Auto-Enrolment
What Year did auto Enrolment start?
2012
Who pays into a DC pension?
Employer & Employee
Who takes the investment risk in a DC pension?
The member
What percentage of a DC pension can be taken tax-free?
25%
True or false?
False.
The transfer value is known as the Cash Equivalent Transfer Value (CETV) and is the cash value of a pension when it is moving from one scheme to another.
DB has no fund value.
What is the minimum age for auto-enrolment?
22 years old
How are DB pensions funded?
Employer and employee contribute - employer bears the risk and has to top up if things go wrong.
Do DB pensions depend on market performance?
No, they are guaranteed benefits
What is an annuity?
A fixed income purchased with a pension pot
Why do DB transfers over 30k require financial advice?
1- Law
2- To ensure the member understands potential risks/losses
How can employees opt out of auto-enrolment?
They have to wait until 1st contribution then can opt out and get a refund. They have 1 month to do this.
What is the minimum contribution for auto-enrolment
8% total – 5% employee, 3% employer
What could happen to DC pensions during a stock market crash?
The fund value decreases
What are the standard DB options?
1- Annual pension
2- 25% TFC and Reduced Annual Pension
What happens if a DB member transfers to a DC scheme but later regrets it?
NOTHING ! They cannot reverse the transfer once completed
How often do employers have to re-enrol employees?
Every 3 years
How does salary sacrifice impact contributions?
Reduces taxable income, increases pension contributions
What type of strategies are used in lifestyle investment?
Higher risk when young, safer near retirement
What are the Three non-typical options given to some DB members?
1 - Bridging pension
2- Small Pots
3- Trivial Commutation
Once a member transfers their pension it becomes crystallised. Is this true or false?
False.
Only when they actually claim does it become crystallised
What happens if an employee opts out but later wants to re-join?
They must be re-enrolled at the next cycle, or can opt in at any time
What happens if an employer fails to pay contributions on time?
They must report it to The Pensions Regulator & may face penalties
What's the difference between Switching and Redirecting?
Switching: Moving already invested money from one fund to another.
Redirecting: Changing where future contributions will be invested, but leaving past investments unchanged.
What is Flexi-Access Drawdown?
A DC pension option allowing flexible withdrawals while the rest stays invested
A RS calls in what do we need on file in order to speak to them?
We need the receiving scheme discharge and warranty form and need to verify the scheme names match.