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ro4 exam

R04 exam: Pass first time

The CII’s R04 exam, Pensions and retirement planning, has a current pass rate of 61% which makes it the hardest R0 multiple-choice exam.

The exam has 50 questions, and you have an hour to complete it. 39 of these questions are single-response questions that only need one answer. 11 of the 50 are those pesky multiple-response question that require more than one answer. These are much harder to answer.

Here are our top ten tips to make sure you pass the exam first time – or at least make it more likely!

  1. Put in the hard yards. The CII recommend around 50 hours of study and most people will, unfortunately, need this. If you have limited experience of pensions, odds-on you’ll need much more than this. Why? Because R04 covers a really broad syllabus ranging from the background to pensions, relevant state benefits and the different methods of drawing a pension income. Unfortunately, it also includes HMRC tax rules and these aren’t most people’s idea of fun!
  2. Work smarter, not harder. It’s not just about how much study you do, but it’s also about the quality of your study. Most people learn best by ‘doing stuff’, rather than just reading (which is passive). If you use the study text, for example, use highlighter pens, write summary notes and use the CII online RevisionMate practice questions. You might also use our audio material so that you can learn on the go.
  3. Practice, practice and practice some more. The best way to know what the R04 exam will look like is to complete the R04 CII exam guide at least twice. We suggest that you at least look at it at the start of your revision so you get a feel of the depth of knowledge you will require. You’ll then know which parts of the study text to ignore because they are too complicated. Unless you just enter for the exam, you’ll also get access to loads of practice questions on the CII RevisionMate. There is no excuse for not practising and it is the best way to learn, as well as assessing your knowledge.
  4. Focus on chapters 2, 6, 7 and 8 of the CII R04 study text.  The R04 exam questions are not allocated equally across each chapter in the study text. So if time is short, why wouldn’t you focus on the chapters that are most heavily examined? These four chapters not only account for over half of the tricky multiple response questions (which will require a greater level of understanding), but also over half the overall questions in the R04 exam.  In other words, you are unlikely to pass R04 without a decent grasp of the content in these chapters.
  5. Don’t panic about the HMRC tax regime! OK, let’s be clear about this. You cannot ignore this area as it will typically account for around 10 of the 50 questions in R04. That’s the bad news. On the positive side, some elements of the pensions tax regime are almost impenetrable which means that it is difficult for the examiners to test the more complex areas when they expect you to answer a question in around a minute.
  6. Calculations. The number of questions that involve a calculation will vary between exams but are typically less than 10. Being able to calculate a commutation factor or a straightforward tax liability on a pension income or a death benefit should be expected. An in-depth calculation of pension input periods less so. Keep this in mind when you are looking at some of the examples in the study text.
  7. Focus on the content you don’t know. If you are sitting R04, this is unlikely to be your first R0 exam so hopefully, you are likely to be familiar with at least some of the content. As few people will read the study text from cover to cover, focus your reading on the bits you are unfamiliar with AND which get examined. Why? The fact is that some knowledge goes a long way. Even if you don’t know the answer to a question, a little knowledge will help you to eliminate one or more of the incorrect answers. This leads me on to the next tip.
  8. Guess! Questions in R04 are marked positively so if you guess and get it wrong, you don’t lose anything. If you get it right then, bingo, one mark closer to the pass mark. Use a process of elimination to reduce the likely number of options but if in doubt, guess!
  9. Read the exam questions twice. Trust me, if the question gives you information, you’ll need to use it somehow. The CII doesn’t give information to just ‘pad out’ a question or mislead you. So read the question twice and ask yourself: ‘how do they expect me to use this information?’.
  10. Study in short bursts. For many people, a prolonged period of caffeine and last minute cramming just doesn’t work. Regular short bursts of 15-20 minutes is far more effective. Click here for more detail.

R04 resources:

Click here for our FREE R04 practice question

Click here to access our revision hub

Be prepared. Good preparation leads to success. If you want to know how you can learn on the go and fit it in around everything else, click here for details.

Our job is to help you pass R04 first time. Hopefully this article has helped.

Ian Patterson

Ex-examiner and author of the current CII CF8, J07 and AF6 study texts.

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 hardest main R0 exam with a pass rate of just 61%.

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 questions

All figures are based on the 2020/21 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, does Susan 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. £20,000 payable by Jamie

D. £20,000 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 8 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 considered to be 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 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 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 D; 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