Dates

Question 1

When did the new state pension come in?

Answer 1

6th April 2016

Question 2

A-Day - when & what?

Answer 2

6th April 2006 - introduction of the lifetime allowance.

Question 3

What significant change happened in relation to defined benefit pensions in April 2011?

Answer 3

Defined benefit pension increases calculated in line with CPI rather than RPI

Question 4

If you go above the lifetime allowance - what happens?

Answer 4

You pay marginal tax on anything above the LA

Question 5

What is the max PCLS you can take?

Answer 5

25% of the lifetime allowance - £1,073,100 so

The only significance of the lifetime allowance now is that the maximum PCLS you can take is 25% of it. So £268,275.

Anything above the PCLS is taxed at marginal rate.

Question 6

Complaints timeline

Answer 6

• acknowledge 5 days
• end of 4 weeks still investigating
• end of 8 weeks, final decision

If consumer unhappy with decision they then have 6 months to complain to FOS

Question 7

What is the max comp the FOS can dish out?

Answer 7

£415k + interest? + costs + interest on costs

Question 8

If you had primary protection - How do you work out what PCLS (cash) your entitled to after A day?

Answer 8

Whatever cash (PCLS) you’re entitled to as of A Day Increase it by 20%

Question 9

Money Purchase AKA

Answer 9

Defined Contribution

Question 10

What triggers the Money Purchase Annual Allowance?

Answer 10

• Taking money out via UFPLS
• Income from flexi access drawdown (income - not cash lump sump, this won’t trigger it)
• drawing over 1.5x gad rate from capped drawdown
• Any annuity that isn’t guaranteed for life - so must trigger it but guaranteed fixed for life annuities don’t.

What DOESNT trigger it?

• 25% cash PCLS
• scheme pension from employer (scheme pension pays you for life)
• if you buy a lifetime annuity

Question 11

What is the money purchase annual allowance?

Answer 11

£10k max annual contribution to a DC scheme once MPAA has been triggered.

Question 12

Capped drawdown

Answer 12

Capped at 150% (1.5x) GAD Rate - government actuary department.

• once you go over 150% you automatically switch to flexible access drawdown.
• Not been able to take one out since April 2015
• Old ones still in existence
• reason to retain is to be able to continue paying over £10k into pension & also you can drop other pensions into the capped drawdown scheme. So you can draw some pension without triggering MPAA.
• Death cancels it out and for beneficiary it gets switched to a flexible access drawdown.
• every 3 years you have to review income limits, then once you get to 75 it’s an annual basis.

Question 13

Can you carry forward the £10k allowance if you’ve triggered MPAA?

Answer 13

No - £10k per year, use it or lose it.

Question 14

Once triggered when does the MPAA kick in?

Answer 14

As soon as it’s triggered, even if it’s part way through the year.

Question 15

How does MPAA affect DB contributions?

Answer 15

It doesn’t except if full £10k MPAA has been used max £50k in DB scheme (£60k total annual allowance)

If you pay £15k into a DC scheme - you can still pay £50k into a DB as you’ll be taxed on the £5k over in the DC scheme

Question 16

How long does a scheme member get to apply for a refund of member contributions to a DC/Money purchase scheme?

Answer 16

1 month

Question 17

How long does a member get to apply for a refund of contributions to a workplace DB / Final Salary scheme?

Answer 17

Within 2 years

Question 18

The technical provisions of a defined benefit occupational pension scheme are the…

Answer 18

Valuation of the schemes liabilities

Question 19

What is the administration levy of a PPF based on?

Answer 19

Number of members

Question 20

What is a scheme based levy of PPF based off?

Answer 20

S179 valuation and liabilities

Question 21

What constitutes an unauthorised payment in regards to recycling PCLS?

Answer 21

• More than £7500
• More than 130% of expected contribution
• more than 30% of original PCLS

I also think 12 months comes into at some point

Question 22

When it comes to a refund of contributions on a DB scheme, what are the tax implications?

Answer 22

20% on the first £20,000 and 50% on the balance.

Question 23

Is the state pension paid gross or net?

Answer 23

Gross

Question 24

How would you break down a phased retirement? Year one

Answer 24

• Take total fund figure (£20,000)
• Work out 25% tax free (£5,000)
• Multiple balance by annuity rate (£15,000 x 5.3% = £636)
• Add TFC + annuity income (£5000 + £636)
  = £5636 year 1 income

Question 25

When deferring the lump sum from a basic state pension, what is the situation with tax?

Answer 25

The lump sum from deferring the basic state pension is incredibly tax efficient.

The whole amount is taxed in full at time of taking it and at the same rate as the first £1 so if Jack has £3000 of basic rate tax headroom, the whole £16,000 payment will be taxed at 20% even if the payment takes him into a higher tax bracket.

Question 26

Which benefit is taken into account when assessing the eligibility for pension credit?

Answer 26

Carers allowance

Question 27

What is the foundation amount and what is the protected payment in relation to the old state pension?

Answer 27

The foundation amount is the amount calculated that someone is entitled to based on NI contributions from before April 2016.

The protected payment is the amount by which the foundation amount exceeds the current new state pension.

Question 28

Do SSAS have to send money purchase illustrations?

Answer 28

No, they are one of the money purchase schemes exempt from sending an SMPI

Question 29

What date did things change for deferral of state pension?

Answer 29

Changes are influenced by whether someone reached SPA before 6.4.16 - when the new state pension was introduced or after.

• 5 to 9 weeks
• no lump sum
• 10.4% to 5.78% income increase
• missed payments used to be paid to the estate on death - now it’s just 3 months backdated.

Can only defer SP once but this can be done after starting it.

Question 30

Where a DB benefit comes into payment after 6 April 2006, any income is tested by using a factor of?

Answer 30

Where a DB benefit comes into payment after 6 April 2006, any income is tested by using a factor of 20.

So, a pension of £20,000 coming into payment has a value for LTA purposes of £400,000 (£20,000 x 20).

Any lump sum paid in addition to the DB pension (for example where a DB scheme offers an accrual rate of 1/80th as pension plus 3/80ths as a lump sum on top) the lump sum is tested against the LTA in its own right.