Chapter 6

Question 1

Features of DC Contracts

Answer 1

GPP can accept transfers
RAC - no extra TFC but can have GAR’s
Occ DC - employer sets rules inc if flexible options available

Question 2

When do SMPI’s not need to be sent/assumptions?

Answer 2

No SMPI for RAC or SASS
Accumulation rate set by provider - based before charges
Inflation 2.5%
Retire Expenses 4% of annuity value

Question 3

Trust based vs Contract based

Answer 3

Features broadly the same
Trust - Typically Net Pay, Better protection & relationship with employees

Contract - Relief at source, less costly & time consuming

Question 4

Master Trust Information

Answer 4

One legal trust & one bord with each employer with their own division.
NOT trustees from each employer
Ongoing management & oversight
Consolidated accounts & governance
Cost Effective & Greater Simplicity

Question 5

What is the charge control if a DC is used as qualifying

Answer 5

0.75% per year

Question 6

How many members on a Independent Governance Committee

Answer 6

Min of 5 & majority independent

Question 7

Features of SASS

Answer 7

Under Trust (NOT Master Trust)
TPR
Occ Dc
Can lend 50%
Not Earmarked
More Admin
SMPI not needed if all members are trustees

Question 8

Features of SIPP

Answer 8

Contract Based
FCA
Ind Dc
Can’t lend
Earmarked
Less Admin
SMPI annually

Question 9

What happens if an employee continues conts after NPA for employer sponsored GPP

Answer 9

The employer must continue to contribute too

Question 10

What effect would any occ scheme transitional protection for lump sums accrued before A-day have

Answer 10

likely protected TFC

Question 11

DC ill health options

Answer 11

Income
Income/PCLS
Small Pot
UFPLS
Will not be fully tax free.

Question 12

Pension Cont Insurance Features

Answer 12

Premiums are separate insurance contract
No Tax Relief upon claim
Cont paid net of basic tax
Deferred period is usually 26 weeks
Claim mostly limited to £3600

Question 13

Occ Refund of employee conts

Answer 13

Less than 30 days of qualifying service
Check if month is more than 30 days i.e. August 31 days
It is likely that any transfer value will only be accepted by a stakeholder pension due to the potentially small amount involved.

Question 14

Occ Transfer value

Answer 14

At least 3 months service & must offer preserved option
It is likely that any transfer value will only be accepted by a stakeholder pension due to the potentially small amount involved.

Question 15

Occ Preserved benefit

Answer 15

At least 30 qualifying days
It is likely that any transfer value will only be accepted by a stakeholder pension due to the potentially small amount involved.

Question 16

Transferring flexible benefits

Answer 16

uncrystallised right to transfer value until the day of cry. even if after NPA

Question 17

Adviser should check if thinking about tsfr

Answer 17

Compare charges
Fund past performance
Transfer penalties/WP MVR
GAR, Bonus, growth rates (RAC)

No additional TFC on RAC

Question 18

Stakeholder features

Answer 18

The minimum cannot be less than £20
Must offer lifestyle as default fund

CANNOT use Cash, Credit card or debit cards (any cards)

Question 19

A defined contribution pension arrangement was set up in 1998 to receive a transfer in from a previous employer’s defined benefit scheme. If the scheme provides benefits at least equal to the Guaranteed Minimum Pension at State Pension Age, what type of scheme is it?

Answer 19

Section 32

Question 20

What is the main way in which a collective money purchase scheme differs from a traditional defined contribution pension scheme?

Answer 20

Assets are pooled between members

Question 21

What is the earliest NRA when DC benefits can be taken

Answer 21

55 currently (57 from 2028)

Question 22

Features of RAC

Answer 22

Not since 1988
Some Offer GAR’s
No GMP
On death before retirement only contributions with interest are returned. Although this could be more restricted so no interest