UPSC Prelims Practice Questions — India’s Pension Landscape

Q1. The Pension Fund Regulatory and Development Authority (PFRDA), constituted under the PFRDA Act, 2013, functions under the administrative control of which one of the following?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department of Financial Services, Ministry of Finance
  • C. Ministry of Labour and Employment
  • D. Ministry of Corporate Affairs

Q2. Under the Central Civil Services (Implementation of the Unified Pension Scheme under the National Pension System) Rules, 2025, what is the minimum number of years of qualifying service required for an eligible Central Government employee to be entitled to the FULL assured payout of 50% of average basic pay?

  • A. 10 years
  • B. 20 years
  • C. 25 years
  • D. 33 years

Q3. Which one of the following statements best describes the Atal Pension Yojana (APY) as currently implemented in India?

  • A. A defined-benefit pension scheme exclusively for Central Government employees recruited on or after 1 January 2004.
  • B. A guaranteed minimum monthly pension scheme for unorganised-sector workers, administered by the Pension Fund Regulatory and Development Authority.
  • C. A contributory provident fund scheme for organised-sector wage earners administered by the Employees' Provident Fund Organisation.
  • D. A non-contributory old-age social assistance pension funded entirely by the Union under the National Social Assistance Programme.

Q4. The Pension Fund Regulatory and Development Authority, which administers the Atal Pension Yojana, derives its statutory powers from which one of the following Acts?

  • A. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952
  • B. The Payment and Settlement Systems Act, 2007
  • C. The Pension Fund Regulatory and Development Authority Act, 2013
  • D. The Insurance Regulatory and Development Authority Act, 1999

Q5. Among the Life Cycle Funds offered under the 'Auto Choice' investment option of the National Pension System (NPS), which one has the HIGHEST permissible equity allocation at the starting age of the subscriber?

  • A. LC25 — Conservative Life Cycle Fund
  • B. LC50 — Moderate Life Cycle Fund
  • C. LC75 — Aggressive Life Cycle Fund
  • D. Balanced Life Cycle Fund

Q6. With reference to the National Pension System (NPS), consider the following statements: 1. A Tier II account can be opened by an individual only if he/she has an active Tier I PRAN. 2. Withdrawals from a regular (non-Tax Saver) Tier II account are unrestricted and can be made any time. 3. Under Active Choice, a subscriber can allocate up to 100% of the Tier II corpus to Asset Class E (Equity). 4. Contributions made to a regular Tier II account are eligible for the additional deduction of ₹50,000 under Section 80CCD(1B) of the Income-tax Act. Which of the statements given above is/are NOT correct?

  1. A Tier II account can be opened by an individual only if he/she has an active Tier I PRAN.
  2. Withdrawals from a regular (non-Tax Saver) Tier II account are unrestricted and can be made any time.
  3. Under Active Choice, a subscriber can allocate up to 100% of the Tier II corpus to Asset Class E (Equity).
  4. Contributions made to a regular Tier II account are eligible for the additional deduction of ₹50,000 under Section 80CCD(1B) of the Income-tax Act.
  • A. 1 and 3 only
  • B. 2 only
  • C. 4 only
  • D. 2 and 4 only

Q7. Under the Unified Pension Scheme (UPS) notified for Central Government employees in 2025, the term 'assured pension' refers to which one of the following?

  • A. 50% of the average basic pay drawn during the last 12 months of service, payable to employees with a minimum qualifying service of 25 years
  • B. 50% of the last drawn basic pay plus dearness allowance, payable to employees with a minimum qualifying service of 20 years
  • C. A flat monthly amount of Rs. 10,000 payable to all retirees, irrespective of the length of qualifying service
  • D. 60% of the average basic pay over the entire period of service, payable on completion of 30 years of service

Q8. Among the pension arrangements applicable to Central Government employees, which one entails the highest mandatory Government (employer) contribution expressed as a percentage of the employee's basic pay plus dearness allowance?

  • A. National Pension System (NPS) for Central Government employees
  • B. Unified Pension Scheme (UPS) for Central Government employees
  • C. Employees' Pension Scheme, 1995 (EPS-95)
  • D. Atal Pension Yojana (APY)

Q9. At the Union level, the Indira Gandhi National Old Age Pension Scheme (IGNOAPS) under the National Social Assistance Programme is implemented by which one of the following Ministries?

  • A. Ministry of Social Justice and Empowerment
  • B. Ministry of Rural Development
  • C. Ministry of Labour and Employment
  • D. Ministry of Finance, Department of Financial Services

Q10. Which one of the following statements best describes the Indira Gandhi National Old Age Pension Scheme (IGNOAPS)?

  • A. A contributory, voluntary micro-pension scheme open to all Indian citizens aged 18–40 in the unorganised sector, regulated by PFRDA
  • B. A non-contributory central assistance to every Indian citizen aged 60 years and above, irrespective of income, granted as a universal old-age pension
  • C. A non-contributory, fully Centre-funded social assistance to persons aged 60 years and above belonging to Below Poverty Line households, with differential amounts for those 80 years and above
  • D. A defined-benefit pension guaranteeing 50% of the last drawn basic pay to all retired workers in the unorganised sector after 25 years of contribution

Q11. Which one of the following is the single largest source of inflow into the Employees' Pension Fund corpus under the Employees' Pension Scheme, 1995?

  • A. The employee's own monthly statutory contribution credited directly to the Pension Fund
  • B. The employer's diverted contribution out of the statutory provident fund share
  • C. The Central Government's budgetary support linked to the prescribed wage ceiling
  • D. The administrative charges levied by EPFO on covered establishments

Q12. As of the close of FY 2025-26, which one of the following contributory pension schemes regulated by PFRDA has the largest subscriber base in India?

  • A. National Pension System – Central Government sector
  • B. National Pension System – All Citizens Model
  • C. Atal Pension Yojana
  • D. National Pension System – Corporate sector

Q13. The Pension Fund Regulatory and Development Authority (PFRDA), which administers the National Pension System and the Atal Pension Yojana, functions under which one of the following Union Government departments/ministries?

  • A. Department of Economic Affairs, Ministry of Finance
  • B. Department of Financial Services, Ministry of Finance
  • C. Ministry of Labour and Employment
  • D. Department of Revenue, Ministry of Finance