The committee is likely to give recommendations to replicate 401 k retirement plan in a mutual fund structure in India.
AMFI is believed to have set up a committee to draft a white paper which will outline a plan to form a mandated retirement fund structure in the mutual fund industry, said two people familiar with the development.
The committee is likely to give its recommendations on drafting pension funds in the next few months.
Currently there are only two retirement products with tax benefits in the mutual fund industry. UTI MF launched its Retirement Benefit Pension Fund in 1994. It manages Rs 827 crore as on August 2012 and has 5,15,005 investors. Templeton India Pension Plan launched in 1997 manages Rs 219 crore. These funds have tax benefits for investments up to Rs 1 lakh under section 80 C of the Income Tax Act. Recently Reliance MF has filed an offer document with SEBI for an open-ended notified tax savings cum pension scheme called Reliance Retirement Fund. Other fund houses too are planning to file offer documents of similar funds with tax advantages.
The committee is likely to suggest tax measures which are over and above 80 C in order to make MF pension funds attractive. “They’ll try to create a 401 k equivalent structure in India. The idea is to attract mandated vehicle to attract savings in a mutual fund structure. Today we don’t have that in India,” says a sales head of a bank sponsored fund house.
