R04 Method and timing of taking benefits: free practice questions
5 free questions on Method and timing of taking benefits, part of learning outcome 6 (Drawing pension benefits). Pick an answer to check it, or open the answer to see why each option is right or wrong.
Question 1 of 5
Which of these factors help determine the best way to access pension benefits?
1. The tax consequences
2. How important certainty is
3. Plans to keep contributing
4. The importance of death benefits
Show answer
The answer is C: 1, 2, 3 and 4
Tax, income need, certainty, future contributions (the MPAA) and death benefits all shape the choice.
Why the other options are wrong
A
Tax and contributions also matter.
B
Death benefits also matter.
D
Certainty and death benefits also matter.
Question 2 of 5
What is a key drawback of taking a series of UFPLS payments?
Show answer
The answer is B: The fund could be exhausted, and each payment triggers tax
UFPLS gives flexibility and tax planning but risks depletion, with 75% of each payment taxable and the MPAA triggered.
Why the other options are wrong
A
UFPLS comes from DC funds.
C
Usually 25% is tax-free.
D
Frequency is flexible.
Question 3 of 5
Roughly how large a fund would be needed in 2026 to buy an income similar to the full new State Pension, with 2.5% increases?
Show answer
The answer is D: About £200,000
Annuity quotes suggested roughly £200,000 would be needed, showing how valuable the State Pension is.
Why the other options are wrong
A
£500,000 is too high.
B
£100,000 is too low.
C
£50,000 is far too low.
Question 4 of 5
Why have the pension flexibilities put downward pressure on annuity rates for younger lives?
Show answer
The answer is B: Healthier people dominate annuity buyers, reducing cross-subsidy
Fewer annuities are sold and those buying tend to be healthy, so less mortality gain is available to subsidise rates.
Why the other options are wrong
A
Annuities weren't banned.
C
Mortality tables are still used.
D
Yields aren't fixed by law.
Question 5 of 5
A client's priority is leaving wealth to children. Which features favour flexi-access drawdown over an annuity?
1. The fund can pass to any beneficiary
2. It can be passed on repeatedly
3. Tax-free to beneficiaries on death before 75
4. Guaranteed growth
Show answer
The answer is B: 1, 2 and 3 only
Drawdown funds can go to anyone, cascade through generations and pass tax-free on death before 75. Growth isn't guaranteed.
Why the other options are wrong
A
Growth isn't guaranteed.
C
Tax-free treatment before 75 is also a feature.
D
Statement 4 is wrong.
Practise all 17 Method and timing of taking benefits questions
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