown. True/False?

True ## Footnote BS2

Your client has a SIPP as he likes to make his own investment decisions. Your client should be aware that this allows him to use the plan as:  funding for his buy-to-let properties. True/False?

False ## Footnote BS2

Ben, Jeff and Tristan are considering whether they would find cash flow modelling useful in helping them decide how much they should withdraw each year from their flexi-access drawdown (FAD) fund. They should be aware that the ones who will mostly benefit are: Ben, who wishes to withdraw enough each year to meet his needs while keeping the capital value of his FAD fund intact to pass on to his children. True/False?

True ## Footnote BS2

Ben, Jeff and Tristan are considering whether they would find cash flow modelling useful in helping them decide how much they should withdraw each year from their flexi-access drawdown (FAD) fund. They should be aware that the ones who will mostly benefit are: Jeff, who wishes to withdraw enough each year to provide an income for life. True/False?

True ## Footnote BS2

Ben, Jeff and Tristan are considering whether they would find cash flow modelling useful in helping them decide how much they should withdraw each year from their flexi-access drawdown (FAD) fund. They should be aware that the ones who will mostly benefit are: Tristan, who does not mind what happens to his fund as he has other non-pension investments he can use if necessary. True/False?

False ## Footnote BS2

Ben, Jeff and Tristan are considering whether they would find cash flow modelling useful in helping them decide how much they should withdraw each year from their flexi-access drawdown (FAD) fund. They should be aware that the ones who will mostly benefit are: none of them; they are not clients who would typically benefit from cash flow modelling. True/False?

False ## Footnote BS2

Your client is considering recycling excess pension income as further pension contributions. You advise him that: this will fall foul of the recycling anti-avoidance provisions. True/False?

False ## Footnote BS2

Your client is considering recycling excess pension income as further pension contributions. You advise him that: it could increase lump sum death benefits if he doesn't have lifetime allowance issues. True/False?

True ## Footnote BS2

Your client is considering recycling excess pension income as further pension contributions. You advise him that: it creates a further source of pension commencement lump sum (PCLS). True/False?

True ## Footnote BS2

Your client is considering recycling excess pension income as further pension contributions. You advise him that: recycling anti-avoidance provisions only apply to a PCLS. True/False?

True ## Footnote BS2

An employer is setting up a qualifying workplace pension scheme as an occupational defined contribution scheme under a master trust. To be authorised by The Pensions Regulator, the employer should be aware that master trust schemes must ensure:  the trustees are 'fit and proper' to act in their role. True/False

True ## Footnote BS1

An employer is setting up a qualifying workplace pension scheme as an occupational defined contribution scheme under a master trust. To be authorised by The Pensions Regulator, the employer should be aware that master trust schemes must ensure:  an Independent Governance Committee is established. True/False

False ## Footnote I'm guessing that trustees are the equivalent BS1

An employer is setting up a qualifying workplace pension scheme as an occupational defined contribution scheme under a master trust. To be authorised by The Pensions Regulator, the employer should be aware that master trust schemes must ensure:  a Governance Advisory Arrangement with a third party is in place. True/False

False ## Footnote BS1

Your client is transferring his personal pension to another provider. During your discussions, you would have taken account of a number of factors when determining the suitability of the transfer. These would have included: his current inheritance tax position True/False?

False ## Footnote BS1

True ## Footnote BS1

False ## Footnote BS1

True ## Footnote BS1

Your client designated funds to capped drawdown in April 2014. With regards to capped drawdown rules, he should be aware that: his benefits can stay in capped drawdown for as long as he wishes. True/False?

True ## Footnote BS1

Your client designated funds to capped drawdown in April 2014. With regards to capped drawdown rules, he should be aware that: the maximum permitted income review frequency was re-set from 6 April 2015. True/False?

False ## Footnote BS1

Your client designated funds to capped drawdown in April 2014. With regards to capped drawdown rules, he should be aware that: the maximum income is 150% of the basis amount. True/False?

True ## Footnote BS1

Your client designated funds to capped drawdown in April 2014. With regards to capped drawdown rules, he should be aware that: he cannot transfer his existing plan into a new capped drawdown plan with another provider. True/False?

False ## Footnote BS1

Your client designated funds to capped drawdown in April 2014. With regards to capped drawdown rules, he should be aware that: he can designate additional funds into his existing capped drawdown plan. True/False?

