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Question 1
Which of the following consumers would NOT be classified as a vulnerable consumer under the Consumer Protection Code?
Correct Answer:
Dermot, who earns over €115,000 per annum.
Explanation:
Under the Consumer Protection Code, a vulnerable consumer is someone who faces barriers that make it harder to understand, compare, or engage with financial products and services. These barriers can come from disabilities or health issues, language or literacy problems, or financial hardship and lack of experience. In these scenarios, the person with a serious health issue that affects writing shows a disability that can affect how they receive and process information. The immigrant with limited English faces a language barrier, making it harder to understand terms and options. The person with a poor credit history may be in financial distress, which can influence how they interpret information and make decisions about products. Earning a high income, by itself, does not create such barriers or vulnerability. So, the consumer with income above €115,000 would not be classified as vulnerable.
Question 2
Which statement best reflects the tax treatment of ARF inheritance by a non-spouse, based on the material provided?
Correct Answer:
Exempt from inheritance tax but subject to a 30% income tax charge
Explanation:
The key idea is how ARF benefits are taxed when they pass to someone who isn’t a spouse. For ARFs, the death benefit paid to a non-spouse isn’t charged as inheritance tax (CAT). Instead, the value of the inherited ARF is treated as income, triggering a 30% income tax charge on that amount. This charge is typically deducted at source by the fund administrator. So this treatment means the beneficiary doesn’t pay CAT on the ARF, but they do face a 30% income tax bill on the inherited amount. The other options don’t fit because capital gains tax isn’t applied here, PAYE at the beneficiary’s marginal rate isn’t the mechanism, and it isn’t taxed as CAT or exempt from income tax in the way those alternatives suggest.
Question 3
Which statement best describes a Lifestyle fund?
Correct Answer:
It changes its asset allocation to more secure assets as retirement approaches
Explanation:
Lifestyle funds use a glide path approach: as retirement gets closer, the fund systematically shifts from higher-risk assets toward lower-risk assets. This automatic rebalancing aims to reduce volatility and protect capital as the investor’s time horizon shortens. So, the description that it changes its asset allocation to more secure assets as retirement approaches is the best fit. Early on, the fund tends to hold more equities to seek growth, then gradually increases exposure to bonds and cash equivalents. The other statements don’t match SAMPLEhow lifestyle funds are designed: they don’t increase risk as retirement nears, they don’t invest only in luxury stock shares, and they aren’t restricted to wealthy investors.
Question 4
In the Jamie example, Brigitte has obtained a PAO over his PRSA. The PAO is served on which party?
Correct Answer:
ABC Life Co.
Explanation:
The important idea is that authority over a PRSA through a PAO must be recognised by the scheme administrator. Brigitte, as the holder of the PAO, needs the PRSA provider to acknowledge and accept that authority before she can act on Jamie’s PRSA. That’s why the PAO is served on ABC Life Co., the entity administering the PRSA. Serving the provider ensures the actions Brigitte takes are valid for the plan, and it avoids questions about who is authorised. It wouldn’t be served on Jamie or on Brigitte alone, or on both jointly; the necessary party to acknowledge and carry out the authority is the PRSA administrator.
Question 5
What is the limit on the total amount of all tax free ex-gratia termination payments an individual can take over their lifetime?
Correct Answer:
€200,000
Explanation:
Ex-gratia termination payments are discretionary sums paid when you leave a job, not part of a contractual redundancy package. The tax rules set a lifetime cap on how much of these payments can be received tax-free, and that cap is €200,000. This limit applies across all employments and all years, so the total tax-free amount from any ex-gratia termination payments you receive over your career cannot exceed €200,000. Any amount above €200,000 is taxed as employment income in the year it’s received, at your marginal tax rate (subject to normal PAYE/PRSI/USC rules). For example, if you’ve already received €180,000 tax-free and then get €30,000 more, only €20,000 would remain tax-free; the extra €10,000 would be taxable. That’s why the correct limit is €200,000—the lifetime cap on tax-free ex-gratia termination payments.
Question 1
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About this Exam

Prepare with the Qualified Financial Adviser (QFA) Pensions Exam 2 Practice Test practice quiz. This question bank includes 10 questions covering consumer, describes, fund, limit, and pension. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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Qualified Financial Adviser (QFA) Pensions Exam 2 Practice Test

This practice set contains 10 questions from the matching question bank and focuses on consumer, describes, fund, limit, and pension. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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