AFAR1 — Retirement planning — Unit 1

What AFAR1 covers

• •State Pension: qualifying years, new State Pension, deferral
• •Occupational DB vs DC, auto-enrolment and the employer duty
• •Personal pensions, SIPPs and stakeholder
• •Tax relief: relief at source vs net pay; annual allowance £60,000
• •MPAA £10,000, tapered annual allowance, carry forward
• •Lump sum allowance £268,275 and lump sum and death benefit allowance

3 free AFAR1 practice questions

Straight from Mock Paper 1, in the real exam style — no sign-up, no paywall.

1. Q1.For the 2026/27 tax year, what is the full weekly rate of the new State Pension (before any deferral enhancement)?

   1. A£203.85
   2. B£221.20
   3. C£241.30
   4. D£268.50
   Reveal the answer

   C is correct. The full new State Pension for 2026/27 is £241.30 a week (£12,547.60 a year). Older figures from earlier tax years are a common distractor — always use the current year's rate in an exam.

2. Q2.To receive the full new State Pension, a person normally needs:

   1. A30 qualifying years on their National Insurance record
   2. B35 qualifying years on their National Insurance record
   3. C40 qualifying years on their National Insurance record
   4. DTo have been in paid employment for 35 consecutive years
   Reveal the answer

   B is correct. The full new State Pension requires 35 qualifying years of National Insurance contributions or credits. Fewer years produce a proportionally reduced pension. The years need not be consecutive.

3. Q3.Which statement about deferring the State Pension is correct?

   1. ADeferral is never possible once State Pension age is reached
   2. BDeferring increases the pension by a fixed £50 a week regardless of how long deferral lasts
   3. CDeferring can increase the weekly amount eventually paid, but the client should weigh the higher income against the years of payments foregone
   4. DDeferral automatically triggers the money purchase annual allowance
   Reveal the answer

   C is correct. State Pension deferral can boost the eventual weekly amount, but it is a trade-off: no payments are received during the deferral period. It is not linked to the MPAA, which applies to money purchase pension contributions.

How to pass AFAR1

• ✓The lifetime allowance was replaced: learn LSA and LSDBA, not the old LTA figure.
• ✓MPAA is triggered by flexibly accessing DC benefits, not by taking PCLS from an uncrystallised pot on its own in every case — read the trigger list.
• ✓Carry forward needs unused AA from the three previous tax years and being a member of a scheme.

AFAR1 exam — common questions