True ## Footnote BS1

Your client started flexible drawdown in June 2013. As a result of the rule changes on 6 April 2015, he should be aware that: his arrangement was converted to flexi-access drawdown. True/False?

True ## Footnote BS1

Your client started flexible drawdown in June 2013. As a result of the rule changes on 6 April 2015, he should be aware that: the money purchase annual allowance (MPAA) was triggered from the date of his first withdrawal after converting to flexi-access drawdown. True/False?

False ## Footnote "[On conversion to FAD] this was not a BCE (as this occurred when initially transferred to flexible drawdown) *but the MPAA was triggered immediately on transfer* because they previously accessed the benefits flexibly" BS1

Your client started flexible drawdown in June 2013. As a result of the rule changes on 6 April 2015, he should be aware that: his position with regards to being able to make defined contribution pension contributions without incurring an annual allowance charge improved. True/False?

True ## Footnote BS1

Your client started flexible drawdown in June 2013. As a result of the rule changes on 6 April 2015, he should be aware that: the automatic conversion into flexi-access drawdown was a benefit crystallisation event. True/False?

False ## Footnote BS1

Your client has a conventional lifetime annuity. He should be aware that the income he receives could fall compared to that paid in a previous year if he: has just married. True/False?

False ## Footnote BS1

Your client has a conventional lifetime annuity. He should be aware that the income he receives could fall compared to that paid in a previous year if he: chose a with profit annuity at outset. True/False?

True ## Footnote BS1

Your client has a conventional lifetime annuity. He should be aware that the income he receives could fall compared to that paid in a previous year if he: chose an annuity linked to RPI. True/False?

True ## Footnote BS1

Your client has a conventional lifetime annuity. He should be aware that the income he receives could fall compared to that paid in a previous year if he: has reached the end of the guarantee period. True/False?

False ## Footnote Guarantee periods are to do with death benefits, paying back the original lump sum BS1

Your client entered into a capped drawdown contract in December 2014. You should be aware that the GAD rates used for calculating the basis amount and the maximum income for your client are based on gilt yields and a notional annuity which is:  level in payment. True/False?

True ## Footnote BS1

False ## Footnote In arrears not advance BS1

False ## Footnote "GAD rates used for capped drawdown are based on the following annuity assumptions: level in payment, monthly in arrears (not advance), no guarantee, and single life." Q 45 BS1

True ## Footnote BS1

You are considering the inclusion of fixed interest securities in a client's retirement portfolio. You should be aware that: the fixed redemption value is known as the par value. True/False?

True ## Footnote BS1

You are considering the inclusion of fixed interest securities in a client's retirement portfolio. You should be aware that: the coupon represents the fixed rate of interest given. True/False?

True ## Footnote BS1

You are considering the inclusion of fixed interest securities in a client's retirement portfolio. You should be aware that: they all have a set redemption date. True/False?

False ## Footnote BS1

You are considering the inclusion of fixed interest securities in a client's retirement portfolio. You should be aware that: they represent loans to various institutions. True/False?

True ## Footnote BS1

Your client is considering investing in a 'lifestyle' pension fund. He should be aware that: funds will start to be switched away from fixed interest to equity investments between five and ten years from the selected retirement age. True/False?

False ## Footnote BS1

Your client is considering investing in a 'lifestyle' pension fund. He should be aware that:  switching funds is designed to lock in gains already made. True/False?

True ## Footnote BS1

Your client is considering investing in a 'lifestyle' pension fund. He should be aware that:  switching takes place automatically, with no need for Davide to trigger the event. True/False?

True ## Footnote BS1

Your client is considering investing in a 'lifestyle' pension fund. He should be aware that:  Lifestyle switching will always be beneficial for him, provided retirement takes place at the planned date. True/False?

False ## Footnote BS1

Your clients are considering ISAs as a means of building up funds for their retirement. They should be aware that: tax relief is available at basic rate. True/False?

False ## Footnote BS1

Your clients are considering ISAs as a means of building up funds for their retirement. They should be aware that: equity ISA funds have the same tax treatment as a pension fund. True/False?

True ## Footnote BS1

Your clients are considering ISAs as a means of building up funds for their retirement. They should be aware that: ISAs may not provide the maximum savings input that a high earner may desire. True/False?

