R04 UFPLS and drawdown: free practice questions

1. Question 1 of 5

   In which situation can an UFPLS NOT be paid?

   Option A: To a member with no LSA leftOption B: To a member aged 78 with uncrystallised fundsOption C: From funds already designated to drawdownOption D: As one of a series of UFPLS payments

   Show answer

   The answer is C: From funds already designated to drawdown

   An UFPLS must come from uncrystallised funds. There's no maximum age, no LSA is needed (it's then fully taxable) and several can be taken.

   Why the other options are wrong

   A

   An UFPLS can be paid with no LSA, though it's then fully taxable.

   B

   There's no maximum age for an UFPLS.

   D

   A series of UFPLS payments is allowed.

2. Question 2 of 5

   Yan takes a £40,000 UFPLS but has only £6,000 of LSA left. How much is taxable?

   Option A: £34,000Option B: £40,000Option C: £10,000Option D: £30,000

   Show answer

   The answer is A: £34,000

   The tax-free part is the lower of 25% (£10,000) and remaining LSA (£6,000). So £34,000 is taxed as pension income.

   Why the other options are wrong

   B

   Part of it is still tax-free.

   C

   £10,000 is the usual tax-free amount, not the taxable part.

   D

   £30,000 assumes the full 25% is tax-free.

3. Question 3 of 5

   Within what window can the administrator recalculate the basis amount at the end of a reference period?

   Option A: Three months before the member's birthdayOption B: 60 days ending on the new reference dateOption C: Any day in the final pension yearOption D: 30 days after the new reference date

   Show answer

   The answer is B: 60 days ending on the new reference date

   The administrator picks a nominated date within the 60 days ending on the new reference date, using the member's age and fund value on that date.

   Why the other options are wrong

   A

   Birthdays don't set the window.

   C

   It's limited to 60 days.

   D

   The window ends on, not after, the reference date.

4. Question 4 of 5

   Which is an HMRC requirement for a short-term annuity?

   Option A: Purchase from uncrystallised fundsOption B: A guarantee period of ten yearsOption C: Payment by the pension schemeOption D: A term of no more than five years

   Show answer

   The answer is D: A term of no more than five years

   It must be bought with drawdown funds, from an insurer, for up to five years. A member's version can have a guarantee of up to five years.

   Why the other options are wrong

   A

   It's bought with drawdown funds.

   B

   Any guarantee can't exceed five years.

   C

   It must be paid by an insurer.

5. Question 5 of 5

   Roughly what fund size is often seen as needed before using drawdown for regular income?

   Option A: About £250,000Option B: About £1 millionOption C: About £10,000Option D: About £30,000

   Show answer

   The answer is A: About £250,000

   Ongoing advice and charges weigh more heavily on small funds; around £250,000 is a common rule of thumb.

   Why the other options are wrong

   B

   £1 million is far above the usual guide.

   C

   £10,000 is the small pots limit.

   D

   £30,000 is the trivial commutation limit.

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