To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these questions.
Richard requires a lump sum at retirement in 10 years’ time of £400,000 to meet his retirement aspirations. His retirement fund is currently valued at £250,000 and expected growth rates over the next 10 years are only expected to average 4.5 per cent per annum. Will there be sufficient funds, a surplus or a deficit ?
A) It will produce the required amount
B) It should produce a surplus of £12,000 to requirements
C) It should produce a deficit of around £12,000 to requirement
D) He will need to extend his retirement by around 2 years
James reaches retirement with a personal pension fund valued at £600,000, which he crystallises in full. What is the minimum he must use to provide himself with an income?
The factfind reveals that Emily earns £40,000 a year, is aged 55 and has a current pension fund of £100,000. She she wants to retire at 60 on a pension of £20,000 a year. What do you do?
A) Tell her that her goal is unachievable and that you cannot advise her
B) Tell her that her goal is only achievable if she is willing to take investment risks
C) Suggest that she consults another investment adviser
D) Explain that she will need to consider retiring later and/or having a lower pension objective
Scroll down for the answers
Questions supplied by the CPD Centre. For more help keeping up to date with your technical knowledge go to www.ifacpd.com