R01 Retirement planning and pensions: free practice questions

1. Question 1 of 5

   What is the current State Pension age, and what change is planned?

   Option A: 67, rising to 68 between 2026 and 2028Option B: 65, rising to 66 by 2028Option C: 66 for men and 65 for womenOption D: 66, rising to 67 between 2026 and 2028

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   The answer is D: 66, rising to 67 between 2026 and 2028

   Since October 2020 the State Pension age has been 66 for men and women, rising to 67 between 2026 and 2028. A rise to 68 is under review.

   Why the other options are wrong

   A

   The rise to 67 happens between 2026 and 2028; 68 is still under review.

   B

   State Pension age reached 66 in October 2020.

   C

   State Pension age has been the same for men and women since 2018.

2. Question 2 of 5

   A client has adjusted income of £290,000. What is their tapered annual allowance?

   Option A: £10,000Option B: £45,000Option C: £60,000Option D: £30,000

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   The answer is B: £45,000

   Income above £260,000 is £30,000. The allowance reduces by £1 for every £2, so by £15,000: £60,000 − £15,000 = £45,000.

   Why the other options are wrong

   A

   £10,000 is the floor, reached only at much higher income.

   C

   The allowance is tapered because adjusted income exceeds £260,000.

   D

   £30,000 is the excess income, not the allowance; the reduction is half of it.

3. Question 3 of 5

   How is an uncrystallised funds pension lump sum (UFPLS) usually taxed?

   Option A: Half tax-free and half taxed as savings incomeOption B: Entirely tax-free, as it comes from a pensionOption C: Entirely taxed as pension income at marginal rateOption D: 25% tax-free and 75% taxed as pension income

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   The answer is D: 25% tax-free and 75% taxed as pension income

   An UFPLS is a lump sum from an uncrystallised fund; usually 25% is tax-free and 75% is taxed as pension income at the client's marginal rate. It is taxed like other non-savings income, but no National Insurance is due.

   Why the other options are wrong

   A

   The split is usually 25/75, and the taxable part is pension income, taxed at the marginal rate.

   B

   Only a quarter is usually tax-free.

   C

   A quarter is usually tax-free.

4. Question 4 of 5

   What is a career average revalued earnings (CARE) scheme?

   Option A: A defined contribution scheme with a guaranteed annuity rateOption B: A defined benefit scheme based on average salary over a careerOption C: A personal pension where the contribution rate is fixed by lawOption D: A State Pension top-up paid to people who care for relatives

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   The answer is B: A defined benefit scheme based on average salary over a career

   A CARE scheme is still defined benefit, but the pension is based on revalued earnings averaged over the member's whole career rather than final salary, usually giving a lower pension.

   Why the other options are wrong

   A

   CARE schemes are defined benefit, not defined contribution.

   C

   CARE schemes are occupational DB schemes.

   D

   CARE has nothing to do with carers or the State Pension.

5. Question 5 of 5

   What is the minimum total contribution to a qualifying defined contribution scheme under auto-enrolment, and who pays it?

   Option A: 10%, paid entirely by the workerOption B: 8%, from employer, worker and tax reliefOption C: 5%, paid entirely by the employer on top of payOption D: 3%, paid by the Government as relief

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   The answer is B: 8%, from employer, worker and tax relief

   The minimum total is 8% of qualifying earnings (above £6,240 in 2026/27), made up from employer contributions, worker contributions and tax relief.

   Why the other options are wrong

   A

   The total is 8%, shared between employer, worker and tax relief.

   C

   The minimum is 8% in total, and workers contribute too.

   D

   The Government's share is the tax relief within the 8% total.

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