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CII > R04 > Flashcards

R04 Flashcards

1
Q

Autoenrolment introduced when? Single SP?

A

2012
2016

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2
Q

Pension Minimum Funding?
PPF formed?

A

1995
2004

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3
Q

A-Day?
Main Changes?

A

04/2006
ATAC
- Allowances: LTA, AA
- Tax Regime simplified
- Annuity Avoidance/Alternatives
-Concurrency: Personal & Occupational

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4
Q

Annuities increase by 3% for each?

A

+30 basis points in GILTs

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5
Q

Financial Advice exempt from IT/NICs up to?
Pensions advice allowance?

A

£500
£500, on max x3 occasions

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6
Q

DB Pension benefits depend on?

A

Time Served
Renumeration
Accrual Rate

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7
Q

Tax regime for ‘registered schemes outlined in?

A

Pensions Tax Manual

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8
Q

To qualify for tax relief must be?

A

<75 +
Relevant Earnings
Resident in UK (Or prior 5yrs)

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9
Q

Net Pay Method?

A

PCs before IT deducted (IT on ‘Net’ amount)

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10
Q

Relief at Source?

A

PCs paid after BR tax, further relief claimed for HR/AR

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11
Q

Self-Ax Tax deadlines?

A

End of Jan: 50%
End of July: 50%
Following End of jan: Balancing Payments

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12
Q

Salary Sacrifice useful as?

A

Reduced NICs, could be recycled. May return allowances.

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13
Q

General Recycling PCLS rules?

A

Subsequent higher PC, or, additional PCs >30% PCLS.
Pre-Planned
PCLS + Prev PCLSs in 12 mths >£7500 since 2015 (1% SLA Pre-2015)

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14
Q

6 PCLS Recycling Rules?

A
  1. Receives PCLS
  2. PCLSs >£7500
  3. PCs in 12 mths >30% PCLS
  4. Paid by Individual/Employer/Party
  5. PCs >Expected due to PCLS
  6. Pre-Planned
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15
Q

PCLS Recycling: Additional PCs exceeds 30% PCLS terms?

A

Relevant Tax year + 2yrs Pre- and Post-PCLS

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16
Q

PCLS Recycling: PCs greater than expected terms?

A

Does not count if individual does not have control e.g. employer increases PCs across the board.

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17
Q

Spreading of large ‘non-regular’ employer PCs if?

A
  • If >210% vs prev chargeable period.
  • Relevant excess (XS over 110% prev chargeable period) is >£500,000
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18
Q

Employer PCs: ‘Relevant Excess’ spreading periods?

A

£0.5-£1m: 2yrs
£1-£2m: 3yrs
>£2m: 4yrs

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19
Q

Annual Allowance?
Carry forward?
Tapering rules?

A

£60k
3yrs
Adjusted Income >£260k: Reduced by £1 for every £2, to £10k (£360k)
Threshold income: Full AA if <£200k

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20
Q

AA: Adjusted Income?
Threshold Income?
Protects who?
In order to taper which tests must fail?

A

Total income + PCs
Total income - PCs
‘Lower’ salaries with spikes in PCs
Both

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21
Q

Charge for exceeding AA?

A

Marginal rate on higher of:
- Default Chargeable Amount: Pension input in to all schemes
- Alternative Chargeable Amount: DB schemes - Alternative AA

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22
Q

AA: Elect for scheme pays if?
With?

A

> £60k (Even if tapered/MPAA)
£2k
Relevant reduction in pension.

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23
Q

Result of MPAA being triggered?

A

Only £10k in to DC scheme.
Keep £60k AA - for DBs.
No carry forward.

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24
Q

MPAA triggered when?

A

Pension flexibly accessed:
- UFPLS
- FAD
- Flexi-Annuity
- Exceeding Cap on Capped Drawdown

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25
Q

MPAA not triggered when?

A

TFC
‘Secure income’: DB/Annuity
Capped Drawdown
Small Pots
Survivors Pensions

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26
Q

MPAA tiggered at:
1. Start + Subsequent <£4k?
2. Start + Subsequent >£4k?
3. Later?

A
  1. Standard AA.
  2. Alt AA £50k (AA-MPAA). Savings tested against MPAA not AA.
  3. DC input after date tested against MPAA
    - DC As per Contributions
    - DB As per time
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27
Q

DC savings exceed MPAA?

A

Higher of?
Default Chargeable Amount: Input - AA
Alternative Chargeable Amount: (DB-Alt AA) + (DC-MPAA)

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28
Q

Working out DB PCs?

A

‘Pension Input Amount’: Closing Value - Opening Value

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29
Q

DB AA: Opening Value? Closing Value?

