Chapter 8 - Flexible Income Options

Question 1

Is taking the Uncrystallised Funds Pension Lump Sum (UFPLS) an MPAA trigger event?

Answer 1

Yes

Question 2

If a member has protected lump sum rights of more than £375,000 via enhanced protection, can they be paid UFPLS?

Answer 2

No

Question 3

When did capped drawdown close to new members?

Answer 3

5 April 2015

Question 4

What are the HMRC requirements of a short term annuity? (3)

Answer 4

Must be purchased using funds held in a drawdown pension
Be payable by an insurance company
Term is max 5 years

Question 5

Which annuity, conventional or flexible, triggers the MPAA?

Answer 5

Flexible annuity does trigger the MPAA
Conventional does not

Question 6

COBS 13 requires a provider to provide what at the point of sale of a new drawdown plan?

Answer 6

A Key Features Illustration

Question 7

What is a Type A critical yield?

Answer 7

Is the growth rate needed on a drawdown investment to provide and maintain income levels equal to that available under an equivalent annuity

Question 8

What is segmentation?

Answer 8

Where a member phases retirement over several years, and crystallises different pension pots at different times

Question 9

What restrictions are there on taking withdrawals from a pre-April 2015 capped drawdown pension?

Answer 9

Income is subject to 150% of the basis amount, but there is no minimum level of income

Question 10

Under COBS 19.9, the FCA sets out the annuity comparison information a provider must show when the annuity they are offering:

Answer 10

Provides more or less income than the market leading annuity

Question 11

Does taking capped drawdown trigger the MPAA?

Answer 11

No, as long as the withdrawals stay within the capped amount