R04 DC scheme types and attributes: free practice questions
5 free questions on DC scheme types and attributes, part of learning outcome 5 (Defined contribution schemes). Pick an answer to check it, or open the answer to see why each option is right or wrong.
Question 1 of 5
What is a group personal pension plan, legally?
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The answer is B: A series of individual pension contracts
Although it looks like a company scheme, a GPP is a collection of individual personal pensions, each owned by the employee.
Why the other options are wrong
A
Each member has their own arrangement.
C
A GPP is purely DC.
D
GPPs are contract-based, not trust-based occupational schemes.
Question 2 of 5
Since when has it been impossible to start a new retirement annuity contract?
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The answer is A: 1 July 1988
RACs (section 226 contracts) couldn't be taken out after 1 July 1988, but existing ones can still receive contributions.
Why the other options are wrong
B
2001 saw stakeholder pensions arrive.
C
1986 isn't the date.
D
A-Day didn't end RACs; they had ended in 1988.
Question 3 of 5
Which of these statements about targeted money purchase schemes are correct?
1. Contribution rates are reviewed regularly
2. The employer must top up any shortfall at retirement
3. Early leavers normally get only the DC assets
4. On employer insolvency, trustees usually have no claim unless contributions are in arrears
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The answer is B: 1, 3 and 4 only
Contributions are reviewed, early leavers get the DC assets and trustees usually have no claim on insolvency. Any top-up is optional.
Why the other options are wrong
A
Topping up isn't compulsory, so 2 is wrong.
C
Statement 2 is wrong.
D
Topping up isn't compulsory.
Question 4 of 5
Which of these are assumptions for SMPIs under current TM1?
1. Accumulation rates set by the fund's volatility group
2. Inflation of 2.5% a year
3. No lump sum taken at retirement
4. A 50% spouse's pension in every case
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The answer is B: 1, 2 and 3 only
TM1 uses volatility-group accumulation rates (2% to 7%), 2.5% inflation, no lump sum, and a single life annuity with a five-year guarantee.
Why the other options are wrong
A
A spouse's pension isn't assumed.
C
No lump sum is also assumed.
D
A single life basis is assumed.
Question 5 of 5
What characterises a collective defined contribution (CDC) scheme?
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The answer is B: Pooled assets paying a scheme pension that can be adjusted
CDC pools contributions and pays a scheme pension that isn't guaranteed and can rise or fall, sharing investment and longevity risk.
Why the other options are wrong
A
Benefits come as scheme pension.
C
There are no individual pots.
D
There's no employer guarantee.
Practise all 22 DC scheme types and attributes questions
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R0 Exam Prep is an independent revision tool. It is not produced, endorsed by or affiliated with the Chartered Insurance Institute (CII). Questions and explanations are original. Use it alongside the official study text. About R0 Exam Prep