5 free questions on Phased retirement, 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
What is phased retirement?
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The answer is D: Crystallising a pension in stages over time
Phasing means crystallising parts of a fund, or separate segments, at different times, often using PCLS as tax-free income.
Why the other options are wrong
A
It isn't simply cash instalments.
B
It's about crystallising benefits, not working hours.
C
Purchases are spread over time.
Question 2 of 5
Why is phased retirement tax-efficient in the early years?
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The answer is D: Much of the income comes from tax-free PCLS
Each tranche provides 25% as tax-free cash, so early 'income' is largely tax-free; this falls as more taxable income builds up.
Why the other options are wrong
A
There's no 10% rate.
B
Income tax applies before SPA.
C
Annuity income is taxable.
Question 3 of 5
Hal is a higher rate taxpayer and wants £14,000 after tax from an UFPLS falling wholly in the 40% band. How much must he take?
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The answer is A: £20,000
Each £100 gives £25 tax-free plus £75 less 40% (£45): £70. £14,000 / 0.70 = £20,000.
Why the other options are wrong
B
£23,333 treats it all as taxable at 40%.
C
£17,500 uses 80% net.
D
£18,667 uses 75% net.
Question 4 of 5
What is segmentation in phased retirement?
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The answer is D: Holding the pension as many separate policies to crystallise in turn
A segmented plan holds many identical policies that are crystallised whole. Partial crystallisation of one plan is the alternative.
Why the other options are wrong
A
It isn't about fund choice.
B
It isn't about spouses.
C
It isn't about multiple providers.
Question 5 of 5
Tim, a higher rate taxpayer, needs £10,000 and still contributes heavily to his pension. What phasing approach suits?
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The answer is C: Crystallise £40,000, take the £10,000 PCLS and draw nothing
Taking just the PCLS avoids income tax and the MPAA, preserving his full annual allowance.
Why the other options are wrong
A
An UFPLS triggers the MPAA and is partly taxable.
B
A drawdown payment triggers the MPAA.
D
A flexible annuity triggers the MPAA.
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