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I reached SPA in 2010. How long must I defer my pension before I can receive a higher income?
5 weeks
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B3A SPA reached before 6 April 2016
I reached SPA in 2011. If I defer my State Pension benefits, how does my income increase?
Your weekly payment will increase by 1% for every 5 weeks deferred
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B3A SPA reached before 6 April 2016
I reached SPA in 2011. If I defer my State Pension benefits by more than 12 months, how is the lump sum option calculated?
The amount of weekly payments deferred
Plus weekly compound interest
2% above the BoE rate
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B3A SPA reached before 6 April 2016
I reached SPA in 2017. How long must I defer my State Pension benefits before I can receive a higher income?
9 weeks
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B3B SPA reached on or after 6 April 2016
I reached SPA in 2018. If I defer my State Pension benefits, how does my income increase?
Your weekly payment will increase by 1% for every 9 weeks deferred
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B3B SPA reached on or after 6 April 2016
I reached SPA in 2017. If I defer my State Pension benefits by more than 12 months, how is the lump sum option calculated?
You are not able to take the deferred amount as a lump sum
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B3B SPA reached on or after 6 April 2016
I reached SPA in 2021. I have been deferring my SP benefits for 2 years now but die before taking the benefits.
What can my dependants claim on this?
It is not possible for a surviving spouse/civil partner to inherit deferred State Pension
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B3B SPA reached on or after 6 April 2016
I reached SPA in 2021. I have been deferring my SP benefits for 2 years now but die before taking the benefits.
What can my estate claim?
You can claim up to three months’ arrears of State Pension
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B3B SPA reached on or after 6 April 2016
Who regulates SIPPs?
The FCA
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The principal purpose of the National Employment Savings Trust (NEST) is to:
Enable smaller employers to meet the auto-enrolment obligations
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What is the currently projected SPA of someone who is now 30 years old?
68 years old
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What incentive does an employer receive from the government to provide access to financial advice for members of its pension schemes?
The cost of pensions advice
up to £500 p.a.
is not a taxable benefit for employees
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A Section 32 buy-out policy includes provision for the employees contracted-out portion of State Earnings-Related Pension Scheme (SERPS) by the provision of a guaranteed minimum pension (GMP). If the fund value is insufficient to provide the GMP element, which party is liable for the shortfall?
The current provider
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Marc is a higher-rate taxpayer. He is the beneficiary of a flexi-access drawdown fund valued at £450,000, which belonged to his mother who has just passed away aged 82. If he takes the entire fund as a lump sum, what is the tax treatment?
There would be no additional LTA test
The sum would be taxed at his marginal rate
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Gordon is employed and has a salary of £60,000. He has NOT yet made a pension contribution for the tax year 2022/2023 and has a total unused carry forward allowance of £70,000. What is the maximum tax-relievable personal contribution he can make in the tax year 2022/2023?
£60,000
Might look like £110,000 but it is still limited to his relevant UK earnings for that year
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Claudia, aged 57, has triggered the money purchase annual allowance (MPAA) in the current tax year, as a result of accessing flexi-access drawdown for the first time. Will the MPAA apply:
All subsequent tax years
or,
In the current and all subsequent tax years.
In the current and all subsequent tax years.
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Stan has two personal pensions and he took capped drawdown benefits from the first in September 2005. At 6 April 2006, the maximum drawdown income was £10,000 per annum. It has now increased to £12,000 per annum. He now intends to take benefits from the second pension. In terms of the lifetime allowance, the first pension will be valued at:
£240,000
It might look like it’s 25:1 from the date he entered capped dd (i.e. £250k) but it must be another BCE calculation and it is 20:1 against the current maximum income
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A member of an occupational pension scheme dies and his dependants receive a lump-sum death- in-service benefit. Assuming there is no transitional protection, what key factor dictates whether any of this payment incurs a tax charge?
The amount of the lump-sum payment
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If your UK pension pays to you when you are residing in a country without a double taxation agreement with the UK, how is the income taxed?
Taxable under PAYE and may be subject to tax in your resident country
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Your client, aged 60, works on a part-time basis. He intends to take the benefits from his former occupational pension scheme which includes a PCLS of £38,000.
He currently pays £300 gross per month into a personal pension and once he receives his PCLS, he plans to pay in a single contribution of £15,000 gross. He should be aware that in respect of recycling:
the entire PCLS is likely to be treated as an unauthorised payment.
True/False?
True
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Your client, aged 60, works on a part-time basis. He intends to take the benefits from his former occupational pension scheme which includes a PCLS of £38,000.
