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How Does the National Pension Scheme Compare With Bajaj Finance FD?

Did you just cut a cake after receiving your first paycheck? That’s great. It is an overwhelming moment after all. A few decades hence you may be celebrating your retirement farewell too in a similar manner. Between today and your retirement date, you need to build a lump sum corpus that takes care of your daily expenses, medical costs, leisure, and emergencies in your retired life.

So, what are the various investment options in the market for retirement planning? Well, there are many. One of the most popular investment avenues is the National Pension Scheme (NPS). Let us understand more about the NPS in the successive paragraphs.

National Pension Scheme

The prime features of the National Pension Scheme are as follows:-

  • It is a Central government initiative open to all Indian citizens. It is ideal for investors having a low-risk appetite and desiring to have a regular income stream post-retirement.
  • The NPS mainly invests in four asset classes – direct equities, corporate bonds, government bonds, and alternate financial assets. There are many NPS funds to choose from that allocate your money among different asset classes in varying proportions.
  • Returns from NPS investments are market-linked. However, they usually give annualized returns in the range of 8%-10%. 
  • NPS investments are eligible for tax exemptions under sections 80C and 80CCD of ITA.

Bajaj Finance FD Vs National Pension Scheme 

  1. Interest Rates

Currently, the bank FD rates in India are low. Thanks to the RBI’s monetary policy changes. However, even during a low-interest regime, Bajaj Finance offers lucrative interest rates in the range of 5.98% – 6.75% p.a. Moreover, if you are a non-senior online investor, you will receive an additional return of 0.10% p.a. If you are a senior citizen, you will receive an additional return of 0.25% p.a. Bajaj Finance senior citizen FD rates are one of the best in the country.

While the annualized returns from an NPS are higher, NPS investments are subject to market risks. Thus, the returns from an NPS are unstable as opposed to guaranteed returns from a Bajaj Finance FD. Bajaj Finance FD rates are also better than the present bank FD rates in India.

  1. Pay-out Options

Bajaj Finance offers both cumulative and non-cumulative FDs. If you invest in a non-cumulative FD, you can opt for the monthly, quarterly, half-yearly, or yearly pay-out option as per your liquidity needs. NPS doesn’t give you such pay-out options. You will just receive a monthly pension post-retirement.

  1. Investment Duration

Bajaj Finance allows you to choose any FD duration between 12-60 months. Moreover, the longer your investment tenor the greater will be your returns. NPS requires you to remain invested till retirement. Thus, NPS doesn’t offer your tenor flexibility.

  1. Premature Withdrawals

The minimum lock-in period for Bajaj Finance FDs is just 3 months. Thereafter, you can prematurely withdraw your FD to meet your immediate liquidity needs or emergencies. 

An NPS investment, on the other hand, allows you to withdraw 25% of your money thrice throughout the investment tenure. The gap between subsequent withdrawals has to be a minimum of 5 years. Moreover, post-retirement too your maximum withdrawal limit is capped at 60% of your total corpus. You can go for the premature-exit option, wherein you can withdraw 20% of your corpus but are mandated to invest the remaining 80% in an annuity plan.

  1. Other Benefits

Bajaj Finance FD offers a wide range of value-added features like loans against FD, multi-deposit schemes, SDP schemes, FD applications using debit cards, instant built-in FD calculators, and online FD renewals. You can also claim tax rebates up to Rs. 5000 on Bajaj Finance FDs under section 80C of ITA.

Final word

Bajaj Finance FD offers a lot more benefits than NPS investments. Bajaj Finance FD offers higher assured returns even when FD rates in India are low. Backed by the high credibility of CRISIL and ICRA ratings, Bajaj Finance FD is definitely a better investment option than NPS.



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