Unit 2

Question 1

FCA

Answer 1

Regulates consumer credit industry, supervises insurance provision and marketing of pension products

Question 2

PRA

Answer 2

Regulates certain types of firms at individual level (insurance)

Question 3

FPC

Answer 3

Financial policy committee:

Responsible for systemic risk

Question 4

Unregistered/employer financed pension schemes

Answer 4

Don’t receive tax concessions. Conts paid post income tax and NI. Benefits paid get income tax, no NI. Employer conts get tax relief when member takes benefits.

Question 5

What can you claim tax relief on personal contributions on?

Answer 5

Higher of £3,600 or full earnings made by you or third party on your behalf

Question 6

AA amount

Answer 6

£40k

Question 7

Money purchase AA

Answer 7

£4k

For people who have already accessed money purchase benefits, max amount they can put back into a pension fund

Question 8

Pension input period

Answer 8

6 April to 5 April

Question 9

AA - Value of increased pen

Answer 9

DC - value of conts

DB - 16 x (accrued pen at end of PIP - beginning x CPI)

Question 10

AA - tax charge

Answer 10

Marginal rate

Question 11

When is AA not applied?

Answer 11

Year in which retire on ill health or dies

Question 12

AA - carry forward

Answer 12

3 years

Question 13

LTA

Answer 13

Total value of benefits from registered pension schemes

£1.055m

Question 14

LTA - calculation

Answer 14

DC - amount
Cash comm - amount
DB pre comm - x 20
DB in payment before 06 - x 25
Annuities - value of them

Question 15

LTA charges

Answer 15

55% if cash, 25% plus marginal rate if pension

Question 16

Refund of conts to employer

Answer 16

OK if have enough assets to meet wind up costs. 35% rate. Need to have provision in rules agreed by 5 April 2016.

Question 17

Refund of conts to employer

Answer 17

OK if have enough assets to meet wind up costs. 35% rate. Need to have provision in rules agreed by 5 April 2016.

Question 18

Pension sharing on divorce

Answer 18

Not compulsory, up to the parties involved. Set up pension debit, and pension credit for ex-spouse. Or can pay out CETV.

Question 19

TPR - COP 1

Answer 19

Reporting breaches of law

Requirement to report breaches. Decision to report based on whether likely a breach has occurred and materiality of impact

Question 20

TPR - COP 2

Answer 20

Notifiable events

Gives tpr early warning of call on PPF. Events notified asap.

Question 21

TPR - COP 3

Answer 21

Funding DB

IRM/Funding/Covenant/Investment/Recovery Plans

Question 22

TPR - COP 4

Answer 22

Early leavers - reasonable periods

Applies if scheme rules don’t provide vested rights for +3 months, less than 2 years. Gives TPR view on reasonable time period for notifying members of rights

Question 23

TPR - COP 5

Answer 23

Reporting late payments of conts to MP schemes

What is a reasonable period within which trustees must report late payments of conts

Question 24

TPR - COP 6

Answer 24

Reporting late payments of conts to Personal pens

What is a reasonable period within which trustees must report late payments of conts

Question 25

TPR - COP 7

Answer 25

Trustee knowledge & understanding Sets out TPR expectations of TKU

Question 26

TPR - COP 8

Answer 26

MNT requirements Helps trustees to meet 1/3 requirement

Question 27

TPR - COP 9

Answer 27

Internal controls Sets out what expectations are

Question 28

TPR - COP 10

Answer 28

Modification of subsisting rights Helps anyone who needs to modify to do duties

Question 29

TPR - COP 11

Answer 29

Dispute resolution reasonable periods Expectation of time periods, not on what IDRP should cover

Question 30

TPR - COP 12

Answer 30

Material detriment test Circumstances where TPR expects to issue contribution notice if material detriment test met (whether sponsor's actions have materially detrimented scheme)

Question 31

TPR - COP 13

Answer 31

Governance of DC trust based schemes Standards expected (e.g. investment governance, administration, VFM)

Question 32

TPR - COP 14

Answer 32

Governance of public sector schemes Knowledge/understanding, risk controls, record keeping

Question 33

TPR - COP 15

Answer 33

Authorisation of master trusts Information needed for authorisation.

Question 34

PPF benefits

Answer 34

- 100% if over NPA, 90% if under - Deferred are subject to compensation cap/long service cap - Can take PCLS - Increases: Pre 97 - nil, Post 97 - CPI2.5 - Reval - CPI5 pre 09, CPI2.5 post 09 - Widowers entitled to 50% - PPF can change rules if wants to

Question 35

Entry to PPF

Answer 35

- Scheme must be eligible - Wind up post 6 April 05 - Qualifying insolvency event - No chance of rescue - Not enough assets to buy out PPF level benefits

Question 36

What if PPF thinks could buy out but trustees disagree?

Answer 36

Can request PPF reconsider decision, within 3 months with auditor valuation and quotes from insurers.

Question 37

Logistics of entry

Answer 37

Section 143 valuation