He currently pays £300 gross per month into a personal pension and once he receives his PCLS, he plans to pay in a single contribution of £15,000 gross. He should be aware that in respect of recycling:
only the £15,000 single contribution is likely to be treated as an unauthorised payment.
True/False?
False
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Your client, aged 60, works on a part-time basis. He intends to take the benefits from his former occupational pension scheme which includes a PCLS of £38,000.
He currently pays £300 gross per month into a personal pension and once he receives his PCLS, he plans to pay in a single contribution of £15,000 gross. He should be aware that in respect of recycling:
only £7,500 of the f15,000 single contribution is likely to be treated as an unauthorised payment.
True/False?
False
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Your client, aged 60, works on a part-time basis. He intends to take the benefits from his former occupational pension scheme which includes a PCLS of £38,000.
He currently pays £300 gross per month into a personal pension and once he receives his PCLS, he plans to pay in a single contribution of £15,000 gross. He should be aware that in respect of recycling:
the single contribution will be allowed as it is less than 40% of the PCLS.
True/False?
False
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Your client left his company after working there for 10 years. He had been contributing to his employer’s group personal pension scheme at the time but wants to continue growing this fund by continuing contributions. You tell him…
That he can continue to contribute even after leaving the service.
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Your clients are going through a divorce. How would offsetting work?
One would retain their own pension fund by transferring other assets
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An employer has asked the trustees of its qualifying occupational defined contribution pension scheme to introduce higher charges for deferred members of the scheme. The trustees should be aware that
the trustees have a duty to take into account the interests of all members.
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Your client, a higher-rate taxpayer, has been a member of an occupational defined benefit pension scheme for 18 months and has made personal contributions of £6,000 gross. If he now leaves the scheme, how will any refund be treated for tax purposes?
It will be subject to a 20% tax charge
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Paul became a deferred member of a defined benefit occupational pension scheme in January 2014, after two years’ service. What minimum rate of revaluation, if any, will be applied to his deferred benefits?
CPI to a maximum of 2.5%
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Does your employer legally have to offer AVCs for a DB pension?
No
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The technical provisions of a defined benefit occupational pension scheme are the …
… valuation of the scheme’s liabilities.
In essence it is how much approximately a scheme expects to have to pay out in total over its lifetime with the current arrangements in place
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Within what maximum period, if any, should a newly-appointed trustee of a defined benefit occupational pension scheme reach the required level of trustee knowledge and understanding?
6 months
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What retirement options, if any, exist for an employee, aged 48, who has just been declared unfit to work through ill health?
Benefits may be paid
subject to the agreement of the scheme trustees
acting in accordance with the scheme rules.
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Under a public sector pension scheme, what is normally the maximum permissible pension commencement lump sum at retirement?
120/80ths of the final pensionable salary.
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Your client has an uncrystallised Personal Pension worth £100,000. If he took the full PCLS, would the MPAA be triggered?
No
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How is a serious ill health lump sum taxed once you are over 75?
Fully at marginal rate
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My deferred State Pension lump sum is £10,000. I earn £5,000 below the Higher rate tax band. What is the tax position on the £10,000 lump sum?
£10,000 fully charged at 20%
The deferred State Pension lump sum does not push you into a new tax band and is fully taxed at whichever band it initially falls in
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Joan is approaching State Pension age and is looking at the possibility of claiming Pension
Credit. Which State benefit is taken into account when assessing her eligibility for Pension Credit?
Carer’s Allowance.
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Sofia, aged 64, has been advised that her foundation amount will be higher than the full rate State Pension. She should be aware that at State Pension age she …
will receive the excess foundation amount as additional income.
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What are the rules for a PCLS recycling to be unauthorised?
All of these are satisfied:
1. Contributions increase
2. Preplanned
3. >£7,500
4. >30%
What is the tax charge on unauthorised payments?
40% income tax charge
If unauthorised payments exceed 25% of pension fund then 15% surcharge added
40% same as de-registration tax charge as it is no longer authorised
Does short service refund apply to DB or DC? How long do you have to leave?
Applies to both
20% up to £20k and 50% after
DB (CETV) is 2 years
DC is 30 days
What minimum amount of revaluation would be applied to the benefits of a DB deferred member?
CPI to a max of 2.5%
“For every £500 of savings above £10,000, you are treated as having £1 in income.”
What does this apply to?
Means testing pension credit
What are the rules on borrowing within a SIPP?
50% of net assets in total are allowed
What are the rules on lending from a SIPP?
Not allowed
What are the rules on SSAS borrowing money?
Can borrow 50% of net assets in total
What are the rules on SASS lending?
Can lend up to 50% of net assets
To sponsoring employer
