The Chartered Insurance Institute (CII) R04 Pensions and Retirement Planning unit now has the lowest countrywide pass rate. In this article, Luiza Todd FPFS CFP explores five reasons why candidates can struggle with the R04 exam and offers her tips on how to pass the CII R04 exam.
Firstly, congratulations on achieving your Certificate in Mortgage Advice! We know how much hard work goes into studying and revising for the exams, so that’s a real achievement.
With your Certificate completed, you are well on your way to being able to set up as a Mortgage Adviser, but there is another step you need to take first: achieving Competent Adviser Status (CAS).
The CII pensions unit had a countrywide pass rate of 61% in the 2020 calendar exam year. This is a unit that requires a minimum of 50 study hours and gives candidates 10 CII credits towards the regulated DipFS, but don’t let this fool you.
Our years of experience coaching and supporting this unit have shown that most candidates will need more than the minimum study hours, and nearly all will come away baulking at the meagre 10 credits for the effort required (it should be worth more in our opinion!). So, what are the top five reasons for this paper hitting the charts as the exam with the lowest national pass rate in 2020?
When HMRC came up with the phrase ‘pension simplification’ they were clearly having a chuckle! The changes brought in through the annual Finance and Pensions Acts, might have been intended to make pensions simpler, but there are still so many different rules associated with different pension policies, regimes, caps, valuation factors, tests, death benefits, state pensions and ages, only a real pensions technician would dare to say this was simple.
As an example, the annual allowance charge – one of the caps introduced in 2006 in an attempt to simply pensions, started off relatively simple, acting as a cap on annual defined contribution (DC) pension contributions and defined benefit (DB) benefit accrual.
If the cap was breached a tax charge was triggered at the individual’s marginal rate, known as the annual allowance charge. Additional tweaks and changes brought in by successive Chancellors such as carry forward, tapering of the annual allowance and the cherry on its cake, the Money Purchase Annual Allowance (known in less respectful circles as More Pain for Advisers and Administrators), have muddied the waters somewhat!
From your AA to your LTA, from the AAA to the MPAA, RPSs, PPS, SSASs, SIPPS and RACs to name a few there. Have you ever come across a subject that has more abbreviations than pensions?
Keeping track of what they each stand for is tricky enough without having to remember how they each work! Check out the BTS R0 glossary, available as a free pdf, to help you keep all your abbreviations in one place.
To pass the CII R04, the examiner expects candidates to have a firm knowledge of not only the current rules, but some of the old rules as well! For example, simplification of the state pension came in from 6 April 2016, yet the R04 exam papers still contain questions on Category B basic state pensions, old deferral rules, how savings credit works etc.
Pension legislation is generally introduced via annual Pension and Finance Acts. This leads to so many different dates relating to when each change to pension rules came in. For example, inflation proofing of pensions, evaluation pre-retirement and escalation in retirement.
Both have minimums that DB schemes must usually adhere – so CPI capped at 5% and/or 2.5%. But the year this minimum fell is DIFFERENT for revaluation and DIFFERENT for escalation.
Long question stems, use of double negatives, grids and tables; all of which make deciphering the questions tricky. Candidates need to develop the skill of identify key question information and words that are ‘exam fluff’ before they can even begin to apply their knowledge to the question asked.
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Find out more in depth help and advise to structure your R04 studies by viewing our R04 Study Plan.
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