Why MF Companies lined up for retirement linked pension plan mutual funds?

Retirement linked pension plan mutual fundsWhy MF Companies lined up for retirement linked pension plan mutual funds?

In last budget, Govt. of India has announced tax benefits for retirement linked pension plan mutual funds. Many mutual fund companies are approaching the capital market regulator, SEBI to launch pension plan mutual funds. While these retirements lined pension plan mutual funds provide tax benefits, these are expected to provide better returns than current pension plans offered by insurance companies. I would provide more insights about the retirement linked pension plan MF’s in this article.

Also Read: Should you invest in Varshitha Pension Bima Yojana from LIC for Sr. Citizens?

What are Retirement Linked Pension Plan Mutual Funds?

These mutual fund schemes are aimed to protect capital, but invest in various segments of equity and debt. Currently, most of the MF companies who applied NFO prospectus are offering 3 plans, conservative, moderate and dynamic. Based on the age and risk appetite, one can choose a plan from these 3 categories. One would also get tax benefit upto Rs 1.5 Lakhs u/s 80C by investing in such plans.

Let me give you few features of the LIC Nomura Retirement Fund, which applied draft prospectus to SEBI. Majority of such funds would have similar features.

Features of LIC Nomura Retirement Fund

  • It has 3 plans, Conservative, Moderate and Dynamic plan.
  • This is an open ended scheme.
  • Investment objective it to provide comprehensive retirement saving solutions that need to invest through long term diversified investments in the major asset classes.
  • Investment in such retirement linked pension plan mutual funds would be eligible for Rs 1.5 Lakhs tax  benefit u/s 80C.
  • Such schemes are expected to invest in equity, equity related instruments, debt and money market instruments. The portfolio would depend on the plan chosen by the investor.

Why MF Companies lined up for retirement linked pension plan mutual funds?

  • As we know only insurance companies can offer pension plans earlier, this move to offer pension plans by mutual fund houses would provide great opportunities for mutual fund companies as well as investors.
  • Currently only UTI retirement benefit pension fund and Franklin Retirement Pension fund are offering a pension plan mutual funds. LIC Nomura is the lastest to join in this segment considering the large potential in this business segment. The reliance mutual fund already got approval for such plans.
  • Apart from LIC Nomura, other fund houses like SBI MF, Axis MF, DSP BR MF, IDBI MF, Birla SL MF etc., has approached the capital market regulator, SEBI with draft prospects to launch pension plan mutual funds.
  • Fund houses lining up such retirement fund schemes as Govt. Of India has announced tax benefits in the last budget. 
  • Retirement is one of the largest segments in investment all over the world, which is still not capitalized in India. Mf companies want to encash such opportunities.

Also Read: How to invest lump sum money in mutual funds to get higher returns?

Conclusion: Retirement Linked Pension plan mutual funds could be a good opportunity compared to pension plans of insurance companies. Performance of pension plans of insurance companies is difficult to track. It is difficult to choose a best pension plan. However, in future, pension plan mutual fund performance can be tracked like any other fund and invest wisely. This is surely a welcome move that several MF companies are approaching SEBI to launch pension plan mutual funds.

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MF Companies lined up for retirement linked pension plan mutual funds


  • Jhulan Dey (@jhulandey)

    I think, putting aside money for retirement should be done in 50:50 ratio in PPF and in Mutual Funds.
    Search for a proven large-mid cap fund and a balanced fund. Try this – https://www.valueresearchonline.com/.
    Then step up the amount you put in 10-20% in every year. Remember, I m not an advisor. Just an ordinary investor like you. Happy investing….

  • vipin viswanathan

    Dear Suresh,

    Could you advise on the post retirement mutual funds which is available at the moment.l am 35 and would love to know which fund is the best for me.


  • sara

    Hi Suresh, I am 31 year old and I would like to invest 10,000 pm for next 30 years towards my retirement. Please suggest some good SIP earning 15% interest rate on an average.

  • anurag

    Please suggest me pension plan linked with MF. SIP
    age — 33
    Currently Monthly expenses–30k.
    monthly SIP Deducations— 7K.

    I am long term invester.

  • anurag

    Please suggest me a MF linked pension plan .
    my age –33
    Monthly expenses—30 k
    SIP monthly installments that I can pay–6–7K .

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