After completion of the workshop the learner must complete an electronic assessment on the learning management system.

  • Form of assessment: Multiple Choice Questions
  • Number of questions: 10 questions
  • Duration: 30 minutes
  • Competency mark: 60%

Upon obtaining a competency mark of 60% the learning will receive a certificate of completion. The learner will be afforded an opportunity to re-do the workshop should a competency mark not be attained.

Question 1

A Pension fund is most likely to enter into a fund policy in order to-

  1. Safeguard the member’s interest.
  2. Ease administrative burdens on the fund.
  3. Minimize risks in terms of liability payouts.
  4. Convert long term liabilities to short term liabilities.

Question 2

Please state if the following statement is true or false.

Trustees of a pension fund are most likely to be looking to maximise the level of security for the members of the pension fund and will probably be looking for benefits to ultimately be bought out with an insurance company.

  1. True
  2. False

Question 3

Please complete the sentence. A product that agrees to meet the benefit payment for a covered group of members for a medical scheme, pension fund or friendly society is known as a(n)-

  1. Buy-out annuity
  2. Buy-in annuity
  3. Longevity insurance.
  4. Liability hedge

Question 4

Which of the following risks that a medical scheme, pension fund or friendly society faces, are removed when such a scheme, fund or society purchases a buy-in annuity?

  1. Longevity risk
  2. Inflation risk
  3. Administrative risk
  4. Investment risk
  1. ii & iii only
  2. ii & iv only
  3. i, ii & iii only
  4. i, ii & iv only

Question 5 

Please complete the sentence. A buy-out annuity is an insurance policy issued to each member individually which enables the scheme, fund or society to-

  1. Decrease volatility.
  2. Reduce liabilities.
  3. Retain assets.
  4. Wind-up.

Question 6 

Which of the following statement with regard to a buy-out annuity are correct?

  1. Under a buy-in annuity, monthly premiums need to be made to the insurance company.
  2. Under a buy-in annuity, a single premium is made to the insurance company.
  3. Under a buy-in annuity, the insurance company issues individual annuities to members.
  4. Under a buy-in annuity, the insurance company issues one annuity to the fund, scheme or society.
  1. i & iii only
  2. i & iv only
  3. ii & iii only
  4. ii & iv only

Question 7

Which one of the following statements is correct with regard to the difference between a buy-in and a buy-out annuity?

  1. A buy-in annuity is seen as an endgame solution whereas a buyout annuity is one option on the path to the endgame.
  2. Under a buy-in annuity the pension fund has no further governance obligations whereas governance obligations are retained under a buy-out annuity.
  3. A buy-in annuity eliminates all further investment mis-match risk whereas the mis-match risk under a buy-out annuity is only reduced.
  4. With a buy-in annuity the member obligations are not included as a liability in the balance sheet whereas with a buy-out annuity the obligations are retained on the balance sheet.

Question 8 

Which of the following statements with regard to longevity insurance are correct?

  1. A longevity insurance policy reduced longevity risk as well as inflation risk.
  2. With a longevity insurance policy, the pension fund trustees retain control of the fund’s assets.
  3. A longevity insurance policy usually applies to all members of the pension fund.
  4. The pension fund is required to pay an upfront premium in order to purchase longevity insurance.

Question 9 

If a pension fund enters into a longevity insurance policy, who ultimately retain responsibility for meeting members’ benefits?

  1. The insurance company
  2. The pension fund
  3. The sponsoring employer
  4. The pension fund and the sponsoring employer

Question 10

Please state if the following statement is true or false.

Pricing for a buy-in is generally expected to be similar to that of a buy-out, but the additional flexibility of the unwind provision can add a premium over a buy-in annuity.

  • True
  • False