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The Unified Pension Scheme (UPS) was introduced as an option under the NPS architecture for eligible central government employees. From which date did the UPS take effect, and what assurance does it primarily add relative to standard NPS?
A
B
C
D
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2026 Statistics
Key Facts: IAI SA4 Exam
3h 15m
Paper Duration
IAI SA4 format
PUC
Required Valuation Method
Ind AS 19 / AS 15(R)
Rs 20 lakh
Gratuity Ceiling
Payment of Gratuity Act (2018)
8.33%
EPS Diversion of Wages
EPS 1995
6 domains
Syllabus Areas
IAI SA4 syllabus
1 Apr 2025
Unified Pension Scheme Start
Government of India
IAI Subject SA4 (Pensions and Other Benefits Specialist Advanced) is a written, application-based Fellowship-level paper of about 3 hours 15 minutes set in the India jurisdiction, mirroring the IFoA SA4 subject. It applies advanced actuarial judgement to Indian benefit schemes: Projected Unit Credit valuation of gratuity and leave encashment, AS 15(R)/Ind AS 19 accounting with OCI remeasurements, funding and contribution strategy, investment of benefit funds, and integrated risk management. This free bank delivers 100 knowledge-prep MCQs weighted toward valuation and Ind AS 19. Because SA4 is a written paper, the IAI does not publish a fixed MCQ count, fee, or percentage pass mark.
Sample IAI SA4 Practice Questions
Try these sample questions to test your IAI SA4 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.
1Under the Payment of Gratuity Act, 1972, gratuity normally becomes payable to an employee only after completion of a minimum continuous service period. What is that minimum period in the standard case (resignation, superannuation or retirement)?
A.3 years
B.5 years
C.7 years
D.10 years
Explanation: Section 4 of the Payment of Gratuity Act, 1972 requires five years of continuous service before gratuity is payable on resignation, retirement or superannuation. The five-year condition is waived where termination is caused by death or disablement.
2Under the Payment of Gratuity Act, 1972, the standard formula computes gratuity as a number of days' wages for each completed year of service based on the last drawn wages. How many days' wages per completed year applies to employees covered under the standard (non-seasonal) provision?
A.7 days' wages
B.26 days' wages
C.30 days' wages
D.15 days' wages
Explanation: The Act provides gratuity of 15 days' wages for each completed year of service (or part beyond six months), using last drawn monthly wages divided by 26 to derive a day's wage. The 26 is the assumed number of working days in a month, not the multiplier.
3The maximum statutory gratuity payable under the Payment of Gratuity Act, 1972 was raised by notification in 2018. What is the current ceiling on tax-exempt/statutory gratuity that an actuary typically applies when valuing a gratuity liability for a private-sector employer?
A.Rs 20 lakh
B.Rs 10 lakh
C.Rs 25 lakh
D.No ceiling applies
Explanation: The ceiling was raised from Rs 10 lakh to Rs 20 lakh with effect from 29 March 2018. Valuations of statutory gratuity usually cap the projected benefit at this limit unless the employer's scheme rules provide a higher (unfunded enhanced) benefit.
4The Employees' Pension Scheme (EPS), 1995 is administered by the EPFO and provides a defined pension to organised-sector workers. From the employer's statutory provident-fund contribution, what portion of pensionable wages is diverted to fund EPS?
A.1.16%
B.8.33%
C.3.67%
D.12%
Explanation: Of the employer's 12% contribution, 8.33% of wages is diverted to the EPS, with the remaining 3.67% going to the EPF account. EPS is a statutory defined-benefit arrangement, so an actuary must understand its funding split when advising on retirement provision.
5The National Pension System (NPS) in India is regulated by which statutory authority, and what is its fundamental benefit design?
A.PFRDA; a defined-contribution individual-account scheme
B.EPFO; a defined-benefit final-salary scheme
C.IRDAI; a with-profits annuity scheme
D.SEBI; a unit-linked defined-benefit scheme
Explanation: NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) and is a defined-contribution arrangement: benefits depend on accumulated contributions and investment returns, with a mandatory annuitisation portion at exit. This contrasts sharply with the defined-benefit EPS.
6The Unified Pension Scheme (UPS) was introduced as an option under the NPS architecture for eligible central government employees. From which date did the UPS take effect, and what assurance does it primarily add relative to standard NPS?
A.1 April 2024; a guaranteed lump sum only
B.1 April 2025; an assured, inflation-indexed pension
C.1 January 2026; full commutation rights
D.1 April 2023; mandatory equity allocation
Explanation: The Unified Pension Scheme came into effect from 1 April 2025 as an option within NPS for eligible central government employees, providing an assured pension that is inflation-indexed. It reintroduces defined-benefit-style longevity and inflation protection absent from pure defined-contribution NPS.
7An actuary advises a company on whether actuarial valuation of its gratuity liability is required. Under prevailing Indian guidance, an enterprise must generally measure defined-benefit gratuity using an actuarial method when it employs at least how many persons, triggering applicability of the Payment of Gratuity Act?
A.5 employees
B.20 employees
C.50 employees
D.10 employees
Explanation: The Payment of Gratuity Act applies to establishments employing 10 or more persons, making the gratuity benefit a legal obligation that must be measured. Once a material defined-benefit obligation exists, accounting standards require an actuarial (Projected Unit Credit) valuation.
8The Code on Social Security, 2020 consolidates several Indian labour laws, including provisions affecting gratuity. Which change to gratuity eligibility for fixed-term employees does the Code introduce?
A.Fixed-term employees become eligible for gratuity on a pro-rata basis without the 5-year condition
B.Fixed-term employees become eligible for gratuity only after 7 years
C.Fixed-term employees are excluded from gratuity entirely
D.Fixed-term employees receive gratuity only at age 58
Explanation: The Code on Social Security, 2020 makes gratuity payable to fixed-term employees on a pro-rata basis, removing the usual five-year continuous-service condition for them. This expands the obligation and affects the membership data and assumptions an actuary must reflect.
9A funded gratuity arrangement is commonly set up as an approved gratuity trust to obtain tax benefits. Which statute primarily governs the income-tax treatment (deductibility of contributions and exemption of fund income) of such approved gratuity funds in India?
A.The Companies Act, 2013
B.The Trusts Act, 1882 only
C.The Income-tax Act, 1961
D.The Insurance Act, 1938
Explanation: Approved gratuity funds are governed for tax purposes by Part C of the Fourth Schedule to the Income-tax Act, 1961, which allows deduction of ordinary annual contributions and exempts the fund's income. Approval conditions shape how the actuary certifies contribution limits.
10Leave encashment (compensated absences) is a common Indian employee benefit. For accounting purposes, how is the liability for accumulating, vesting leave that can be carried forward and encashed treated?
A.It is ignored until the leave is actually taken
B.It is recognised as a liability measured on an actuarial/PUC basis as service is rendered
C.It is treated only as a contingent liability disclosed in notes
D.It is expensed as a defined-contribution cost each year
Explanation: Accumulating compensated absences that vest are long-term employee benefits where the entitlement builds up with service, so the obligation is recognised and measured actuarially (Projected Unit Credit) as employees render service, not when leave is eventually used or paid.
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Verified exam format metadata for IAI Subject SA4 Pensions and Other Benefits Specialist Advanced is pending. The practice questions above remain available while official exam length, timing, passing score, fee, and administrator details are reviewed.