True ## Footnote BS1

Your clients are considering ISAs as a means of building up funds for their retirement. They should be aware that: there is no need to purchase an annuity or secure an income. True/False?

True ## Footnote BS1

Your client is interested in using his trust-based SIPP for investing in shares in his employer. The company is unlisted. As his adviser, you should be aware of the possible dangers which include: His employment and retirement income would be largely dependent on the fortunes of one company. True/False?

True ## Footnote BS1

Your client is interested in using his trust-based SIPP for investing in shares in his employer. The company is unlisted. As his adviser, you should be aware of the possible dangers which include: His would be restricted to investing no more than 15% of the value of his SIPP in his employer. True/False?

False ## Footnote There is no limit BS1

Your client is interested in using his trust-based SIPP for investing in shares in his employer. The company is unlisted. As his adviser, you should be aware of the possible dangers which include: As his employer is an unlisted company, the shares may be difficult to sell at his time of choosing. True/False?

True ## Footnote BS1

Your client is interested in using his trust-based SIPP for investing in shares in his employer. The company is unlisted. As his adviser, you should be aware of the possible dangers which include: He would be forced to sell the shares in the event of his leaving the company. True/False?

False ## Footnote BS1

Certain assets are not permitted holdings within a UK registered pension scheme. A scheme administrator should be aware that prohibited assets exclude: a caretaker's flat. True/False? ("Caretaker's flat is allowed - T/F?")

True ## Footnote That is, you are allowed to invest in a caretaker's flat "Residential property is generally not an authorised asset. However, there are exceptions, which include a caretaker's flat and student halls of accommodation" BS1

Certain assets are not permitted holdings within a UK registered pension scheme. A scheme administrator should be aware that prohibited assets exclude: a beach hut. True/False?

False ## Footnote BS1

Certain assets are not permitted holdings within a UK registered pension scheme. A scheme administrator should be aware that prohibited assets exclude: student halls of accommodation. True/False? (Student halls of accommodation are allowed - True or False?)

True ## Footnote BS1

Certain assets are not permitted holdings within a UK registered pension scheme. A scheme administrator should be aware that prohibited assets exclude: an office building. True/False?

True ## Footnote BS1

You are considering your client's annual allowance and seeking to determine the total pension input amount relevant to his personal pension portfolio. He should be aware that: employer contributions made on behalf of the client must be excluded. True/False?

False ## Footnote That is - employer contributions do count towards your AA utilisation Cii 22/23

You are considering your client's annual allowance and seeking to determine the total pension input amount relevant to his personal pension portfolio. He should be aware that: if the annual allowance is exceeded, the client is subject to tax on the excess at his marginal rate. True/False?

True ## Footnote Cii 22/23

You are considering your client's annual allowance and seeking to determine the total pension input amount relevant to his personal pension portfolio. He should be aware that: investment growth in the value of the fund is ignored. True/False?

True ## Footnote Cii 22/23

You are considering your client's annual allowance and seeking to determine the total pension input amount relevant to his personal pension portfolio. He should be aware that: the annual allowance will not apply in the year the member wholly crystallises his benefits. True/False?

False ## Footnote Cii 22/23

You are looking to set up either a small self-administered scheme (SSAS) or a self-invested personal pension scheme (SIPP) for two directors of a company. When comparing the two types of pension arrangements, you should be aware that: SIPP will be regulated by the Financial Conduct Authority. True/False?

True ## Footnote Cii 22/23

You are looking to set up either a small self-administered scheme (SSAS) or a self-invested personal pension scheme (SIPP) for two directors of a company. When comparing the two types of pension arrangements, you should be aware that: SIPP would normally be set up under contract. True/False?

True ## Footnote Cii 22/23

You are looking to set up either a small self-administered scheme (SSAS) or a self-invested personal pension scheme (SIPP) for two directors of a company. When comparing the two types of pension arrangements, you should be aware that: SSAS will issue Statutory Money Purchase Illustrations at least annually. True/False?

False ## Footnote Cii 22/23

You are looking to set up either a small self-administered scheme (SSAS) or a self-invested personal pension scheme (SIPP) for two directors of a company. When comparing the two types of pension arrangements, you should be aware that: SSAS would normally be set up under a master trust. True/False?

