Recently SEBI chief U K Sinha had urged fund houses to launch pension products.
Reliance Mutual Fund has filed an offer document with SEBI to launch Reliance Retirement Fund, an open ended notified tax savings cum pension scheme.
This would be the third pension fund in the mutual fund industry. Templeton India Pension Plan launched in 1997 manages Rs. 217.50 crore as on May 2012. UTI’s Retirement Benefit Pension Fund launched in 1994 manages Rs 801 crore as on May 2012. Both schemes offer tax benefits of up to Rs 1 lakh under section 80 C of the Income Tax Act.
Reliance Retirement Fund will aim to provide capital appreciation and consistent income which will be in line with their retirement goals by investing in a mix of securities comprising equity, equity related instruments and fixed income securities.
“Tax benefits as per the current applicable rule are available. We will be separately applying as and when the pension benefits are also extended to mutual funds. The Retirement Fund will also be a part of it,” says Sundeep Sikka, CEO, Reliance Mutual Fund.
The scheme will get tax benefit (up to Rs. 1 lakh) as a Notified Pension Fund U/S 80C of Income Tax Act 1961, subject to fund being notified by the Central Government under Section 80C(2) (xiiic) of the Income Tax Act 1961.
The fund comes with two options - Wealth Creation Plan and Income Generation Plan. Benchmarked against BSE 100, Wealth Creation Plan will invest a minimum of 65% of its assets in equities and a maximum of 35% in debt and money market securities.
The Income Generation Plan, benchmarked against Crisil MIP Blended Index, will invest a minimum of 5% and a maximum of 30% in equities and a minimum of 70% and a maximum of 95% in debt and money market securities.
The fund will carry an exit load of 1% if redeemed/switched out before attainment of 60 years of age. Transfer from Wealth Creation Plan to Income Generation Plan will not attract any exit load.
The scheme comes with a lock-in period of five years. The minimum application amount under lump sum is Rs 5000 and Rs 500 through monthly SIPs. The fund will be managed by Sanjay Parekh, Anju Chajjer and Jahnvee Shah.
