Topic 8

Question 0

To benefit from range of tax adv, what must a scheme do

Answer 0

Register scheme with hmrc

Question 1

The pensions act 2006 attempted what?

Answer 1

To bring all under one simplified set of rules

Question 2

What are the limit of pa pension conts

Answer 2

Higher of:
100% of uk earning
£3600
To max of £50k-combined bet emp and employer
Eg earn 35k, out in 35k, emp can out in 15k w/o income taxed

Question 3

Taking benefits froma pension scheme is known as ….

Answer 3

Crystallisation

Question 4

Lifetime allowance limit is?

Answer 4

£1.5m
25% charges to excess funds used to provide income
55% if taken as cash

Question 5

What is a pension fund w/d?

Answer 5

Alternative to purchasing annuity
Drawdown- income w/d from fund within limits, officially called an unsecured pension- still taxed
Allows holder to take tax free lump sum, then delay taking an income by setting dd at 0%

Question 6

On a unsecured pension, how much can be withdrawn?

Answer 6

Bet 0 and 100% of GAD rate -gov actuaries dept

This is capped drawdown which applies to most

Question 7

What is the GAD rate?

Answer 7

Gov actuaries dept rate, broadly the income a level anniuty would have provided for same age and sex
Reviewed every 3rd anniv, but holder can change w/d within limits at any time

Question 8

What is secured pension income defined as?

Answer 8

State pensions, occ scheme or pension annuities

Question 9

What is flex drawdown?

Answer 9

If secure ret income at least £20k can take any amount anytime
Each w/d treated as income and taxed accordingly

Question 10

If planholder dies b4 75 and crystal…

Answer 10

Fund passes to beneficiaries free from IHT

Question 11

If holder dies after 75 but not crystalised benefits…

Answer 11

A recovery charge of 55% applies

Not IHT, prevent building up pension without intention of taking benefits to escape tax

Question 12

If holder dies while taking unsecured income….

Answer 12

the fund can be returned to beneficiaries less 55% recover charge
Or fund can provide income for deps- fund wouldnt be taxed

Question 13

Accrual rate

Answer 13

This is the rate at which you build up pension benefits while a member of a defined benefit scheme
Ie 1/60th

Question 14

With profits?

Answer 14

Min maturity guaranteed

Bonuses are added assuming profits are sufficient

Question 15

Unit links

Answer 15

Prems inv in chosen fund

Question 16

Dep account

Answer 16

No risk but growth is unlikey to compare to with profits or unit linked

Question 17

Stakeholder pension standards are?

Answer 17

Charges cant exceed 1% pa of fund value, or if started after april 05 1.5% for ten yrs then 1%
Min contribution cant exceed 20
Can be stopped and started with charge
Default inv option
Facilty to move to low risk as retirement approaches

Question 18

Who must make sh pensions availabe?

Answer 18

Emp with 5+ people unless they have occ scheme or pers pension scheme which they pay 3% min into

Question 19

Who doesnt have to be offered chance to join?

Answer 19

Under18
Below nic lower earning
Emp less than 3 mths

Question 20

Self inv pers pension- sipp

Answer 20

Ind pers pension but wider choice of inv

Incl property or business

Question 21

Group personal pension…

Answer 21

Each emp joins own plan with the scheme
They have full control
But emp collects and pays prems
Employer can set conditions for membership

Question 22

NEST

Answer 22

National employment savins trust
Result of pension act 2008
Most employers will have to join
Auto enrollment- although can opt out

Question 23

State pension- date equalises for m and w?
67
68

Answer 23

2020
2034-36
2046

Question 24

State pension- how much married couples get?

Answer 24

214. 90-(107.45x2)
215. 45 + whatever spouse qual for if 60% or more
216. 85 if spouse qual for under 60%

Question 25

State pension qualifying yrs?

Answer 25

Was 90% of working lifes min 25%

From april 11 - 30 years
1/30th for each qual yr

Question 26

State pension will inc annually by….

Answer 26

Greater of:
Annual Inc in earnings
CPI b4 4/11 was RPI which gen higher
2.5%

Question 27

S2P?

Answer 27

Replaced serps in 2002
Only emp people class 1 nic
Higher level of benefit
Better for low earners - proportionately

Question 28

Serps?

Answer 28

1978-2002
Replaced graduated pension scheme
Class 1 nic only
Band earnings
Max 25% till 2000
Then reduced to 20%

Question 29

Graduated pension

Answer 29

1961-75

V small top up to state

Question 30

Pension credit

Answer 30

Over 60s- Ensures min income if 142.70 for single
And 217.90 for couples
Savings credit pays small amount for those with income above certain limits- over 65

Question 31

% live to pension age?

Answer 31

90

Question 32

Personal pension benefit can be taken from age..

Answer 32

55