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How well do you know... (R04) Pensions & retirement planning?

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Here is a selection of three sample questions from CII exam module R04: Pensions & retirement planning, which will be available to sit at any of 60 UK exam centres from September. 

For full details of the R0 exams, including pricing for Academy members, click here.

Sample questions: (R04) Pensions & retirement planning

(scroll right down to the bottom of the page to check your answers)

1) Trevor is a member of a defined benefit company pension scheme.  Which factor relating to his circumstances confirms that he will avoid incurring a special annual allowance charge in the 2010/2011 tax year?

            A. He is a member of an Employer Financed Retirement Benefit Scheme (EFRBS).

            B. He is aged 61.

            C. His total annual earnings have never exceeded £110,000.

            D. His benefits include the maximum level of death benefit.

2) Stephen is about to commence taking benefits from his personal pension scheme, which includes protected rights.  He should be aware that:

            A. he can take up to 25% of the total fund as a pension commencement lump sum.

            B. he has the right to exercise the open market option.

            C. his whole pension fund must provide limited price indexation in payment.

            D. the value of the protected rights element will not count towards the lifetime allowance.

3) Frank, age 55, is considering adopting a lifestyle investment technique as he aims to build up his personal pension prior to retirement.  He should be aware that:

            A. the asset mix of the fund will be adjusted automatically on pre-determined dates.

            B. his ongoing exposure to equities will reduce with lifestyling.

            C. after 10 years, a maximum of 25% of the investments will be in bonds.

            D. lifestyling is likely to be appropriate if he intends to purchase a conventional annuity with his entire fund.


Click here to test yourself on R01, R02 and R03.

Scroll down to find correct answers to the above R04 questions.









The answers:

R04: 1)C.; 2)A., B.; 3)A., B., D.

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Readers' comments (7)

  • I got the right answers. Does this mean you chose the easy questions or are all the questions like this. Maybe I should try the RO's
    I'm doing the IFS route the first exam was quite hard and I failed by a couple of points.

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  • Sorry to be picky, however the supposedly correct answer to question 1 is, in fact, not correct.

    The application of the Special Annual Allowance Charge is dependent upon an individual's total income from pretty much all sources and not just their earned income. Trevor's total annual income may well have never exceeded £110k, yet he may have had income from other sources which could have put him above the £130k threshold (or £150k if he was making an additional contribution prior to December 9th 2009).

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  • Ooh, I got them all right too, which reinforces the question raised by anonymous, are these some selected easy ones?!

    Gillian, if all the other answers are obviously incorrect, you have to read the question as it is and assume that all income is included and go for the one that would be correct in that situation. Although you are technically correct, too much knowledge can be a downside if you question the question too much – you have to take it as it is. That’s always been the way with the CII….

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  • Following Pensions Simplification things should have got easier, but they haven't!

    The sort of mistake in Q1 that Gillian has highlighted catches out accountants too, but it is very disappointing to see it in a CII sample question.

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  • I sat the R04 exam and it was really difficult and I was pushed for time. I would like to know how others have faired as I found it difficult.

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  • Gillian - I think that is being too picky. The answer clearly states TOTAL ANNUAL EARNINGS so it is clear he has no other earnings.
    I appreciate to be totally accurate the answer should state no other earnings OR INCOME of any kind but adding this sort of information to each question would make the questions too long.

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  • God help me, I take this exam on the 7th March next.

    One thing I learned with RO1 and RO2 is that you need to read the question, decide on the answer you think is correct, read it again, review your answer and then read it a third time as the questions in the papers I have passed so far, especially the multiple choice multiple answers are specifically designed to catch you out and can be easily mis read.

    May the Almighty Architect of the Universe grant us all sufficient knowledge, perseverance and the gift of insight so that we can get through this maze of weird and wonderful exams.

    What amazes me is that the pre - dispostion towards knowing a lot about DB schemes and NEST, has very little to do with IFA services and the advice we give to the majority of our ordinary hard working, hard pressed clients, whose main focus is nearly always allied to Money Purchase DC schemes.

    Who decided in their wisdom that we should know more about DB than DC schemes.

    Very strange!

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