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CII R05 exam

The CII’s R04 exam – 3 top tips everyone should know

A student’s perspective:

I’m Sam. I passed all of my CII R0 exams (including the R04 exam) within the last year and this is my view as a student.  Please bear in mind that I am writing this from the perspective of a 23 year old. I had little previous knowledge of the financial services industry prior to completing my diploma exams.  So here are my three top tips for the CII R04 exam.

These tips are designed to highlight particular areas of the R04 syllabus that I, and others I have spoken to, found either technically difficult or confusing.

Differences between a SIPP and SASS

Luckily for us, we are not required to know huge amounts of detail about either a SIPP or SASS for the RO4 exam. However, a basic knowledge of the differences between them is to be expected. I have produced a table below which outlines the broad differences between them, and this should be sufficient for your RO4 exam.

Type of arrangement Individual Money Purchase scheme Occupational Money Purchase Scheme
Regulator FCA TPR
Governance Contract under Master Trust Individual Trust
Able to lend to employer? No Yes, up to 50% of value
Choice of investments Chosen by member Chosen by trustees
Amount of administration required? Minimal  Large amount
Statutory Money Purchase illustrations required? Provided annually Not required
Membership Anyone Sponsoring employer can restrict membership

Death Benefits

Here is the position with lump sum death benefits paid from uncrystallised or unused funds

Death of the member occurs before age 75 If the fund is designated to provide a lump sum within the two year window:
• it will be paid free of tax if the fund is within the member’s available LTA .
• Any amount in excess of the member’s available LTA will suffer an LTA excess lump-sum tax charge of 55%.If the fund is designated to provide a lump sum outside of the two year window:
• The payment will be subject to tax at the recipient’s margin rate of income tax
• There is no test against the member’s remaining LTA.
Death of the member occurs aged 75 or older • The payment will be subject to tax at the recipient’s margin rate of income tax• There is no test against the member’s remaining LTA.

Beneficiary, Dependant, Nominee, Successor… What’s the difference?

You need to understand the differences between the three types of beneficiary when someone flexibly accesses their pension. A beneficiary will be able to receive a pension income from a deceased member’s fund. If the beneficiary does not fall into one of the below, they will be unable to receive death benefits from a pension.

– Someone who was a dependant of the original scheme member at time of death.
– Could be a spouse, civil partner, child under age 23, or older child who was dependant due to disability.

– Anyone nominated by the member before death.

– Anyone nominated by a dependant, nominee or successor to receive any remaining benefits.
– No limit on number of successors

Click here is you want some really useful talking books that help you to learn on the go.

Good luck with preparing for your R04 exam.