Finance · National Pension System
Which of the following is a deep conceptual question concerning the NPS framework and the PFRDA's regulatory philosophy, applicable universally to both resident and non-resident subscribers?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The maximum Equity exposure (Asset Class E) for a subscriber under the Auto Choice Life Cycle Fund (LC75) at the maximum age of 50 years is set at 50% to mitigate high equity market volatility in retirement plan ning.
- 2The core principle of NPS, as a market-linked investment, fundamentally shifts the longevity risk from the state/employer to the individual subscriber, compelling the subscriber to manage their retirement planning horiz on.✓
- 3The mandatory annuity purchase from the accumulated corpus upon exit ensures that the subscriber's entire retirement fund remains protected from credit risk because annuities are backed by a sovereign guara ntee.
- 4The provision for partial withdrawal from the Tier I account is limited to only two specific purposes: higher education of children and critical illness treatment, and is capped at 25% of the subscriber's own contrib utions.
Correct answer
The core principle of NPS, as a market-linked investment, fundamentally shifts the longevity risk from the state/employer to the individual subscriber, compelling the subscriber to manage their retirement planning horiz on.
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