False ## Footnote Cii 22/23

Your client is about to commence taking benefits from his personal pension scheme, which was previously contracted out of the State Second Pension (S2P). He should be aware that: he can take up to 25% of the total fund as a pension commencement lump sum. True/False

True ## Footnote Cii 22/23

Your client is about to commence taking benefits from his personal pension scheme, which was previously contracted out of the State Second Pension (S2P). He should be aware that: he has the right to exercise the open market option. True/False

True ## Footnote Basically, you can move your pension before retirement to get better annuity rates Cii 22/23

Your client is about to commence taking benefits from his personal pension scheme, which was previously contracted out of the State Second Pension (S2P). He should be aware that: his whole pension fund must provide Limited Price Indexation in payment. True/False

False ## Footnote Cii 22/23

Your client is about to commence taking benefits from his personal pension scheme, which was previously contracted out of the State Second Pension (S2P). He should be aware that: the element of the fund accrued as a result of contracting out of S2P will not count towards the lifetime allowance. True/False

False ## Footnote Cii 22/23

Your client, aged 63, has just retired and has a capped drawdown pension. He also has a small occupational money purchase arrangement valued at £40,000, from which he wishes to take benefits immediately. With regards to his options, he should be aware that he will: be able to take an uncrystallised funds pension lump sum. True/False?

True ## Footnote Cii 22/23

Your client, aged 63, has just retired and has a capped drawdown pension. He also has a small occupational money purchase arrangement valued at £40,000, from which he wishes to take benefits immediately. With regards to his options, he should be aware that he will: not be able to purchase a flexible annuity. True/False?

False ## Footnote Cii 22/23

Your client, aged 58 and in good health, has a number of small personal pension arrangements and is interested in taking their benefits as a lump sum. In respect of the small pots rules, she should be aware that she must wait until she reaches age 60 before taking any small pots payment. True/False?

False ## Footnote Cii 22/23

Your client, aged 58 and in good health, has a number of small personal pension arrangements and is interested in taking their benefits as a lump sum. In respect of the small pots rules, she should be aware that a small pots payment is not a Benefit Crystallisation Event. True/False?

True ## Footnote Quite a key component of this mechanism - the individual doesn't have to have any remaining LTA to do a small pot payment Cii 22/23

Your client, aged 58 and in good health, has a number of small personal pension arrangements and is interested in taking their benefits as a lump sum. In respect of the small pots rules, she should be aware that the limit on each small pot payment is £10,000. True/False?

True ## Footnote Cii 22/23

Your client, aged 58 and in good health, has a number of small personal pension arrangements and is interested in taking their benefits as a lump sum. In respect of the small pots rules, she should be aware that there is no limit to the number of small pots payments that can be made. True/False?

False ## Footnote Cii 22/23

Your client, who has been in receipt of the State Pension since 2015 has asked whether he can defer taking benefits. You should explain that: he must defer for at least 5 weeks to receive any increase in income. True/False?

True ## Footnote **This is because SPA was reached before April 2016** Cii 22/23

Your client, who has been in receipt of the State Pension since 2015 has asked whether he can defer taking benefits. You should explain that: he must defer for at least 9 weeks to receive any increase in income. True/False?

False ## Footnote Cii 22/23

Your client, who has been in receipt of the State Pension since 2015 has asked whether he can defer taking benefits. You should explain that: his deferred pension will annually increase at the rate of 5.78% True/False?

False ## Footnote B3A SPA reached before 6 April 2016 It increases by 1% for every 5 weeks which is equivalent to 10.4% per year Cii 22/23

Your client, who has been in receipt of the State Pension since 2015 has asked whether he can defer taking benefits. You should explain that: he will have the option to take a lump sum if he delays for at least 12 months. True/False?

True ## Footnote Cii 22/23

Your client is considering whether to join his new employer's group personal pension scheme or save for retirement using a stocks and shares ISA. He should be aware that: he will be able to draw a tax-free income from the ISA at retirement. True/False?

True ## Footnote Cii 22/23

Your client is considering whether to join his new employer's group personal pension scheme or save for retirement using a stocks and shares ISA. He should be aware that: he will receive tax relief under the net pay method on his pension contributions. True/False?

