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CMA Intermediate · Financial Management and Business Data Analytics · Financial Institutions

Which statement about the National Pension System (NPS) in India is correct?

NPS is a defined-contribution pension scheme regulated by PFRDA. The final corpus and pension depend on the amounts contributed and the investment returns earned across equity, corporate debt and government securities, so no fixed benefit is guaranteed. It is not an IRDAI product or an EPFO scheme.

  1. AIt is a defined-benefit scheme guaranteeing a fixed pension
  2. BIt is regulated by IRDAI and invests only in government bonds
  3. CIt is a defined-contribution scheme regulated by PFRDA where the retirement corpus depends on contributions and investment returnsCorrect
  4. DIt is run by the Employees' Provident Fund Organisation and pays interest declared annually by the government

Explanation

NPS is a defined-contribution scheme regulated by PFRDA. The corpus depends on contributions and returns from chosen asset classes, so no fixed pension is guaranteed. The other options mix up the regulator, the benefit type or the EPFO scheme.

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