(Milcah Anila, Intern Journalist) Vijayawada:
Special schemes from mutual funds institutions
Investments in a combination of equities, debt, and both
The plan can be selected based on the risk of the investors
Five-year lock-in period for investments
Can be withdrawn anytime after that
Many facilities compared to NPS
Retirement It is very important for everyone to set up some funds for the next life. Because most people in our country do not have social security. In addition to inflation, which drains the value of the currency, the necessities of life and costs continue to rise over time. Life expectancy has also increased compared to the past. So if everyone does not have enough funds by the age of 60 .. they have to face a confusing situation.
Even providing some nominal savings fund may not meet the aging needs for a long time. That is why it is important to plan ahead and provide as much funding as you need for retirement. There are many tools for this. In addition to the Public Provident Fund (PPF), the Employees’ Provident Fund (EPF), and the National Pension Scheme (NPS), there are also pension funds offered by mutual funds.
One of these is the Solution Oriented Retirement Division. This is a profit plus article about the performance of these funds.
In the Solution Oriented Retirement category, Aditya Birla Sun Life, Axis, Franklin, HDFC, ICICI Prudential, LIC, Nippon India, Principal, Tata, UTI Mutual Funds, Equity, Dai, etc. Each of these investments in a lump sum or in the form of a systematic investment plan (SIP) has a lock-in period of five years.
This means that investments are not allowed to be withdrawn for five years. If you reach retirement age within five years then there is a chance of withdrawal.
Tax benefit …
Of these funds, only five are mutual fund companies. Franklin, HDFC, LIC, Nippon India, and UTI have been approved by the Central Government as pension plans. This means that the tax benefit under Section 80C of the Income Tax Act can be availed through these. Up to a maximum of Rs, 1.5 lakh per financial year can be invested in these schemes tax-free. The rest of the schemes do not have this benefit.
Lots of options ..
Returns on Pension Mutual Funds plans depend on the risk capability of the investor. They also invest in equities and debt. While LIC, Franklin, and UTI Mutual Fund offer only one plan, the rest offer plans with different options to suit the needs of investors Offer. For example, Tata Retirement Savings Fund offers three plans namely Progressive, Moderate, and Conservative. As the name suggests, they invest in equities at 94 percent, 82 percent, and 28 percent, respectively. The company has designed these to appeal to teenagers, middle-aged and retirement-aged people. There are a total of 25 pension schemes in this category.
The track record for most projects is short-lived. Because all of this has come about in the last ten years. Also, it does not seem appropriate to compare the performance between them as they follow different tools with respect to investments. These can be divided into four sub-categories based on allocations made to equities.
85–100 percent for equities
Six schemes in this segment are operating with an investment option in at least 85 percent equity. They are suitable for high-risk, young people. Tata Retirement Savings Progressive Plan is performing better than other schemes in this segment. Will be locked in for five years. So if you look at the returns on this scheme over a five-year period, they are above 11 percent annually. It is noteworthy that in seven years the annual returns are over 15 percent.
Another scheme in this segment was launched in HDFC Retirement Savings Equity Plan 2016. So in three years, the returns are around 2 percent per annum. Nippon India Retirement Wealth Creation’s annual return for just five years is just 2.75%. The performance of Principal Retirement Savings Progressive Plan, Aditya Birla Sunlife Retirement 30, ICICI Prudential Retirement Fund Pure Equity schemes is also not much better.
The pattern of returns has changed, especially with the recent market crash. So in the long run these schemes are not likely to show better performance. Those who want to make more allocations to equities will consider Tata Retirement Savings Progressive Plan in this section.
65–85% for equities
9 schemes in this segment offer plans with the option of investing in 65 to 85 percent equities. On the one hand, they work to reduce risk by allocating a certain percentage to the debt in addition to higher returns. These are suitable for middle-aged people who want to be a little less at risk. Tata Retirement Savings Moderate Plan is also a leader in this segment in terms of revenue.
It has grown investor investment at an annual rate of 10 percent over a five-year period and 15.68 percent annually over a seven-year period. Doubled investments over a period of five years and ten months. Since HDFC Retirement Savings Hybrid Equity Plan in this segment was launched in February 2016, the annual returns over a three-year period have been 4%.
LIC Mutual Fund Ulips, Principal Retirement Savings Moderate, Aditya Birla Sunlife Retirement 40, ICICI Prudential Aggressive, Axis Retirement Savings Dynamics, Axis
Hybrid section…
These are schemes that allocate a maximum of 40 percent investment to equities. The remaining 60 percent will be invested in the debt segment. This greatly reduces the risk. Those who want to be low risk can opt for schemes in this category. These do not have the same returns as long-term equity schemes.
Tata Retirement Savings Conservative Plan is performing well in this segment. The scheme has a history of giving annual returns of 8% over five years and 10% over seven years. HDFC Retirement Savings Hybrid Debt, Franklin India Pension, Nippon India Retirement Income Generation, UTI Retirement Benefit Pension, Axis Retirement Savings Conservative, ICICI Pvt. Retirement Hybrid Conservative, Aditya Birla Sunlife Retirement Funds – 50 falls under this category.
Full Debt Funds
One hundred percent of investments are made in the debt segment. So expect moderate returns. Aditya Birla Sunlife Retirement 50 Plus and ICICI Prudential Retirement Pure Debt plans are available in this segment. Aditya Birla Sunlife Retirement 50 Plus Plan launched in 2019. Revenue for the year was 6.63 percent.ICICI Prudential Retirement Pure Debt Plan, which was also launched in 2019, has shown a return of 9.77 percent for the year.
Are there any specialties..?
In addition to mutual funds’ pension schemes, investors may also consider open-ended equity schemes to finance their retirement. Otherwise, the plans named Retirement will have a five-year lock-in. The fund cannot be emptied if anything is needed. It is beneficial in away. In the same NPS and ULPP plans, the annuity plan has to be taken with a fixed amount after maturity.
There is no such provision in mutual funds’ pension plans. Investments can be withdrawn in full at any time after the five-year lock-in or at retirement. You can now invest in mutual funds and pension schemes through SIP. In the same way, there is a facility to withdraw as much as desired every month in the form of a systematic withdrawal plan. Aditya Birla Sunlife, Axis, Nippon India however provides insurance cover to the investor at no extra cost. Aditya Birla Sunlife offers 100 times the monthly sip of insurance coverage. There is a maximum limit of Rs 50 lakh.
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