A

O: Pension x 16 x CPI
C: Yrs Pension Increase x 16

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30
Q

LSDB when member dies >75?

A

Taxed at marginal rate.

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31
Q

Pre-2015 ‘Flexible Drawdown’?

A

No limit to income if taking secure income.

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32
Q

Pre-24 if exceeded LTA?

A

25% charge on XS used for income
55% charge on XS used for LS

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33
Q

LTA: Benefits paying Pre-A Day tested how?
‘Flexible Drawdown’ after 2014?
Capped after 2015?

A

25x Yrly pension at first BCE.
25x 80% Max Yrly Pension (Max Capped amount 150% GAD Basis)

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34
Q

‘Two year window’ applies to?

A

When death benefits must be ‘designated’ to income.

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35
Q

Normal pension age? Increases to?

A

55
58

36
Q

Commuting Pensions for Cash:
Small Pots?
DB Schemes can use?
Occupational Schemes

A

Small Pot LS <£10k
Trivial Commutation LS <£30k
Winding-Up LS

37
Q

Small Pot rules?

A

PPs: Arrangement <£10k, Stop all rights under arrangement, Payable up to x3.
Occ Ps: SCHEME <£10k, No Limit to use, No Transfers out within 3yrs

38
Q

Can take trivial commutation LS if ? <£30k

A

DB arrangements, IPMPISP

39
Q

Tax of:
Small Pots?
Trivial?

A

SP: Crystallised as income, Uncrystallised as 25% TFC, 75% income.
Trivial: 25% TFC, 75% income
- If Scheme Pensions: as income

40
Q

Scheme pension from DC only triggers MPAA if?

A

<11 others entitled

41
Q

PAYE on Flexible Payments usually starts with?

A

‘Month One’ basis: taxed as a monthly payment e.g. 1/12th BR Band.

42
Q

‘Unused Funds’ are?

A

Funds not crystallised by age 75, may have been LTA tested.

43
Q

Pension/Annuity Protection LD Death Benefit?

A

Pension x20, or, Lifetime Annuity Amount

44
Q

Trust Special LS Death Benefit Charge?

A

45%

45
Q

What are Retirement Annuity Contracts?

A

Personal Pension Plans starting pre-1988.

46
Q

Main benefits of Small Pots Payment?

A

Does not trigger MPAA.
Was never tested against the MPAA.

47
Q

Primary Protection?
DB value?
Can still contribute?
Deadline for application?

A

Protects against LTA if >£1.5m in 2006 (Allows 25% £1.5m)
20:1 (Though 25:1 if in payment)
Yes
2009

48
Q

Primary Protection Factor? Calculated how?

A

% by which benefits exceed £1.5m.
(2006 Pension - £1.5m)/£1.5m

49
Q

How to work out Primary Protection amount?

A

PPF x Underpinned LTA (£1.8m)

50
Q

Enhanced Protection?
Ongoing PCs?
Deadline?

A

No min on A day.
No further PCs.
25% of £1.5m
2009
BEST TYPE

51
Q

Types of protection?

A

Fixed x3
Individual x2

Primary
Enhanced
Scheme Specific

52
Q

Scheme Specific LS Protection?

A

> 25% LS Rights on A Day, automatically protected.
Lost if transferred (Unless block).
Lost if does partial crystallisation.

53
Q

Primary /Enhanced+ LS Protection?
Expressed as?

A

LS Rights on A Day >£375k
and
Primary: Monetary Amount
Enhanced: %

54
Q

Fixed Protections?
Ongoing PCs?
Deadlines?

A

No ongoing PCs.
FP12: £1.8m - 2012
FP14: £1.5m - 2014
FP16: £1.25 - None, but no further PCs

55
Q

Individual Protections? Ongoing PCs?

A

Funds above Standard LTA on date. Protected to lower of pension savings or max level.
Yes
IP14 - Min £1.25 - Prot £1.5m - 2017
IP16 - Min £1m - Prot £1.25 - None

56
Q

How does splitting/sharing affect Primary Protection?

A

Pension Debit subtracted from Pension. If new LTA <£1.5m, protection lost.

57
Q

What is Alternative Annual Allowance?

A

If both DB + DC member: can pay in MPAA to DC, then up to £60k to DB accrual.

58
Q

BCE:
- 1?
- 2?
- 6?
- 8?

A

1: Drawdown
2: Scheme
6: Lump Sum
8: Transferring Overseas

59
Q

Valuation for DC BCE?

A

DC benefits after 06/04/06:
- Valued as fund value brought in to payment
- Drawdown for Annuity/at 75: original allocation to drawdown deducted from current cash value (Therefore only growth tested, preventing double testing)

60
Q

Valuation for DB BCE?
- Prior to A day?
- Since?