False ## Footnote Group **personal pension scheme** doesn't get net pay method Cii 22/23

Your client is considering whether to join his new employer's group personal pension scheme or save for retirement using a stocks and shares ISA. He should be aware that: the overall size of his fund at retirement is likely to be higher under the pension scheme compared to the ISA, assuming he makes the same net payments into both. True/False?

True ## Footnote Cii 22/23

Your client is considering whether to join his new employer's group personal pension scheme or save for retirement using a stocks and shares ISA. He should be aware that: pension saving will become compulsory for most employees from the employer's staging date. True/False?

False ## Footnote Cii 22/23

A 25-year-old is considering how much to pay into a personal pension plan in order to achieve a retirement income of half his salary. He should be aware that the: Government Actuary's Department recommends 8% of qualifying earnings as an adequate level of saving. True/False?

False ## Footnote Cii 22/23

A 25-year-old is considering how much to pay into a personal pension plan in order to achieve a retirement income of half his salary. He should be aware that the: higher the growth rate he assumes for his investments, the lower the level of contribution required to meet his target income. True/False?

True ## Footnote Cii 22/23

The maximum prescribed growth rate in a key features illustration is 9% per annum. True/False?

False ## Footnote Cii 22/23

A 25-year-old is considering how much to pay into a personal pension plan in order to achieve a retirement income of half his salary. He should be aware that the: rate of return he receives on his savings is likely to be linked to how much risk he is prepared to take in his investment strategy. True/False?

True ## Footnote Cii 22/23

A client is starting a new job and his employer's pension scheme has a target date fund as its default fund. He should be aware that normally: the fund's asset allocation strategy assumes that benefits will be drawn on the target date. True/False?

True ## Footnote Cii 22/23

A client is starting a new job and his employer's pension scheme has a target date fund as its default fund. He should be aware that normally: the fund targets a specific minimum level of income linked to the level of his contributions. True/False?

False ## Footnote Cii 22/23

A client is starting a new job and his employer's pension scheme has a target date fund as its default fund. He should be aware that normally: he will not have the option of choosing an alternative fund. True/False?

False ## Footnote Cii 22/23

A client is starting a new job and his employer's pension scheme has a target date fund as its default fund. He should be aware that normally: the move into lower risk assets happens gradually as retirement approaches based on the fund manager's view of investment market conditions. True/False?

True ## Footnote This is in contrast to lifestyle funds, which switch at preset dates. Cii 22/23

A client, aged 50, has an existing investment portfolio and other pension schemes. He has a high appetite for investment risk and asks for advice on which fund to invest in through his new employer's defined contribution occupational pension scheme. In terms of asset allocation when considering his fund choices, he should be aware that normally the default fund is likely to be best suited to his needs. True/False?

False ## Footnote Cii 22/23

A client, aged 50, has an existing investment portfolio and other pension schemes. He has a high appetite for investment risk and asks for advice on which fund to invest in through his new employer's defined contribution occupational pension scheme. In terms of asset allocation when considering his fund choices, he should be aware that normally he should consider when he is likely to be drawing his retirement benefits. True/False?

True ## Footnote Cii 22/23

A client, aged 50, has an existing investment portfolio and other pension schemes. He has a high appetite for investment risk and asks for advice on which fund to invest in through his new employer's defined contribution occupational pension scheme. In terms of asset allocation when considering his fund choices, he should be aware that normally he should take into account his other investments and pensions in order to achieve appropriate diversification. True/False?

True ## Footnote Cii 22/23

A client, aged 50, has an existing investment portfolio and other pension schemes. He has a high appetite for investment risk and asks for advice on which fund to invest in through his new employer's defined contribution occupational pension scheme. In terms of asset allocation when considering his fund choices, he should be aware that normally _his investment strategy is unaffected by whether he plans to buy an annuity or start a drawdown pension._ True/False? ["Whether you buy an annuity or go into DD at retirement will impact your investment strategy - T/F?”]

False ## Footnote That is, if your plan is to buy an annuity or go into DD you'd have to adapt your investment strategy. If buying annuity, you would want the full lump sum on retirement so you would need to move to low risk assets prior to retirement to preserve capital If going into drawdown, you would not need to crystallise the full pension on retirement. So, although you will be *shifting* to lower risk assets, you would not need to shift fully to low risk before retirement. Cii 22/23

A self-employed client is considering the direct purchase of a buy-to-let property as part of his retirement planning. He should be aware that the capital repayments on any loan used to purchase property can be offset against the rental income for tax purposes. True/False?

