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The Technical Quiz: 24 October

To help you to keep up with the fundamentals of tax, retirement and financial planning, try answering these questions.

The following questions all relate to lifetime annuity.


To qualify as a lifetime annuity under the pensions’ tax regime it must:

A) be bought from an insurance company that the member had the chance to select 

B) be bought from a UK insurance company that the member had the chance to select

C) not allow the income paid in any one year to be lower than that paid in a previous year

D) not be capable of assignment or surrender in any circumstances


Which one of the following statements concerning a lifetime annuity is not correct?

A) It can be set up with annuity protection

B) A guarantee period can continue beyond age 75

C) Where a five-year guarantee period has been selected, it can be commuted for a lump sum on the death of a member

D) Where a ten-year guarantee period has been selected, it cannot be commuted for a lump sum on the death of a member


Which one of the following statements is not correct in respect of HMRC’s rules in respect of lifetime annuities?

A) A lifetime annuity must be set up before a member’s 75th birthday

B) A lifetime annuity must be bought from an insurance company the member had the opportunity to select

C) A lifetime annuity must not allow the payment, either directly or indirectly, of a capital sum triggered by the member’s death (apart from annuity protection)

D) A lifetime annuity must not be capable of assignment or surrender (except to give effect to a pension sharing order)


Freda is in receipt of a lifetime annuity of £10,000 gross p.a. (£8,000 net p.a.) paid annually in arrears. She received three payments but then died. The annuity was established with ”annuity protection” and originally the annuity purchase price was £200,000. The net lump sum payable on her death will be:

A) £76,500

B) £79,200

C) £110,500

D) £114,400


Which one of the following statements in respect of a dependant’s annuity is not correct?

A) A dependant’s annuity can include escalation in payment

B) A dependant’s annuity can include a guarantee period

C) A dependant’s annuity can cease if the dependant’s remarries

D) A dependant’s annuity can be provided by a different insurance company to the one who provided the member’s
lifetime annuity



1 A
2 C
3 A
4 A
5 B



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