Topic 10 Flashcards
Topic 10 - Pension products.
Anna is 29, pays 3% of her salary into a pension scheme each month. The benefit she will receive at retirement depends solely on the investment performance of the fund. What is Anna’s pension scheme.
A) defined-benefit personalpension.
B) final salary occupational pension.
C) defined-benefit occupational pension.
D) a defined contribution.
D) Anna’s scheme is a defined-contribution scheme, which could be either an occupational or a personal pension.
2) Explain what is meant by the term ‘lifetime allowance’.
The lifetime allowance is the total amount that an individual may hold in retirement benefits at the point where the benefits are crystallised without incurring a tax charge.
What rate of tax relief is applied to contributions to an individual rate pension.
A) basic, higher or additional rate depending upon the contributor’s marginal rate of tax.
B) always basic rate.
C) always higher rate.
D) basic, higher or additional rate depending upon the pension provider’s own rules.
A) basic, higher or additional rate depending upon the contributor’s marginal rate of tax.
Contributions to AVCs are deducted from gross income.
True or False
True
Which of the following statements is correct.
An individual may be auto-enrolled in a workplace pension scheme providing they.
A) were born in and are currently working in the UK.
B) are aged between 18 and 55.
C) earn in excess of 10k per year.
D) are not liable to higher-rate tax.
C) indvuals must earn in excess of 10k per annum to be auto enrolled into a workplace pension scheme.
Since April 2015 personal pension provider’s have been obliged to allow scheme members to access their retirement benefits in the form of an uncrystallised funds lump sum if the member wishes to do so.
True or False?
False. Pension provider’s are not obliged to offer this facility, although scheme members are free to move to a different provider if they wish to access their funds this way.
Which of the following in relation to stakeholder pensions is correct?
A) charges must not exceed 2 per cent of the fund.
B) there must not be any entry or exit charges.
C) the minimum monthly contribution is £50.
D) the maximum contribution is 3600 per annum in all access.
B) there must not be any entry or exit charges.
John is using an uncrystallised funds lump sum to provide his pension benefits. The amount of each payment he takes that is free of tax is.
A) 50%
B) 100%
C) 25%
D) nil
C) 25% of each ufpls payment is tax-free.
What previous form of income drawdown was converted to flex-access drawdown from 6th April 2015?
Flexible drawdown arrangements were all converted to FAD on 6th April 2015.
Ian is 60 years old and has a low appetite for risk. He is considering options for taking benefits from her pension fund and would like to be able to receive a guaranteed income, with his pension fund no longer exposed to any investment risk.
Which method of providing retirement benefits should Ian take.
An annuity provides a guaranteed income and there is no investment risk, so this would be a suitable option for Ian.