False ## Footnote Cii 22/23

A self-employed client is considering the direct purchase of a buy-to-let property as part of his retirement planning. He should be aware that he may be subject to Capital Gains Tax on the sale of the property. True/False?

True ## Footnote Cii 22/23

A self-employed client is considering the direct purchase of a buy-to-let property as part of his retirement planning. He should be aware that the property will normally be included in his estate on death. True/False?

True ## Footnote Cii 22/23

A self-employed client is considering the direct purchase of a buy-to-let property as part of his retirement planning. He should be aware that rental income, after allowing for costs, will be subject to Income Tax at his highest marginal rate. True/False?

True ## Footnote Cii 22/23

Sam is transferring assets into a SSAS. In relation to this type of registered pension scheme… all members must contribute equally. True/False?

False ## Footnote BTS

Sam is transferring assets into a SSAS. In relation to this type of registered pension scheme… all scheme decisions must be made unanimously. True/False?

True ## Footnote BTS

Sam is transferring assets into a SSAS. In relation to this type of registered pension scheme… a scheme administrator must be appointed. True/False?

True ## Footnote BTS

Sam is transferring assets into a SSAS. In relation to this type of registered pension scheme… the scheme administrator must be FCA approved. True/False?

False ## Footnote BTS

Sam is transferring assets into a SSAS. In relation to this type of registered pension scheme… member numbers are capped at less than 12. True/False?

False ## Footnote BTS

John has died, aged 77, whilst taking flexi-access income withdrawals. He leaves a crystallised pension fund value of £1,475,000 to a trust. In relation to death benefits. these are IHT-free if distributed within two ears of John's death. True/False?

False ## Footnote BTS

John has died, aged 77, whilst taking flexi-access income withdrawals. He leaves a crystallised pension fund value of £1,475,000 to a trust. In relation to death benefits. the entire lump sum payment will suffer a 45% tax charge. True/False?

True ## Footnote BTS

John has died, aged 77, whilst taking flexi-access income withdrawals. He leaves a crystallised pension fund value of £1,475,000 to a trust. In relation to death benefits. the lump sum can be left to any beneficiary or nominee. True/False?

True ## Footnote BTS

John has died, aged 77, whilst taking flexi-access income withdrawals. He leaves a crystallised pension fund value of £1,475,000 to a trust. In relation to death benefits. John's wife must be one of the beneficiaries on his death. True/False?

False ## Footnote BTS

Peter is approaching state pension age and trying to decide whether deferral is a good idea.  Deferral of the state pension will mean that... Peter's income will rise by 10.4% annually for each year deferred. True/False?

False ## Footnote BTS

Peter is approaching state pension age and trying to decide whether deferral is a good idea.  Deferral of the state pension will mean that... a cash lump sum option will be available to Peter. True/False?

False ## Footnote BTS

Peter is approaching state pension age and trying to decide whether deferral is a good idea.  Deferral of the state pension will mean that... Peter must defer for a minimum of nine weeks. True/False?

True ## Footnote BTS

Peter is approaching state pension age and trying to decide whether deferral is a good idea.  Deferral of the state pension will mean that... Peter's pension will increase by 5.78% for each complete deferral year. True/False?

True ## Footnote BTS

Jeff and Lisa are considering their plans for retirement. Jeff is thinking of using a registered pension scheme (RPS), Lisa a Lifetime ISA. The internal tax treatment of both is the same. True/False?

True ## Footnote BTS

Jeff and Lisa are considering their plans for retirement. Jeff is thinking of using a registered pension scheme (RPS), Lisa a Lifetime ISA. A Lifetime ISA allows contributions up to €4,000 annually. True/False?

True ## Footnote BTS

Jeff and Lisa are considering their plans for retirement. Jeff is thinking of using a registered pension scheme (RPS), Lisa a Lifetime ISA. An ISA will be available earlier than a pension scheme. True/False?

False ## Footnote BTS

Jeff and Lisa are considering their plans for retirement. Jeff is thinking of using a registered pension scheme (RPS), Lisa a Lifetime ISA. ISA contributions are likely to be greater than an RPS. True/False?

