1. Political, Social, Legal

Question 1

By what % do most pensioners’ income reduce at retirement?

Answer 1

37%+

Question 2

What % of under 55s have <£10k assets?

Answer 2

20%

Question 3

LISA key features (4)

Answer 3

£4k p.a contribution until 50yo
25% govt bonus paid monthly
Withdraw tax-free from 60yo
Early withdrawal subject to 25% charge

Question 4

What were the key outcomes from the Penions Acts 1995, 2004, 2015

Answer 4

1995; fraud prevention & improved scheme admin
2004; Pension Protection Fund & Pensions Regulator
2015; ability to access pension without min income & free guidance

Question 5

What is the FCA’s role in pension regulation? (2)

Answer 5

Regulates personal pensions & marketing of pensions to retail customers

Question 6

What 3 orders can the Pensions Regulator issue?

Answer 6

Contribution notice; require employer to pay debt to fund or PPF

Financial support direction; require scheme to be funded

Restoration order; assets restored to scheme

Question 7

Key features of Pension Protection Fund
Rates above/below pension age

Answer 7

Compensates members of DB schemes whose employer has become insolvent since 2005

100% if reached pension age or ill health
90% if below pension age

Question 8

By what rate does compensation accrue between:
- Insolvency and pension age (2)
- From pension age

Answer 8

Pre-2009 service: inflation / 5%
Post-2009 service: inflation / 2.5%

From pension age: benefits accrued since 1997; CPI / 2.5%

Question 9

Key features of Financial Assistance Scheme
- period
- amount
- accrual rate pre- & post- pension age

Answer 9

Compensation for employer liquidations between 1997-2005
Max claim 90% of entitlement @ wind-up
Accrued pension increases from wind-up to pension age by CPI / 5%
From pension age, post-1997 service increases by CPI / 2.5%

Question 10

What are the 3 possible structures for a pension scheme?

Answer 10

Master trust; provider appoints trust company to act as trustee

Contract-based / work-based; agreement between employer and employee - employer arranges scheme

Deed poll; provider appointed as scheme admin - no trustee

Question 11

Describe the 3 ways of dealing with pensions upon divorce:
Offsetting (1)
Earmarking (2)
Splitting/Sharing (3)

Answer 11

Offsetting; pension value retained by member but ex-spouse may get higher share of other assets

Earmarking; court allocates member’s future pension to ex-spouse, paid on crystallisation.
- member pays tax on whole withdrawal before it passes to ex-spouse

Splitting/Sharing; court decides Cash Equivalent Transfer Value (CETV) and splits pension as %.
- each partner has own fund
- split does not contribute to annual allowance but does to lifetime allowance

Question 12

When is the SPA rising, and to what age?

Answer 12

68 over 2044-46
Could be brought forward to 2037-39