Pensions and retirement planning

The course material consists of:

8 chapters of study text

Several test your knowledge questions in each chapter

A few short audiovisual presentations in some chapters to help on some key areas

Revision assessments for each ch...

Shortened demo course. See details at foot of page.

By studying each chapter and then taking the end of chapter assessment this will create an entry on your CPD certificate containing:

Your personal details

Course name

Chapter name

Assessment results for each chapter

Estimated CPD time for each chapter

After taking a chapter assessment if you go to the CPD certificate link you can produce a CPD certificate. By selecting the date filter you can choose which items to include on your certificate. You can also download this to excel which will allow you to edit the certificate as required.

The estimated CPD times allocated the first time you take the end of chapter assessments are:

R04           

Hours

Chapter 1

2.9

Chapter 2

12.4

Chapter 3

4.4

Chapter 4

7.1

Chapter 5

6

Chapter 6

6.1

Chapter 7

6.1

Chapter 8

5

Total

50

The sec...

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Statement of Professional Standing (SPS)

All advisers giving independent or restricted advice must hold a Statement of Professional Standing (SPS). This details evidence they subscribe to a code of ethics, are qualified and have kept their knowledge up to date.

Bodies accredited by the FCA will be responsible for issuing individuals with an SPS and for ensuring that advisers hold an appropriate QCF Level 4 qualification.

If an SPS is removed from an adviser, the FCA could levy a fine on them, suspend them or even decide to remove their approved person status, although it could also agree to an action plan to be undertaken before reinstatement.

FCA monitoring

Firms are obliged to inform the FCA if any of their advisers fall below its competence or ethical standards.

The FCA collects information about individual advisers, such as the qualifications they hold and which accredited body they use. The FCA uses this database to help identify the highest risk individuals.

Over the last 30 years there have been numerous changes and developments to pension legislation, for example:

Prior to April 2016 the State pension comprised the basic State pension and Additional State pension generally only available to employees (such as SERPS and S2P)

The Finance Act 2011 increased the basic State pension each year b...

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Changes to State Pension Age

Until April 2010 State pension age (SPA) for men was 65 and for women 60.  However in 2010 SPA for women started to go up to 65 too; this ended in November 2018 and in October 2020 it reached age 66. By 2028 it will be age 67. SPA must be reviewed in each parliament.

When will State pension age be 67 for both men and women?

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It is widely recognised, by both the Government and in the media, that there is a significant shortfall between what individuals are setting aside for their retirement and what they will need to lead a comfortable retirement - with too few people setting aside sufficient monies to provide for their futures, whether by choice or financial necessity.

According to research by the Pensions and Lifetime Savings Association (PLSA) in 2024/25, a single person owning their own home would need a net income of £14,400 to achieve a bare minimum standard of living in retirement and a couple £22,400. Those figures increase to £31,300 and £41,300 for a moderate one and £...

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The plethora of changes implemented by the Government in relation to pensions brings its own challenges as both advisers and the general public struggle to come to terms with the myriad of changes and the increasing range of at retirement options to choose from. Many savers are simply loath to commit to pensions, despite their tax benefits, due to their long-term illiquid nature and a conviction that the government may well change things and remove many of the advantages as the country continues to struggle with a burgeoning national debt.

What was the main reason for the fall in annuity rates between 2007 and 2021?

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Because of increased longevity, the percentage of retirees is growing whilst the working population is reducing. In mid-2021 there were over 11 million people aged 65 and over in the UK. Whilst this number has dropped since prior to the pandemic; it is projected that by 2039 1 in 4 people will be aged over 65.  Life expectancy for a boy is currently 79.3 years and 83.1 years for a girl.

There are more retired people as a percentage of the population and they are living for longer periods in retirement. There is therefore an increasingly costly requirement for a non-work source of income in retirement, whether provided by th...

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Although some people still choose annuities to provide income in retirement, the  number of people buying them has fallen significantly since the pension flexibility rules were introduced. 

The State is not immune from these trends, with a diminishing number of individuals working and paying National Insurance contributions, which are in turn used to provide the State pensions for a growing number of people who will be in receipt of them for longer.

What are the two main factors that led to the reduction in annuity rates between 2007 and 2021?

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The Government offers several of tax-related incentives:

Income Tax relief on individual contributions

Corporation Tax relief on employer contributions (treated as a business expense)

No Capital Gains Tax on any growth within the pension

No Income Tax on income received on investments within the pension

Pension commencement lump sum available tax-free as part of the pension proceeds (25% of the fund unless transitional protection applies). Since April 2015 the balance of the fund is available as a taxable lump sum to members of define...

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Attitudes to saving

Inevitably, an individual’s attitude towards saving will influence their willingness to provide for their retirement:

Affordability - current pressing financial demands tend to take precedence over long- term goals

Many people incorrectly believe that the State provision is more generous than it really is

Many people simply leave it too late as retirement seems a long way off when they are young or even middle-aged

What is the current normal minimum pension age?

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NOTE - These questions are designed for revision purposes only and are therefore not written in an exam style. If you require exam style questions...

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