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2026 Statistics
Key Facts: IFoA SP4 Exam
3h 20m
Exam Duration
IFoA SP4 syllabus
£385
Standard Fee
IFoA fees page
200 hrs
Recommended Study
IFoA SP4 syllabus
7
Content Areas
SP4 syllabus
Written
Exam Format
IFoA SP4 syllabus
2026
Syllabus Year
IFoA curriculum
As of June 2026, the IFoA lists SP4 Pensions and Other Benefits as a 3 hour 20 minute online open-book written paper of short and long-answer questions, not multiple choice, with a standard exam fee of £385 and a recommended 200 study hours. The 2026 syllabus spans scheme design, funding methods and assumptions, investment and asset-liability management, risk management and de-risking (LDI, buy-in, buy-out, longevity swaps), accounting for pension costs under IAS 19, member options and UK regulation, with growing emphasis on risk sharing, defined contribution and public-sector schemes. The pass mark is set by the Board of Examiners each sitting. This free bank offers 100 MCQs as technical-knowledge prep.
Sample IFoA SP4 Practice Questions
Try these sample questions to test your IFoA SP4 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1In a defined benefit (DB) pension scheme, who bears the primary investment and longevity risk relating to the promised benefits?
A.The sponsoring employer
B.The individual member
C.The investment manager
D.The state pension scheme
Explanation: In a DB scheme the benefit is defined by a formula (e.g. final salary or career-average), so the sponsor must fund whatever is needed to meet it. Investment shortfalls and improved longevity increase the cost to the employer, who therefore bears these risks.
2In a pure defined contribution (DC) arrangement, the member's retirement benefit at the point of retirement depends MOST directly on which combination of factors?
A.The employer's funding valuation and the scheme's technical provisions
B.Contributions paid, investment returns achieved, and charges deducted
C.The statutory revaluation order and a guaranteed accrual rate
D.The scheme actuary's chosen discount rate for the liabilities
Explanation: In DC the member has an individual pot equal to accumulated contributions plus investment returns net of charges; the retirement outcome (e.g. annuity or drawdown) flows from that pot. There is no employer-guaranteed accrual.
3A career-average revalued earnings (CARE) scheme differs from a final-salary scheme primarily because the pension is based on:
A.The member's highest single year of salary only
B.The total of employer and member contributions with investment return
C.Revalued earnings across the member's whole career rather than salary near retirement
D.A fixed cash lump sum unrelated to salary
Explanation: CARE accrues a slice of pension each year based on that year's pensionable earnings, with each slice revalued to retirement. This reduces the sponsor's exposure to late-career salary spikes compared with final salary.
4Which arrangement is the clearest example of risk-sharing between the sponsor and members?
A.A pure final-salary DB scheme
B.An individual DC pot with member-selected funds
C.An insured annuity bought at retirement
D.A collective defined contribution (CDC) scheme
Explanation: CDC pools contributions and investment/longevity experience across members and targets (but does not guarantee) a benefit; the sponsor's cost is typically fixed while members share residual risk. This sits between DB and DC.
5When designing a new occupational pension scheme, which stakeholder objective is MOST associated with the employer rather than the members?
A.Controlling and stabilising the long-term cost of providing benefits
B.Maximising the certainty of their own retirement income
C.Receiving the highest possible tax-free lump sum
D.Having flexibility to draw benefits early
Explanation: Employers sponsor schemes to recruit, retain and reward staff while keeping costs affordable, predictable and tax-efficient. Cost control and stability are core sponsor objectives; the other items are member-side objectives.
6A 'hybrid' pension scheme is best described as one that:
A.Provides only lump-sum benefits with no pension
B.Combines DB and DC features, for example a DB underpin on a DC pot
C.Invests solely in index-linked government bonds
D.Is funded entirely on a pay-as-you-go basis
Explanation: Hybrid designs blend DB and DC elements to share risk; a common form gives members a DC pot with a DB minimum (underpin), or DB benefits with a DC top-up. This balances cost control against benefit security.
7Which of the following is typically classified as an 'other benefit' provided alongside a pension scheme rather than a core retirement pension?
A.An age-retirement pension accrued to date
B.A deferred pension for an early leaver
C.A lump-sum death-in-service benefit
D.A revalued CARE pension at retirement
Explanation: Other benefits include death-in-service lump sums, ill-health early retirement, and dependants' pensions, which are ancillary risk benefits funded alongside core retirement provision. The others are core retirement-pension benefits.
8A scheme provides a pension of 1/60th of final pensionable salary for each year of service. A member retires after 30 years with final pensionable salary of £48,000. What is the annual pension before any commutation?
A.£14,400
B.£28,800
C.£16,000
D.£24,000
Explanation: Pension = accrual rate × years × final salary = (1/60) × 30 × £48,000 = (30/60) × £48,000 = 0.5 × £48,000 = £24,000. This is a standard final-salary calculation.
9A key advantage to the employer of moving new entrants from a DB scheme to a DC scheme is that it:
A.Transfers investment and longevity risk to members and stabilises employer cost
B.Guarantees members a higher pension in retirement
C.Removes the need to make any employer contributions
D.Eliminates all administration and governance requirements
Explanation: Closing DB to new entrants and offering DC caps the employer's commitment at the agreed contribution rate, transferring investment and longevity risk to members and making future cost far more predictable.
10Auto-enrolment, requiring eligible workers to be enrolled into a qualifying pension with minimum contributions, is primarily a policy tool to address:
A.Excessive employer DB funding costs
B.Under-saving for retirement among the working population
C.The shortage of index-linked gilts
D.Mortality improvement uncertainty
Explanation: Auto-enrolment uses inertia to widen pension coverage and raise saving levels among workers who would otherwise not join, tackling inadequate retirement provision. It is mainly a DC-focused coverage measure.
About the IFoA SP4 Practice Questions
Verified exam format metadata for IFoA SP4 Pensions and Other Benefits Specialist Principles is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.