Will Salmon, Candidate Support & Business Development Adviser, BTS, is working towards R06 to complete his CII Level 4 Diploma, having completed R01 – R05 in recent months using BTS materials. He says a highlight of his role is “helping other learners who are going through the same study process”.
Here he takes a look at the process for achieving success in R04.
I thought I knew pensions pretty well. By the time I started studying for R04 in October 2023 I’d worked within pension teams at a large assurer for nearly 4 years. I wasn’t allowed to start my role with them until I’d completed 3 weeks of classroom training to learn all about the different types of pensions their customers had -and it was quite a list! Many of them were no longer available to new customers. However, there were plenty of customers with accounts that could continue to hold them, here’s a few examples:
- With Profit pension
- Section 32
-
Stakeholder
- Stakeholder With Profit.
-
SERPS
- Workplace pensions Aviva hosted for various employers, such as British Airways.
That’s just a small selection of the ones I can remember!
Most of these pensions were Defined Contribution (DC) schemes that all worked slightly differently. We had several different administrative processes for things like setting up new payments, adding Letters of Authority (LOAs), encashment and producing illustration packs, to name a few daily tasks I carried out.
I became very familiar with rules around DC pensions. The Annual Allowance, the Money Purchase Annual Allowance, the Lifetime Allowance, as well as rules for withdrawal including UFPLS, Annuities and, usually our customers’ favourite….tax free cash! Or PCLS as we call it.
Customers also had questions ranging from:
“Can I re-start payments in?”
“When can I start taking my money?”
“My employer told me I get tax relief, how does that work?”
And after the Bond crisis in September 2022, customers asked lots more questions like this:
“My pension has reduced by £20k, why is that!?”
As you can imagine I put my knowledge about lifestyling to good use during this time!
So, once I’d passed R01 and R05 my natural next step felt like R04, “because I work in pensions”.
This was a logical thought, although I was in for a bit of a shock because there was a whole other side to pensions which I’d yet to come across – Defined Benefit (DB).
Most people may know DB pensions as ‘final salary’ pensions with their accrual rates of 1/80th 1/60th etc, meaning that a set amount of their final salary is guaranteed to be paid to them throughout their retirement. This category also includes DB pensions which are calculated on Career Average earnings (rather than final salary) such as Teacher’s Pensions. Although, it largely depends on the date they joined the scheme as to which type they have – ‘full’ Final Salary DB or Career Average Earnings basis.
It was very interesting to learn about this ‘new’ side of pensions but also, very complicated!
The R04 unit helps give a good understanding of calculating pension contributions for an individual, which is a key skill of any financial professional. This involves making sure that the customer has not gone over the Annual Allowance and working backwards to see if the customer can make additional top ups using the remainder of previous year’s Annual Allowances (known as ‘carry forward’).
R04 was also a good opportunity for me to learn more about the changing rules about State Pensions. A number of different State Pensions could be payable based on the age of the recipient and whether they had opted out of SERPS previously when it was allowed by the Government. This meant that additional National Insurance Contributions were instead directed to a private pension.
There were other types of State Pension too. New claimants will receive the new ‘simpler’ Single Tier State Pension, which requires 35 years of National Insurance contributions to be entitled to the full amount. Although it’s still important to learn about all the older types because many people are still receiving them, so a financial professionals, such as advisers and paraplanners will therefore need good knowledge in this area.
Luiza Todd, a BTS Founding Director, loves pensions – it’s her favourite subject! But she always finds the phrase “pension simplification” to be ironic. In her view, in an effort to simplify things the Government have actually made things more complicated!
R04 also gives a good background knowledge of pension law and regulation. Such as the legal requirements to create and maintain Registered Pension Schemes (RPS) and the key roles within an RPS of pension Administrator, Trustees and Members. In addition, you’ll learn about the various regulators and ombudsmen involved in historic and ongoing disputes with certain DB pension schemes.
R04 is what I’d consider to be a ‘heavy’ exam. There is a lot of detail to learn about different types of pensions (DC, DB and State Pensions) as well as the different stages of the ‘lifecycle’ of a pension, such as accumulation (making payments and saving up) and decumulation (reaching retirement age and taking the money). Not forgetting the key knowledge about pension law and regulation.
Although there are fewer calculations in the R04 exam compared to R03 (for example) the maths is fairly straightforward and mainly involves awareness of things like Annual Allowance maximums (and carry forward availability) and calculating the amount of tax-free cash available.
The BTS R04 Study Guide provides a very thorough understanding of all the different pension knowledge needed to pass the exam and is written by enthusiastic and highly experienced individuals and I believe was key to me passing first time.
I was also very glad of my working experience because much of the DC pensions knowledge surrounding accumulation and decumulation stages I already had from my day-to-day work. My R04 studies helped to highlight just how much I already knew about that particular aspect of pensions, which meant I could concentrate on the other areas to revise for my exam.
Pensions is a very complex area, which is ever changing and advice firms will have clients who have various schemes available to them based on their age, which they will require advice on. This makes R04 a key unit as part of the CII Diploma in Regulated Financial Planning.
For those seeking additional support, Bespoke Training Solutions offers specialised resources designed to enhance exam success. From detailed revision guides to interactive workshops, BTS provides a range of tools to help learners deepen their understanding and refine their exam technique. Whether you’re sitting R02, R03, or another CII exam, Bespoke Training Solutions is equipped to help you achieve your qualification goals with confidence.
Bespoke Training Solutions, a Davies Company, have been supporting regulated exams for over 20 years. Known as ‘the exam experts’ within the industry, BTS provide support for the CII regulated exams by way of study guides, e-learning resources, and workshops for L3, L4 & L6 units. You can learn by visiting https://www.bespoketrainingsolutions.com
You can also visit https://careerszone.bespoketrainingsolutions.com/ and check out the BTS Careers Zone for study plans, answers to exam FAQs and lots more to support your journey.
