Chapter 2.1 MCQs Flashcards
2.1 CII MA *) Which of the following sources of income are classed as relevant UK earnings for pension purposes?
a. Employment income.
b. Dividend income.
c. Interest from a bank account. d. Earnings from an overseas Crown employment, subject to UK tax.
e. Income arising from carrying on or the exercise of a trade, profession or vocation.
f. Rental income from a buy-to-let property.
a. Employment income.
d. Earnings from an overseas Crown employment, subject to UK tax.
e. Income arising from carrying on or the exercise of a trade, profession or vocation.
(CII) In which of the following scenarios will a PCLS be treated as an unauthorised payment?
a. Carrie receives a PCLS of £6000 from her personal pension plan and two months later she decides to recycle £2000 into a new personal pension plan
b. George receives a PCLS of £50,000 from his Employers defined benefits scheme. He is currently contributing £200 per month into a personal pension plan and six month later he recycles £30,000 of the PCLS into the personal pension plan.
c. Hannah receives a PCLS of £30,000 from her personal pension plan and immediately recycles £5,000 of this back into her personal pension plan which she currently contributes £1,500 per month.
d. Phil receives a PCLS of £25,000 from his companies group personal pension plan. Six months later he receives a large inheritance and uses part of this to pay £20,000 into a new personal pension plan.
b. Yes: the PCLS exceeds £7,500, the contribution of £30,000 is significantly higher than the contributions currently being paid and the contribution exceeds 30% of the PCLS.
a. No: the PCLS is less than £7,500.
c. No: although the PCLS exceeds £7,500 the contribution is less than 30% of the PCLS and the increase in contribution would not be deemed to be significant.
d. No: although the PCLS exceeds £7,500 and the contribution exceeds 30% of the PCLS the contribution has been made as a result of an inheritance and therefore would not be treated as being pre-planned.
Which one of the following events occurring on or after 6th April 2015 would not trigger the money purchase annual allowance rules for the member?
a. Drawing an income from a Flexi-access drawdown fund
b. Taking an uncrystallised funds pension lump-sum payment.
c. Converting a pre-6th April 2015 capped drawdown pension fund into a Flexi-access drawdown fund and immediately drawing an income.
d. Crystallising benefits in a defined benefit scheme into a PCLS and a scheme pension
d. Crystallising benefits in a defined benefit scheme into a PCLS and a scheme pension
Receiving a pension commencement lump sum does not trigger the MPAA rules. The funds come from a defined benefit scheme and so the scheme pension purchased cannot trigger the MPAA rules.
Simon, aged 57, is a member of a defined contribution arrangement and a defined benefit scheme. On 6 April 2019 he takes his first withdrawal from his flexi-access drawdown plan. His pension input for 2019/20 is £12,000 into his defined contribution arrangement and £29,000 into his defined benefit scheme. He has no available carry forward and is not subject to the tapered annual allowance in 2019/20.
Which of the following correctly shows the chargeable amount that will apply in calculating Simons annual allowance tax charge?
a. Default chargeable amount of £1,000
b. Alternative chargeable amount of £8,000
c. Default chargeable amount of £8,000
d. Alternative chargeable amount of £8,000
d. The alternative chargeable amount is £8,000 (i.e. £0 excess in respect of the defined benefit scheme as input is less than £36,000 plus £8,000 in respect of the defined contribution scheme as the input of £12,000 is £8,000 above the MPAA of £4,000).
