Monthly Archives:October 2019

CII R04 exam

CII R04 exam: Free practice questions

Are you revising for the CII’s R04 exam? Know someone who is? Want to test your R04 knowledge? Then read on…..!

We’ve put together 10 multiple choice questions for you as a taster of what you can expect in the R04 exam. This exam is the joint hardest main R0 exam with a pass rate of just 57%.

Click for the CII R04 exam syllabus. This shows the distribution of questions throughout the R04 exam and where those pesky multiple-response questions are.

We’ve helped over 6,000 people prepare for the CII R0 exams over the past 12 months. We don’t sell multiple choice questions but we are here to help as much as we can with your R04 exam.

What we do offer is unique R04 MP3 audio material, written by the authors of the CII study text. This provides over 5 hours of dedicated R04 material that enables you to fit your study around your business and social life – not the other way around.  Click here for further details.

Now, onto these practice questions. See how well you do on these R04 exam style questions. You’ll find the answers at the end.

R04 exam practice questions

All figures are based on the 2023/24 tax year.

Questions 1 to 6 inclusive have only one correct answer.

1. Susan reached her State pension age in 2015.  She started working in 1977, was never contracted out and was always employed. What earnings related State pensions, if any, is Susan eligible to receive?

A. None, she didn’t qualify for earnings related pensions

B. S2P only

C. SERPS and S2P only

D. State graduated pension, SERPS and S2P

2. Jamie, who is 46, has earnings of £40,000 after taking into account all allowances.   His employer wants to pay a pension contribution of £90,000 into a pension on his behalf in the current tax year. No other contributions have been paid and he has no unused annual allowance to carry forward.  How much will the annual allowance charge be and who will be responsible for paying it?

A. £10,000 payable by Jamie

B. £10,000 payable by Jamie’s employer

C. £12,000 payable by Jamie

D. £12,000 payable by Jamie’s employer

3. An individual had benefits valued at £2.1 million on 5 April 2006 and applied for primary protection.  What will their primary protection factor be?

A. 28.6%

B. 40%

C. 60%

D. 71.4%

4. Which employee would be an eligible jobholder?

A. Amy, who is age 32 and who has a salary of £19,000

B. Pradeev, who is age 62 and has a salary of £9,000

C. Brian, who is age 18 and who has worked for them for 6 months

D. Laura, who is age 66 and has a salary of £17,000

5. Harry left his company’s defined benefit scheme after completing 18 months of service and he has elected to take a return of his personal contributions.  If the gross refund is £32,000, how much will Harry receive?

A. £16,000

B. £22,000

C. £25,600

D. £32,000

6. How, if at all, will any protected payment increase between the calculation of the starting amount and the date an individual reaches their State pension age?

A. It will not increase

B. It will increase in line with the national average earnings index

C. It will increase in line with the triple lock guarantee

D. It will increase in line with the consumer prices index

The remaining questions – 7 to 10 – have more than one correct answer.

7. Jane was a member of an occupational money purchase scheme for eight months before she left the scheme last July. What options MUST the scheme offer her?

A. Refund of her contributions

B. Preserved benefit

C. The scheme does not have to offer any preserved benefits

D. A transfer value

8. What are the potential advantages of taking an income via a flexi-access drawdown?

A. Guaranteed level of income

B. Funds remain invested and have the potential to achieve capital growth

C. The member can adjust the income levels to help manage their income tax liability

D. Income is paid tax-free to the member

E. The full 25% tax free cash lump sum can be taken at commencement

9. Sunil is writing a suitability report having recommended a drawdown arrangement to a client. What risk warnings must he include to meet the FCA COBS requirements?

A. The levels of income provided may not be sustainable

B. Annuity or scheme pension rates may be at a worse level in the future

C. Regular reviews must be undertaken

D. There may be tax implications

E. Drawdown pensions are complex and so advice must be taken

10Liam has a SIPP with a current fund value of £350,000.  It holds a commercial property and it borrowed £50,000 to finance this purchase three years ago. If Liam would like to use the SIPP to buy a further residential flat, commercial property and some shares in his own limited company, the SIPP:

A. could borrow a further £150,000 if necessary towards the purchase of a second commercial property

B. is able to purchase the flats

C. can purchase shares in Liam’s limited company

D. scheme administrator will be subject to an unauthorised member payments charge of 40% of the value of the prohibited asset if it invests in taxable property

E. scheme administrator will become liable to the scheme sanction charge of 15% of the value of the prohibited asset if the SIPP invests in taxable property

R04 exam resources

Here are some other tips and information you might find useful:

CII R04 exam: the 5 myths. Click here

Five top tips for R0 exam success – part 1. Click here

Five top tips for R0 exam success – part 2. Click here

Answers: 1: C; 2: C; 3: B; 4: A; 5: B; 6: D; 7: B and D; 8: B, C and E; 9: A, B and D; 10: C and E.

Remember, good preparation is the key. If you want to know how to learn on the go, then click here. Hope that you found this useful. Until the next time

Ian Patterson

Author of the current CF8, J07, and AF6 CII study texts and ex-examiner