1(5) - Context of pensions planning

Question 1

What act set up regulatory and compensation schemes regarding pensions

Answer 1

Pensions Act 1995

Question 2

What was the accounting rules which required companies to report pensions deficits/surpluses

Answer 2

FRS17

Question 3

What Act introduced the PPF

Answer 3

Pensions Act 2004

Question 4

Wheen was the State pension credit introduced

Answer 4

2003

Question 5

What was the first measure for pooest pension

Answer 5

Minimum income guarantee

Question 6

What happened on 6 April 2006

Answer 6

A Day: A single pesnion tax regime - replaced all previous regimes

Introduced Annual allowance/ Lifetime allowance

Question 7

What happened on 6 April 2016

Answer 7

Tapered annual allowance

Question 8

What happened 6 April 2023

Answer 8

Abolished lifetime allowance:
PCLS remained same £268,275

Question 9

When was stakeholder pensions introduced

Answer 9

2001

Question 10

When was automatic enrolment was introduced?

Answer 10

October 2012

Question 11

When was a big change in pension flexibility

Answer 11

6 April 2015

Question 12

When was the S2P introduced

Who was elgible

Answer 12

2002
Low earners and individuals reducing certain state benefits, such as carers allowance

Question 13

What happened to all pensions in April 2016

Answer 13

All previous state pensions apart from state guarantee credit were replaced by new state pension (single-tier state pension - 35years NICs)

Question 14

What was the alternative route for additional state pension before consolidation in April 2016

Answer 14

Individuals could “contract out” and receive additional state pension via DB scheme [so they did not receive any Additional state pension (most recently S2P)

Question 15

How has SP Age changed
Until 2010
2018
2020
2028

Answer 15

Male, Female

65, 60
65, 65
66, 66
67,67

Question 16

What are some challenges to adequite retirement income
[6]

Answer 16

Longevity
Amount in Pension pot
Companies changing scheme type
Pension scandal
Failing stock markets, gielt yields and annuity rates
Complexity of pensions

Question 17

What are some incentives of saving for retirement from the government

Answer 17

Income tax relief on contribuutions
Contributions made by employers - corporation tax or income tax purposes
Investment profits of fund - exempt from income tax/CGT
PCLS
Pass DC scheme to member beneficiary before 75

Question 18

What is the max amount employer can pay for financial advise about pensions before being taxed

Answer 18

£500 for income/national insurance purposes per employee

Question 19

What is the pension advice allowance

Answer 19

Payment of up to £500 can be taken from DC scheme - subject to 3 payments from members lifetime

Question 20

What is the state pensions (ALL)

Answer 20

Basic state pension [normal]

In addition to (if elgibile)

1961-1975: **State Graduated pension scheme **(First state pension to provide employees with additional earnings related pension on top of BSP

1978-2002: State Earnings Related Pension Scheme (SERPS) (Earnings related part of state pension that applied to employees between 1978 and 2002)

2002: State Second Pension (S2P): (Replaced SERPS in 2002) - applies to employed/carers and some people with long term disabiltiies who have broken records

Question 21

What are the factors that affect the benefits of DB schemes

Answer 21

Pensionable Service
Pensionable remuneration
Accrual rate

Question 22

Who can death benefits be paid to?

Answer 22

Dependent:
- Child under 23
- Member widow/civil partner
- Child of member (ill)
- Civil partnership

Nominee
- Individual nominated by member

Successor
- Nominated by dependent/nominee