Pensions Exercises

A. You earn £30,000 a year and pay income tax at basic rate. You contribute 4% of your gross pay to a company pension plan. You will not be contracted out of the state scheme so will pay full NI contributions. By how much will /our net after-tax monthly take-home pay be lower than it would have been had you not been a member of the company pension scheme?

3 What are the main questions you will need to ask about the company )Pension scheme of which you would become a member on first taking up Employment with a company?

A member of a fully-funded occupational pension plan, you have been contracted out of the state earnings-related scheme. You have heard it said :hat you might be at a disadvantage on retirement should inflation continue it a high level, since you will have forfeited part of your state pension which vas inflation-proofed by the state. Is this true?

Jill Mortimer continues working full-time until her retirement at age 60. the is unmarried. During 40 years she has paid the full rate of National Insurance contributions. How will her state retirement pension be :calculated?

E Jack Martindale is earning £6,500 a year with a company that operates no occupational pension plan. How much does he pay in a year in National Insurance contributions? What do the company's contributions come to in a year?

F After having been a member of your company pension scheme for six years you decide to change jobs and elect to have your present pension rights preserved. The pension fund rules provide that you earn pension rights each year of 1/60th of final salary, this term being defined as the average salary over the last three years of service with the company. Maximum pension is 40/60ths of this. Assuming you earned £4,500, £6,000 and £7,980 respectively in your last three years, what will be the value in today's terms of your preserved pension?

Pensions Test Questions

1. Discover to what figure the basic state pension has been raised.

2. What is excluded from a person's average earnings in assessing the state earnings-related pension?


3. Who pays for the state pension?

4. Discover the present percentage figure of current earnings required to be paid in National Insurance contributions by employees and by employers.

5. If inflation continues after your retirement will the real value of your state pension fall?

6. What is meant by an occupational pension scheme?

7. Distinguish... see: Pensions Test Questions

Refunds, Personal And Business Finance 2017

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