R04 Drawing benefits, small pots and trivial commutation: free practice questions
5 free questions on Drawing benefits, small pots and trivial commutation, 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
Why is 'crystallisation' used rather than 'retirement' to describe taking pension benefits?
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The answer is C: Benefits can be taken without retiring
It isn't necessary to retire to take benefits, so crystallisation covers taking income, a PCLS, an UFPLS or a lump-sum death benefit.
Why the other options are wrong
A
There's no such ban on retiring.
B
It applies to all schemes.
D
That isn't the reason.
Question 2 of 5
How many small pots payments can a member take from non-occupational schemes?
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The answer is B: Three
Up to three from non-occupational schemes such as personal pensions; unlimited from unconnected occupational schemes.
Why the other options are wrong
A
More than one is allowed.
C
Up to three are allowed.
D
Unlimited applies to unconnected occupational schemes.
Question 3 of 5
Which is a condition for a trivial commutation lump sum by the member?
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The answer is C: Total pension rights of £30,000 or less on the nominated date
Total rights must be within £30,000, the member must have some LSA left, be at minimum pension age and the payment must extinguish rights in that scheme.
Why the other options are wrong
A
There's no upper age of 60.
B
Some LSA must remain.
D
Other pensions can be in payment, but count in the total.
Question 4 of 5
For triviality, how is a DB scheme pension that started in 2010 valued if the first year's pension was £1,200 and a PCLS of £4,000 was taken?
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The answer is A: £28,000
First 12 months' pension x 20 = £24,000, plus the PCLS of £4,000 = £28,000.
Why the other options are wrong
B
£24,000 omits the PCLS.
C
£34,000 isn't produced by the rules.
D
£30,000 uses a factor of 25.
Question 5 of 5
Which is a condition for commuting a dependant's pension as a trivial lump sum?
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The answer is C: It must extinguish all the dependant's rights under the scheme
The payment must extinguish the dependant's entitlement to pension and lump sum death benefits under the scheme. Age and timing aren't restricted.
Why the other options are wrong
A
The dependant's age doesn't matter.
B
There's no time limit.
D
Any age at death is fine.
Practise all 20 Drawing benefits, small pots and trivial commutation questions
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