Explanation:

Pension Fund Regulatory and Development Authority (PFRDA), which operates the National Pension System (NPS), is preparing to launch a guaranteed return scheme, Minimum Assured Return Scheme (MARS), which will provide savers and people from the salaried class an option for their investments.

• The regulator has appointed EY Actuarial Services LLP as a consultant to help design the proposed MARS under the NPS. This will be the first scheme from the pension regulator that will offer a guaranteed return to investors.
• The PFRDA wants to launch the scheme before the end of the current calendar year.
• The actual returns will depend on the market conditions. Any shortfall will be made good by the sponsor, and the surplus will be credited to the subscribers’ account.
• Two options are likely to be on offer.
• Under the fixed guarantee option, the guaranteed return is fixed along the accumulation phase.
• Under the floating guarantee option, the guaranteed rate of return is not fixed along the savings phase. The floating guarantee depends on the development of the 1-year interest rate until retirement.

Hence option 1st is correct.