Superannuation vs NPS – Which is Better?

Planning for retirement is one of the most important financial decisions you will ever make. In India, Superannuation and the National Pension System (NPS) are two widely used retirement savings options, both offering tax benefits and post-retirement income. But how do they differ, and which one is better for you? Let’s break it down in simple terms.
 

What is superannuation?

Superannuation is a company-sponsored retirement plan, where your employer (and sometimes you) contributes a percentage of your salary towards a retirement fund. The purpose is to ensure you have a steady income after retirement.

Key features of Superannuation:

• Employer contribution: Employers usually contribute around 15% of your basic salary. Some plans allow employees to contribute as well.

• Defined benefit vs defined contribution:

  • Defined benefit plan: Predetermined pension based on salary and years of service.

  • Defined contribution plan: Final payout depends on contributions + investment returns.

• Vesting period: Typically, 5–10 years of service to qualify.

• Tax benefits: Employer contributions are tax-free up to Rs. 1.5 lakh annually.

While superannuation secures retirement income, it may not be enough alone. Pair it with a Bajaj Finance Fixed Deposit to enjoy guaranteed returns up to 7.30% p.a., helping you build an extra safety cushion. Open FD.

What is NPS?

The National Pension System (NPS) is a voluntary, government-backed retirement scheme open to all Indian citizens. It is market-linked, meaning returns depend on the performance of equities, bonds, and government securities.

Key features of NPS:

• Voluntary contributions: Minimum Rs. 1,000 annually, flexible in amount and frequency.

• Account types:

  • Tier I: Primary retirement account with lock-in till age 60 + tax benefits.

  • Tier II: Voluntary savings account with no lock-in, but no tax benefit.

• Investment choice: Select your equity-debt mix or let it adjust automatically with age.

• Tax benefits: Deductions up to Rs. 2 lakh (Rs. 1.5 lakh under 80C + Rs. 50,000 under 80CCD(1B)).

• Withdrawals: On retirement, 60% of the corpus is tax-free, and 40% must be used to buy an annuity.

If you want stable growth outside market-linked NPS, consider Bajaj Finance FD with flexible tenures (12–60 months) to balance risk and stability. Check latest FD rates.

Superannuation vs NPS

NPS offers flexibility and higher potential returns, but for guaranteed earnings unaffected by market swings, Bajaj Finance FD is a safer complement. Check eligibility to invest.

Benefits of superannuation for subscribers

• Defined benefit plan: Provides certainty, with a fixed payout based on salary and service years.
• Defined contribution plan: Employer contributes regularly, though final benefits depend on investment performance.
• Tax relief: Contributions and interest earned remain tax-friendly until withdrawal.

Benefits of NPS for subscribers

• Flexibility: Choose how much and when to contribute.
• Balanced risk: Equity exposure capped at 50%, with the rest in safer bonds.
• Transparency: Regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
• Higher returns potential: Historical returns have been around 8–10%, often better than traditional schemes.

If you are looking for consistent income in retirement, pair your NPS with a Bajaj Finance FD offering monthly interest payouts, ensuring regular cash flow. Book FD.

Also Read: NPS vs PPF – Which is better option for investing

Conclusion

Both Superannuation and NPS aim to provide retirement security, but they differ in scope. Superannuation is employer-driven with limited flexibility, while NPS is open to everyone, offers higher tax benefits, and has greater growth potential.

However, neither guarantees fixed returns since market risks exist in NPS and employer policies vary for superannuation. To safeguard your retirement portfolio, combining them with Bajaj Finance FD can provide guaranteed growth, assured safety (AAA-rated by CRISIL & ICRA), and flexible tenures. This balance of security + growth ensures you are financially independent during your golden years. Open FD.