Legislative Context

Question 1

What is insurable interest?

Answer 1

The Life Assurance Act 1774 (the Gambling Act) introduced the need for insurable interest to exist at the time the policy is taken out in order for the contract of insurance to be valid.

Question 2

What principles did the Gambling Act establish?

Answer 2

1 - The person taking out the life insurance must have an interest in the life insured.
2 - The name of the interested person must be shown in the policy.
3 - No greater sum can be covered than the amount of that interest.

Question 3

What is the Annual Allowance?

Answer 3

The AA controls the yearly tax relief available on contributions paid in for an individual across all registered pension schemes they are in, in any tax year. The AA for 2022/23 is £40,000.

Question 4

What is the Lifetime Allowance?

Answer 4

The LTA controls the tax advantages for payments made from registered pension schemes. With registered GLA, this applies to lump sums paid on death. The LTA for 2022/23 is £1,073,100.

Question 5

What is an arrangement?

Answer 5

The parts of an individual’s benefit entitlement promised under any registered pension scheme. There are 4 types of arrangements: other money purchase, cash balance benefit, defined benefit, and hybrid

Question 6

Which act extended contractual rights?

Answer 6

Contracts (Rights of Third Parties) Act 1999

Question 7

What is GDPR and what information does it apply to?

Answer 7

General Data Protection Regulation applies to personal data, which is anything that can help to identify an individual.

Question 8

What is the Access to Medical Reports Act 1988?

Answer 8

It is an act that allows individuals to see any medical reports written about them for employment or insurance purposes.

Question 9

What is A-Day?

Answer 9

On 6th April 2006, the current single tax regime was introduced to simplify the existing legislation and heralded the most radical change in pensions tax laws in recent history.

Question 10

What is an approved scheme?

Answer 10

It is the equivalent of a registered scheme. The key elements were the contributions that could be made in any tax year and the salary that could be taken into account in calculating contributions

Question 11

What is an unapproved scheme?

Answer 11

It is the equivalent of non-registered schemes and was the only option to provide group life cover for members of trade bodies or affinity groups.

Question 12

What is direct discrimination?

Answer 12

Where a person is treated less favourably because of a protected characteristic

Question 13

What is indirect discrimination?

Answer 13

Where the treatment, although appearing to be neutral, has the effect of disadvantaging a person with a particular protected characteristic

Question 14

What are the data protection principles introduced by GDPR?

Answer 14

All personal data should be:
1 - processed lawfully, fairly and in a transparent manner in relation to the individual;
2 - collected for specified and legitimate purposes;
3 - accurate and up to date;
4 - processed in a manner that ensures appropriate security of the personal data

Question 15

What constitutes a contract of employment?

Answer 15

This is anything verbal or in writing that the employer gives the employee. This includes a job offer letter, a staff handbook, pension scheme rules and even verbal discussions. An employee’s contractual right to any GR benefits included in their benefits package stems from their employment contract with their employer.

Question 16

Who can register a new pension scheme with HMRC?

Answer 16

Registration can only be done by the scheme administrator on the pensions scheme online system.

Question 17

What is the process of registering a new pension scheme with HMRC?

Answer 17

1 - Pre-register as a scheme administrator;
2 - When pre-registration confirmation has been received, the SA can apply for a SA ID;
3 - Once ID and activation token acquired, SA can set up a user account and password.

Question 18

What are the key elements of a registered scheme?

Answer 18

1 - It must have a named scheme administor;
2 - Employer contributions qualify for tax relief as a business expense (only if assessed as being used exclusively for business purposes);
3 - Membership doesn’t need to be restricted to employees and directors;
4 - There is no limit on the benefits that can be provided;
5 - The maximum age up to which a dependant’s pension can be paid to a child is 23

Question 19

What are non-registered schemes also known as?

Answer 19

Employer-Financed Retirement Benefits Schemes (EFRBS)

Question 20

What are the key elements of a non-registered scheme?

Answer 20

1 - Employer contributions will qualify for tax relief as an expense of business (if assessed as being exclusively for business purposes);
2 - Employees won’t be subject to a P11D tax charge on contributions paid by employer on their behalf;
3 - Lump sums payable on death won’t be subject to a 40% income tax charge or count towards an individual’s LTA;
4 - No potential chargeable event tax charge on second or subsequent deaths for excepted group life policies