DSP BlackRock Mutual Fund has filed a draft offer document with SEBI to launch mutual fund linked retirement fund.
After Axis and SBI, DSP BlackRock Mutual Fund has filed a draft offer document with SEBI to launch its mutual fund linked retirement fund.
However, the fund house will have to get a green signal from Central Board of Direct Taxes (CBDT) to get a pension fund status. Axis and SBI have approached SEBI to launch similar schemes but are yet to get an approval from CBDT. DSPBR too has approached CBDT to get tax benefit under Section 80C of the Income Tax Act.
Recently, when asked in an interview with Value Research about clarity on uniform tax treatment for pension and mutual fund linked retirement plan, SEBI Chairman UK Sinha said, “It’s true that this was mentioned in the budget summary, but was not there in the speech, or the bill. However, since then, the government clarified that no change in the law is required for mutual fund retirement plans. If any AMC wants to launch such a fund, it can do so. It should file for approval with SEBI. If SEBI approves it, then it can approach the CBDT (Central Board of Direct Taxes), which will give its consent on the basis of SEBI’s approval. We’ve told AMFI about this and I believe one such fund has already been submitted for approval.”
DSP BlackRock Retirement Planning Fund is an open ended mutual fund retirement linked plan. It aims to provide pension to an investor in the form of income/cash flow to the extent of redemption value of holding after the age of 60 years by investing in a mix of equity, debt and money market instrument.
The fund comes with three plans – aggressive, moderate and conservative. The aggressive plan will invest a majority of its corpus (70%-100%) in equity and rest in debt while the moderate plan will allocate a minimum of 50% in equity and maximum of 50% in debt. The conservative plan will invest a minimum of 70% in debt and a maximum of 30% in equity.
The scheme will have a compulsory lock-in of three years. Also, the scheme will charge an exit load of 2% if redeemed within 5 years from the date of allotment and 1% post 5 years. The exit load will be applicable till the investor attains 60 years of age and nil after that.
Currently, only two fund houses have retirement linked pension plans – Franklin India Pension Fund and UTI Retirement Benefit Pension Fund which were approved long back. Franklin India Pension Plan manages a corpus of Rs. 305 crore while UTI Retirement Benefit Pension manages Rs.1,337 crore as on September 30. These schemes were launched before PFRDA was set up.
Last year, HDFC, Pramerica and Reliance had filed offer documents with SEBI to launch their retirement linked plans. However, they did not get approval due to ambiguity regarding their eligibility to be treated as retirement funds.
The silver lining is that the mutual fund linked retirement plan finds mention in the draft budget documents on uniform taxation.
