NPS Quiz: Test Your Knowledge of National Pension System Accounts

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the purpose of Tier-I account in NPS?

To generate a unique Permanent Retirement Account Number

To procure a pension for life by purchasing an annuity

To provide liquidity of investments and withdrawals

To accumulate contributions over time till retirement (correct)

Which statement accurately describes Tier-II account in NPS?

It requires a minimum of 40% corpus for purchasing an annuity

It offers liquidity of investments and withdrawals (correct)

It grows with market linked returns

It is a mandatory account for every NPS subscriber

What is the purpose of PRAN in the National Pension System?

Allows for easy transfer between post office and bank for PPF account

Facilitate the opening of a PPF account

Generated and maintained by the Central Recordkeeping Agency (correct)

Mandatorily utilized for pension procurement on superannuation

What is the maximum number of deposits allowed in a PPF account in a year?

In PPF, when should one deposit to ensure interest for the full month?

Before the 5th of the month Signup and view all the answers

Who can open a PPF account?

Any person irrespective of age Signup and view all the answers

What is the minimum investment amount for the Senior Citizens' Savings Scheme?

Rs 1,000 Signup and view all the answers

How often is interest payable on the Senior Citizens' Savings Scheme?

Quarterly Signup and view all the answers

What happens if there is an excess amount in a Senior Citizens' Savings Scheme account?

The excess funds will be reimbursed to the depositor Signup and view all the answers

Which section of the Income-tax Act, 1961 allows senior citizens to claim a deduction for investing in the Senior Citizens' Savings Scheme?

Section 80C Signup and view all the answers

What is a debt fund?

A mutual fund scheme that invests in fixed income instruments like bonds and corporate debt securities Signup and view all the answers

What is the maximum investment amount for the Senior Citizens' Savings Scheme?

Rs 30 lakh Signup and view all the answers

What are debt funds also referred to as?

Income Funds or Bond Funds Signup and view all the answers

When does interest become applicable on the Senior Citizens' Savings Scheme?

Date of deposit Signup and view all the answers

Who are debt funds ideal for?

Investors who want regular income and are risk-averse Signup and view all the answers

Which investment option is less volatile and less risky than equity funds according to the text?

Debt mutual funds Signup and view all the answers

What is the National Pension System (NPS) regulated by?

Pension Fund Regulatory and Development Authority (PFRDA) Signup and view all the answers

Which type of product is the National Pension System (NPS)?

Defined contribution product Signup and view all the answers

Study Notes

National Pension System (NPS)

A unique Permanent Retirement Account Number (PRAN) is generated and maintained by the Central Recordkeeping Agency (CRA) for individual subscribers.
NPS offers two types of accounts: Tier-I and Tier-II.
Tier-I account is a pension account with restricted withdrawals.
Tier-II account is a voluntary account that offers liquidity of investments and withdrawals, but requires an active Tier-I account.
At least 40% of the corpus must be used to procure a pension for life by purchasing an annuity from a life insurance company on exit/retirement/superannuation.

Public Provident Fund (PPF)

A 15-year scheme that can be extended indefinitely in blocks of 5 years.
Can be opened in a designated post office or bank branch, or online with a few banks.
Can be transferred from a post office to a bank or vice versa.
A person of any age can open a PPF account, including those with an EPF account.
A maximum of 12 deposits can be made in a year, but must be before the 5th of the month to get interest for the full month.

Debt Mutual Funds

A mutual fund scheme that invests in fixed income instruments, such as corporate and government bonds, and money market instruments.
Also referred to as Income Funds or Bond Funds.
Ideal for investors who want regular income and are risk-averse.
Less volatile and less risky than equity funds.
Helps achieve financial goals in a more tax-efficient manner and earns better returns.

Senior Citizens' Savings Scheme (SCSS)

A scheme for senior citizens that allows a deduction of up to Rs 1.5 lakh under section 80C of the Income-tax Act, 1961.
The investment minimum is Rs 1,000 and the maximum is Rs 30 lakh.
Interest is payable on a quarterly basis and applicable from the date of deposit to 31st March/30th June/30th September/31st December.
Excess amounts in a SCSS account will be reimbursed to the depositor, and only the PO Savings Account Interest Rate will be in effect until reimbursement.

Real Estate

The house you live in is for self-consumption and should not be considered an investment.
A second property can be an investment if you do not intend to live in it.
The location of the property determines its value and rental income.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge on the different types of NPS accounts - Tier-I and Tier-II, and understand the restrictions and benefits associated with each. Learn about the Permanent Retirement Account Number (PRAN) and the role of the Central Recordkeeping Agency (CRA) in maintaining NPS accounts.