Question 1

Under the National Pension System (NPS), "Tier I Account" refers to:

A fixed deposit account.A voluntary savings account with withdrawal flexibility.A corporate salary account.A non-withdrawable pension account meant for retirement savings.

View Explanation

Tier I is the primary pension account which is restrictive in nature regarding withdrawals (corpus is locked till retirement). Tier II is a voluntary savings facility with unrestricted withdrawals.

Question 2

The "Atal Pension Yojana" (APY) provides a guaranteed minimum monthly pension to subscribers ranging from:

?1000 to ?5000?2000 to ?10000?5000 to ?15000?500 to ?2000

View Explanation

APY provides five slabs of guaranteed minimum pension: ?1000, ?2000, ?3000, ?4000, and ?5000 per month, depending on the contribution amount and age of entry.

Question 3

In the NPS "Active Choice" investment option, what is the maximum cap on equity exposure (Scheme E) for subscribers up to the age of 50?

75%100%50%25%

View Explanation

Under Active Choice, a subscriber can allocate up to 75% of their funds in Equity (Asset Class E). However, this limit tapers down as the subscriber's age increases beyond 50.

Question 4

In the NPS architecture, the "Annuity Service Provider" (ASP) is responsible for:

Providing a regular monthly pension to the subscriber after exit.Maintaining records.Collecting contributions.Investing funds in equity.

View Explanation

ASPs are IRDAI regulated insurance companies empanelled by PFRDA to provide annuity services (pension payments) to subscribers upon their exit/retirement from NPS.

Question 5

Which asset class in the National Pension System (NPS) corresponds to "Government Securities"?

Asset Class GAsset Class CAsset Class AAsset Class E

View Explanation

In NPS, Asset Class E is Equity, Class C is Corporate Bonds, Class G is Government Securities, and Class A is Alternative Investment Funds.

Question 6

Contributions to NPS are eligible for an additional tax deduction (over and above the ?1.5 Lakh 80C limit) under which section of the Income Tax Act?

Section 80CCD(1B)Section 80GSection 80ESection 80D

View Explanation

Section 80CCD(1B) provides an exclusive additional deduction of up to ?50,000 for contributions to the NPS Tier I account, over and above the ?1.5 Lakh limit under Section 80C.

Question 7

In the NPS "Auto Choice" investment option, the "Aggressive Life Cycle Fund" (LC-75) allows a maximum equity exposure of:

75% up to age 3550% up to age 35100% up to age 5025% throughout

View Explanation

Under Auto Choice (LC-75), the equity exposure starts at 75% until age 35 and then gradually reduces every year as the subscriber ages, shifting towards safer debt assets.

Question 8

In the NPS architecture, a "Point of Presence" (PoP) acts as:

The customer interface for registration and contribution collection (e.g., Banks).The Fund Manager.The Central Recordkeeping Agency.The regulator.

View Explanation

PoPs are the first point of contact for NPS subscribers. Banks and financial institutions registered as PoPs facilitate account opening and upload contributions.

Question 9

At the age of 60, what is the maximum percentage of the accumulated NPS corpus that a subscriber can withdraw as a tax-free lump sum?

25%40%60%100%

View Explanation

At retirement (age 60), a subscriber can withdraw up to 60% of the corpus as a tax-free lump sum. The remaining 40% must be used to purchase an annuity.

Question 10

The PFRDA Act, 2013 mandates that the foreign investment limit in the pension sector shall be linked to the limit in which other sector?

Insurance SectorDefense SectorBanking SectorCapital Markets

View Explanation

The Act specifies that the FDI limit in the pension sector shall be the same as the limit in the insurance sector (currently 74%).

Question 11

Which of the following is a key feature of the NPS Tier II account?

It is mandatory for government employees.It has a lock-in period until retirement.It is a voluntary savings account with no withdrawal restrictions.It offers tax benefits under Section 80C.

View Explanation

Tier II is an add-on voluntary savings account. Unlike Tier I, it offers liquidity as subscribers can withdraw money anytime. However, it generally does not offer tax benefits (except for a specific scheme for govt employees with a 3-year lock-in).

Question 12

If an NPS subscriber exits before the age of 60 (Premature Exit), they must compulsorily annuitize at least what percentage of the accumulated corpus?

60%80%100%40%

View Explanation

For premature exit (before superannuation/60), 80% of the corpus must be used to buy an annuity, and only 20% can be withdrawn as a lump sum.

JAIIB Quiz

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