R04 DB early leavers and transfers: free practice questions
5 free questions on DB early leavers and transfers, part of learning outcome 4 (Defined benefit schemes). Pick an answer to check it, or open the answer to see why each option is right or wrong.
Question 1 of 5
Ayo leaves a DB scheme after 18 months. What must the scheme offer him?
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The answer is B: A CETV, with a refund of contributions often offered too
After three months' service a CETV must be offered. With under two years, a refund of contributions may be offered instead of a preserved pension.
Why the other options are wrong
A
A preserved pension is compulsory only after two years.
C
He has rights after three months.
D
The CETV option must be offered after three months.
Question 2 of 5
What is the correct order of steps in calculating a CETV?
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The answer is B: Preserved pension, revalue to NPA, capitalise, discount to today
Work out the preserved pension, revalue it to normal pension age, convert it to a capital value at NPA, then discount that to today.
Why the other options are wrong
A
Discounting comes last.
C
The preserved pension is the starting point.
D
The pension must be worked out and revalued before capitalising.
Question 3 of 5
Which condition applies to the statutory right to transfer safeguarded benefits?
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The answer is A: Applying at least a year before normal pension age
Benefits must be uncrystallised, accrual must have stopped, a statement of entitlement must be received, and the application made at least a year before NPA.
Why the other options are wrong
B
The £30,000 figure relates to advice.
C
Age 55 isn't a condition.
D
Accrual must have stopped.
Question 4 of 5
What starting assumption must an adviser make about a DB transfer?
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The answer is D: That it will not be suitable
The FCA requires firms to start from the assumption that a transfer isn't suitable, and recommend it only if they can clearly show it's in the client's best interests.
Why the other options are wrong
A
The presumption is the reverse.
B
Age alone doesn't make it suitable.
C
Personal circumstances must be assessed fully.
Question 5 of 5
If a client has access to a qualifying workplace scheme, what must a transfer adviser do?
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The answer is B: Consider it first and justify recommending anything else
Because workplace schemes rarely allow ongoing adviser fees, advisers must prioritise an available qualifying scheme and show why another is more suitable.
Why the other options are wrong
A
GMP rules don't relate to this.
C
Another scheme can be recommended if justified.
D
It must be considered.
Practise all 30 DB early leavers and transfers questions
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