100+ Free IAI SA4 Practice Questions

Prepare for the IAI Subject SA4 Pensions and Other Benefits Specialist Advanced exam with instant access — no signup required.

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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.

About the IAI SA4 Exam

IAI Subject SA4 is a specialist advanced (Fellowship-level) actuarial subject covering pensions and other employee benefits in the India jurisdiction. It builds on Subject SP4 and applies actuarial principles to gratuity, leave encashment and pension scheme valuation, funding and contribution strategy, AS 15/Ind AS 19 accounting, investment of benefit funds, and risk management.

Assessment

Written specialist advanced application paper covering pensions and other benefits in the India jurisdiction

Time Limit

3 hours 15 minutes

Passing Score

Pass mark is set by the IAI for each sitting; the Institute does not publish a fixed percentage

Exam Fee

See the IAI exam fee schedule (varies by sitting and member category) (Institute of Actuaries of India (IAI))

IAI SA4 Exam Content Outline

18%

Indian Pensions and Employee Benefits Regulation

Apply the Payment of Gratuity Act 1972 (five-year vesting, 15 days' wages per year, Rs 20 lakh ceiling), the EPF/EPS framework, PFRDA-regulated NPS, the Unified Pension Scheme effective 1 April 2025, and the Code on Social Security 2020 to benefit design and eligibility.

20%

Gratuity, Leave Encashment and Pension Scheme Valuation

Value Indian benefit schemes using the Projected Unit Credit method with salary projection, multiple decrements, Indian Assured Lives Mortality, and consistent financial and demographic assumptions for gratuity, leave encashment and pensions.

16%

Funding and Contribution Strategy

Select funding methods, design recovery plans, manage surplus and discontinuance/buy-out bases, certify approved gratuity-fund contribution limits, and assess employer covenant within integrated risk management.

20%

Accounting Standards (AS 15 / Ind AS 19) for Employee Benefits

Compute current and past service cost and net interest, route remeasurements to OCI, apply the asset ceiling, account for settlements and curtailments, and prepare the sensitivity and duration disclosures required under Ind AS 19 and AS 15(R).

13%

Investment of Benefit Funds

Apply liability-driven investment and asset-liability matching, work within the Government-notified PF investment pattern and NPS lifecycle funds, and evaluate de-risking transactions such as bulk annuity buy-outs and longevity swaps.

13%

Risk Management for Pension and Benefit Schemes

Use integrated risk management, identify longevity, concentration, liquidity and regulatory risk, perform analysis of surplus and stochastic modelling, and communicate results to trustees under professional standards.

How to Pass the IAI SA4 Exam

What You Need to Know

Passing score: Pass mark is set by the IAI for each sitting; the Institute does not publish a fixed percentage
Assessment: Written specialist advanced application paper covering pensions and other benefits in the India jurisdiction
Time limit: 3 hours 15 minutes
Exam fee: See the IAI exam fee schedule (varies by sitting and member category)

Keys to Passing

Work through all 100 available questions
Review every answer and explanation
Track weak areas and revisit them
Use our AI tutor for tough concepts

IAI SA4 Study Tips from Top Performers

1Anchor every valuation question to the Projected Unit Credit method: project salary at the escalation assumption, apply the decrements, then discount at a term-matched government bond yield.

2Learn the Ind AS 19 cost split cold: current and past service cost and net interest go to profit or loss, while remeasurements (actuarial gains/losses) go to OCI and are never recycled.

3Keep the India regulatory facts precise: five-year gratuity vesting (waived on death), Rs 20 lakh ceiling, the 8.33% EPS diversion, PFRDA-regulated NPS, and the UPS from 1 April 2025.

4Practise distinguishing the funding basis (prudent, asset-return-related) from the accounting basis (best-estimate, bond-yield discount) so you can explain why the two deficits differ.

5For risk-management questions, think in terms of integrated risk management: investment risk you can run depends on the funding level and the strength of the employer covenant.

Frequently Asked Questions

What format is the IAI SA4 exam?

SA4 is a written, application-based specialist advanced paper of about 3 hours 15 minutes set in the India jurisdiction. It mirrors the IFoA SA4 subject and tests advanced actuarial judgement rather than a fixed set of multiple-choice questions.

How does this practice bank relate to the real SA4 paper?

The real SA4 is an essay/application paper, so we build 100 multiple-choice questions as focused knowledge prep across the same syllabus. They reinforce the technical facts, standards and formulae you need before tackling SA4's written application questions.

Which accounting standards does SA4 cover for Indian employee benefits?

SA4 covers AS 15 (Revised) and Ind AS 19. A key difference is that AS 15(R) recognises actuarial gains and losses in profit or loss, while Ind AS 19 routes remeasurements to other comprehensive income and does not recycle them.

What is the statutory gratuity ceiling used in SA4 valuations?

The Payment of Gratuity Act ceiling was raised to Rs 20 lakh with effect from 29 March 2018. Valuations of statutory gratuity generally cap the projected benefit at this limit unless scheme rules provide an enhanced benefit.

Which valuation method must be used for gratuity under Ind AS 19?

Both Ind AS 19 and AS 15(R) mandate the Projected Unit Credit method. It attributes benefit to service periods, projects salaries to the expected payment date, and discounts each unit of benefit using a government/high-quality bond yield.

What prior knowledge does SA4 assume?

SA4 builds on Subject SP4 (Pensions and Other Benefits Principles) and earlier IAI subjects. It assumes a working knowledge of the Indian benefits environment, the labour-code framework, and AS 15(R)/Ind AS 19 accounting.