Unit 1 - Context of pensions planning Flashcards
(21 cards)
In recent years, the fastest population increase has been in the number of
people aged:
a. Under 16.
b. Under 35.
c. 65 to 75.
d. 85 and over.
d. 85 and over.
Paul reached his State Pension age in March 2016. He had always been selfemployed. Which State Pensions, if any, did Paul build up an entitlement to?
a. No State Pension.
b. Basic State Pension only.
c. Basic State Pension and SERPS only.
d. Basic State Pension, SERPS and the S2P.
b. Basic State Pension only.
Since Paul has always been self-employed, and retired before April
2016, he has only built up an entitlement to the Basic State Pension.
Millicent is about to retire and take benefits from her company’s group personal
pension plan. Which of the following factors will be used to determine the level of
pension she receives in retirement?
a. The size of her fund.
b. Her final pensionable remuneration.
c. Her pensionable service with the company.
d. The scheme’s accrual rate.
a. The size of her fund.
Albert, who reached State Pension age in November 2015, was employed for his
entire working life since the age of 16. He was never a member of a contracted out
pension scheme. Which State Pensions are being paid to Albert?
Albert reached the age of 65 in November 2015 and therefore was employed since
1966. He will have built up an entitlement to the Basic State Pension as well as the
three earnings related State schemes, i.e. the Graduated pension scheme, SERPS
and the S2P
When death benefits are paid from a defined contribution pension plan, a nominee is defined as any individual:
a.
other than a successor, nominated by a member to receive the death benefits.
b.
nominated by a dependant to receive the death benefits.
c.
nominated by a successor to receive the death benefits.
d.
other than a dependant, nominated by a member to receive the death benefits.
d.
other than a dependant, nominated by a member to receive the death benefits.
Under current legislation, a 52 year old employee is most likely to receive his State Pension:
a.
at the age of 68.
b.
at the age of 66.
c.
after the age of 68.
d.
at the age of 67.
d.
at the age of 67.
Maggie is a member of an occupational defined contribution scheme and when she retires she plans to purchase a lifetime annuity. Who will bear the investment risk and the annuity risk?
a.
Maggie will bear the investment risk and the scheme will bear the annuity risk.
b.
Maggie will bear both the investment risk and the annuity risk.
c.
The scheme will bear the investment risk and Maggie will bear the annuity risk.
d.
The scheme will bear both the investment risk and the annuity risk.
b.
Maggie will bear both the investment risk and the annuity risk.
Aditya only has an uncrystallised personal pension. If he wishes to access his benefits flexibly, he can take them in the form of a:
a.
flexi-access drawdown, capped drawdown or UFPLS.
b.
flexi-access drawdown or UFPLS.
c.
capped drawdown or UFPLS.
d.
flexi-access drawdown or capped drawdown.
b.
flexi-access drawdown or UFPLS.
What causes annuity rates to fall?
Falling gilt yields
Name 3 problems which have meant people may not have a sufficient income in retirement
- People are living longer – workers have to keep paying more for retirees
- Lots of people are not on track to have the right amount in retirement
- Loss of many DB schemes being offered
What are the 2 key demographic trends which may have an impact on peoiple’s retierement income
an increase in the retired population as a % of the total population - workers have to supoport retirees
Life expectancies are also increasing - meaning people will need pension income for longer
Name 2 incentives to save in to a pension
o Tax relief on contributions
o Employer can treat it as a business expense for corporation tax
o Profits in the fund are free of CGT and income tax
Name 2 disincentives for why people do not save in to pensions
o Limit to max tax free amount can be taken
o Pensions can be complex for many
o Benefits can’t be taken pre 55 unless in poor health
What is the pensions advice allowance?
£500 tax free which can be taken out of a DC scheme to pay for advice
Pre 2016, when would someone receive the State Pension Graduated Scheme and the Basic state pension?
for those who hit SPA from 1961-1975
Pre 2016, when would someone receive the State Earnings Related Pensions Scheme (SERPS) and the Basic state pension?
SPA between 1978 – 2002
Pre 2016, when would someone receive the State Second Pension (S2P) and the Basic state pension?
SPA between 2002- 2016
For DB schemes, can a PCLS be taken at retirement?
Yes
For Capped drawdown, who sets the amount that can be taken per year?
Government’s Actuary Department
Regarding death benefits for DC schemes, who would a nominee be?
Someone other than dependant who was nominated by member to receive death benefits
Regarding death benefits for DC schemes, who would a successor be?
nominated by nominee/ dependant to receive benefits