False ## Footnote BTS

John contracted out of state pensions for ten years, back in the 1980s. When he reaches state pension age. His state pension levels will be unaffected. True/False?

False ## Footnote BTS

John contracted out of state pensions for ten years, back in the 1980s. When he reaches state pension age. His foundation amount is likely to be lower than the maximum single tier. True/False?

True ## Footnote BTS

John contracted out of state pensions for ten years, back in the 1980s. When he reaches state pension age. He is less likely to qualify for a protected payment. True/False?

True ## Footnote BTS

John contracted out of state pensions for ten years, back in the 1980s. When he reaches state pension age. He will have foundation greater than the maximum single tier. True/False?

False ## Footnote BTS

Peter has died, aged 52, leaving an un-crystallised DC pension fund of £1,350,000. His DC pension provider currently does not offer any 'pension freedom' options. He is survived by a wife, Sue, and two daughters, Alice 24, and Sarah 18. With regards to death benefits.. Sue may take the entire pension fund as a lump sum tax-free. True/False?

False ## Footnote BTS

Peter has died, aged 52, leaving an un-crystallised DC pension fund of £1,350,000. His DC pension provider currently does not offer any 'pension freedom' options. He is survived by a wife, Sue, and two daughters, Alice 24, and Sarah 18. With regards to death benefits.. Alice is unable to receive a dependant pension. True/False?

True ## Footnote BTS

Peter has died, aged 52, leaving an un-crystallised DC pension fund of £1,350,000. His DC pension provider currently does not offer any 'pension freedom' options. He is survived by a wife, Sue, and two daughters, Alice 24, and Sarah 18. With regards to death benefits.. Sarah is eligible for a dependant pensior for five years. True/False?

True ## Footnote BTS

Peter has died, aged 52, leaving an un-crystallised DC pension fund of £1,350,000. His DC pension provider currently does not offer any 'pension freedom' options. He is survived by a wife, Sue, and two daughters, Alice 24, and Sarah 18. With regards to death benefits.. Sue, Alice, or Sarah could receive a lump sum from Peter's DC scheme. True/False?

True ## Footnote BTS

Charles is keen to reduce the tax liability on his UK equity portfolio. You correctly advise him that he may…  Dispose of his stocks & shares ISA, which is showing a loss, to offset equity portfolio gains. True/False?

False ## Footnote BTS

Charles is keen to reduce the tax liability on his UK equity portfolio. You correctly advise him that he may… Transfer ownership of his equity portfolio from himself to his RPS. True/False?

True ## Footnote BTS

Charles is keen to reduce the tax liability on his UK equity portfolio. You correctly advise him that he may… Transfer ownership of the equity portfolio into the names of his children. True/False?

False ## Footnote BTS

Charles is keen to reduce the tax liability on his UK equity portfolio. You correctly advise him that he may… Transfer ownership of the equity portfolio to his wife to utilise her CGT exemption. True/False?

True ## Footnote BTS

Jasdeep, aged 56, is changing employers after one year, in July 2021, and is unsure of the best action to take in relation to her occupational DC scheme. She should be aware that… a short-term refund of her personal contributions would not be available to her. True/False?

True ## Footnote BTS

Jasdeep, aged 56, is changing employers after one year, in July 2021, and is unsure of the best action to take in relation to her occupational DC scheme. She should be aware that… the preserved benefits she is entitled to would be revalued up to scheme NRD. True/False?

False ## Footnote BTS

Jasdeep, aged 56, is changing employers after one year, in July 2021, and is unsure of the best action to take in relation to her occupational DC scheme. She should be aware that… taking a CETV and transferring to her new employer's scheme may be an option. True/False?

True ## Footnote BTS

Jasdeep, aged 56, is changing employers after one year, in July 2021, and is unsure of the best action to take in relation to her occupational DC scheme. She should be aware that… the asset allocation of any preserved benefits would be switched to low risk. True/False?

False ## Footnote BTS

Jasdeep, aged 56, is changing employers after one year, in July 2021, and is unsure of the best action to take in relation to her occupational DC scheme. She should be aware that… she could crystallise her benefits mmediately if scheme rules permit this. True/False?

True ## Footnote BTS

True/False Flashcards

(212 cards)