A

x25 pension in payment
Use factor of 20 e.g. £20,000 x20 = £400,000

61
Q

Valuation for BCE: Capped drawdown?

A

Value is 25 x 80% of Max Income

62
Q

Current Pension allowances?

A

LSA: £268,275
LSDBA: £1,073,100 (Minus any LSA used)
OTA: 25% on benefits exceeding £1,073,100 when transferred overseas

63
Q

LSA if:
- Used 100% already prior to 06/04/24?
- Used only part?

A
  • None available to them
  • LSA reduced by 25% of amount of LTA used previously (Usually £1,073,100)
64
Q

LSDBA if:
- Used 100% prior to 06/04/24?
- Used only part?

A
  • None available
  • LSDBA reduced by 25% of %LTA used
65
Q

Serious Ill-Health Early Retirement (SIHLS):
<75?
>75?

A

Tax-free up to LSDBA
Marginal Rate via PAYE

66
Q

Protected Retirement Age?

A

If in place by A-day.
Prior to LTA Abolition - LTA reduced by 2.5%/yr before 55.

67
Q

2028 protection?

A

If have ‘Unqualified Right’ to take benefits at 55.

68
Q

What is a successor?

A

Nominated by dependent/nominee to continue to receive flexi-access drawdown.

69
Q

Significance of time after death to designated death benefits?

A

Two years.
If >2yrs; benefits taxed on recipient regardless of age of member at death.

70
Q

Uncrystallised DC funds on death:
- <75, within 2yr window?
- >75/Outside 2yrs?

A

Tax free. LS tested against LSDBA. XS at marginal rate.

At marginate rate.

71
Q

DB death benefits?

A

LS: Tax-free up to LSDBA. XS at MR.
Income: Guarantee Period/Dependant’s pension. Taxed at MR.

72
Q

DC Crystallised death benefits?
1. Lifetime Annuity?
2. Drawdown?
Tax Rx?

A
  1. Guarantee Period, APLS, Survivors regardless of age
  2. Nominee/Successor takes as LS/Annuity/FAD

<75: LS against LSDBA, XS at MR. Income tax free.
>75: LS/Income at MR

73
Q

Transitional Tax-Free Amount Certificate (TTFAC) requirements?

A

Before first RBCE after 06/04/24.
If can evidence previously taken LSs.
Scheme has 3 mths to provide/decline.

74
Q

Charges?
1. Unauthorised Payment Charge?
2. Unauthorised Payment Surcharge?
3. Scheme Sanction Charge?
4. Deregistration Charge?

A
  1. 40% of unauthorised payment
  2. Additional 15% if unauthorised payments exceed 25% fund value
  3. Around 15% of unauthorised payments scheme sanction charge
  4. 40% if loses registered status
75
Q

Overseas schemes rules?

A

Flexibly access RNUKS; MPAA triggered.
UFPLS equivalents; taxed as income.
Limit of £100k covering payments from registered/overseas schemes.
25% Overseas transfer tax to any QROPS transfer

76
Q

Lump Sum Allowance is?

A

£268,275 - Prev L.S.s taken

77
Q

LSDBA is?

A

£1,073,100 - Previous Lump sums taken

78
Q

How do you calculate TFC allowance?
If taken benefits before 06/04/24?

A

25% of LTA, or, Protected LTA.
‘Standard’: LSA - (25% x %prev LTA Used x current LTA)
TTFAC: LSA - Prev TFC

79
Q

Since 2017, any pension received whilst Non-Resident for period of >10yrs will be taxed on return if?

A

Relevant Withrawals >£100k

80
Q

Overseas Transfer Allowance is?

A

Same as LSA/LSDBA. benefits in XS: subject to 25% tax.

81
Q

If scheme pension paid to <12 members what happens?

A

MPAA triggered.

82
Q

DB PCLS must be taken when?

A

6mths pre- to 12mths post- income starting.

83
Q

Scheme Pension rules?

A

At least annually.
Guarantee Period <10yrs.
Cannot decrease, unless limited circumstances

84
Q

DB scheme death benefits?

A

Dependents SP
Guarantee Period
LS’s:
-DBLS: Multiple of Salary
- Pension Protection LS: Difference between value/income
-Annuity Protection LS: Fund value toward annuity protection - income (LSDBA tested)

85
Q

What is an ‘Open Market Option’?
What affects annuity rates?

A

Ability to shop around for the best annuity rate.
GILT yields and Mortality

86
Q

Shorter than average life expectancy annuities?

A

Enhanced - Lifestyle factors accounted for
Impaired - Health Conditions

87
Q
A

CII (3 decks)

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