CRPC Social Security and Pensions 5

Question 1

A client's defined benefit pension uses a unit-credit formula of 1.5% × years of service × final average salary. With 25 years of service and a $80,000 final average salary, what is the annual pension benefit?

Accepted Answer

$30,000

Answer

1.5% × 25 × $80,000 = $30,000 annual benefit.

Question 2

Under Social Security, what is the maximum family benefit (MFB) expressed as a percentage range of the worker's PIA?

Accepted Answer

150% to 188%

Answer

The maximum family benefit ranges from approximately 150% to 188% of the worker's PIA depending on the PIA bend points.

Question 3

Which pension distribution option provides the highest monthly payment but ceases entirely upon the retiree's death?

Accepted Answer

Life annuity (straight life)

Answer

A straight life annuity pays the maximum monthly amount but provides no survivor benefit after the retiree's death.

Question 4

A 63-year-old client with a non-covered state pension wants to claim Social Security spousal benefits. The GPO will offset the spousal benefit by what fraction of the pension amount?

Accepted Answer

Two-thirds

Answer

The Government Pension Offset reduces Social Security spousal benefits by two-thirds of the non-covered government pension.

Question 5

Under ERISA's minimum participation standards, an employee must generally be allowed to participate in a pension plan when they reach what age and complete what service requirement?

Accepted Answer

21 years old with 1 year of service

Answer

ERISA's general minimum participation standard requires plans to cover employees who are at least 21 and have completed 1 year of service.

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC - Chartered Retirement Planning Counselor Practice Test

CRPC Social Security and Pensions 5