Mutual funds line up retirement plans

NEW DELHI: Encouraged by tax incentives for investment in retirement schemes floated by mutual funds, several fund houses including Canara Robeco MF, LIC Nomura MF and IDBI MF have lined up plans to launch such products.

In addition, fund houses including Birla Sun Life MF, DSP Blackrock MF, Axis MF and SBI MF have already approached capital markets regulator Sebi to launch retirement-linked mutual funds and many others are expected to join the fray.

MFs are queueing such schemes as retirement funds floated by them have been given tax benefits in line with pension funds to attract long-term domestic savings into the equity market in the Budget presented last year.

Earlier, only insurance companies were allowed to offer pension products with tax incentives.

Investments in these schemes up to a limit of Rs 1.5 lakh are eligible for a deduction under Section 80 C of Income Tax Act.

These mutual fund schemes are expected to pool savings for retirement where investors have the option to lock-in the money till the retirement or redeem it before that.

These schemes offer to invest in several securities, including equity, equity-related instruments, debt and money market instruments, among others.

At present, only three fund houses have retirement-linked pension plans -- Franklin Templeton Pension Fund, Reliance Retirement Fund and UTI Retirement Benefit Pension Fund.

IDBI MF filed its draft documents with Sebi last week to become the latest fund house to approach the capital markets regulator to launch retirement product.

Canara Robeco MF has become the latest fund house to approach Sebi to launch retirement product. It has filed its draft papers with the capital markets watchdog today.

Canara Robeco Retirement & Pension Solution is an open ended scheme offering two plans for investment-- wealth and income.

"The investment objective of the scheme is to provide capital appreciation and consistent income to the extent of investment value to the investors which will be in line with their retirement goals by investing in a mix of securities comprising of equity, equity related instruments and fixed income securities," Canara Robeco MF said.

"However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved," it added.