Chapter 6 Flashcards
Features of DC Contracts
GPP can accept transfers
RAC - no extra TFC but can have GAR’s
Occ DC - employer sets rules inc if flexible options available
When do SMPI’s not need to be sent/assumptions?
No SMPI for RAC or SASS
Accumulation rate set by provider - based before charges
Inflation 2.5%
Retire Expenses 4% of annuity value
Trust based vs Contract based
Features broadly the same
Trust - Typically Net Pay, Better protection & relationship with employees
Contract - Relief at source, less costly & time consuming
Master Trust Information
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
What is the charge control if a DC is used as qualifying
0.75% per year
How many members on a Independent Governance Committee
Min of 5 & majority independent
Features of SASS
Under Trust (NOT Master Trust)
TPR
Occ Dc
Can lend 50%
Not Earmarked
More Admin
SMPI not needed if all members are trustees
Features of SIPP
Contract Based
FCA
Ind Dc
Can’t lend
Earmarked
Less Admin
SMPI annually
What happens if an employee continues conts after NPA for employer sponsored GPP
The employer must continue to contribute too
What effect would any occ scheme transitional protection for lump sums accrued before A-day have
likely protected TFC
DC ill health options
Income
Income/PCLS
Small Pot
UFPLS
Will not be fully tax free.
Pension Cont Insurance Features
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
Occ Refund of employee conts
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.
Occ Transfer value
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.
Occ Preserved benefit
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.
Transferring flexible benefits
uncrystallised right to transfer value until the day of cry. even if after NPA
Adviser should check if thinking about tsfr
Compare charges
Fund past performance
Transfer penalties/WP MVR
GAR, Bonus, growth rates (RAC)
No additional TFC on RAC
Stakeholder features
The minimum cannot be less than £20
Must offer lifestyle as default fund
CANNOT use Cash, Credit card or debit cards (any cards)
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?
Section 32
What is the main way in which a collective money purchase scheme differs from a traditional defined contribution pension scheme?
Assets are pooled between members
What is the earliest NRA when DC benefits can be taken
55 currently (57 from 2028)
Features of RAC
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
