LIC Nomura Mutual Fund lines up retirement plans

New Delhi: Encouraged by tax incentives for investment in retirement schemes floated by mutual fund houses, LIC Nomura MF has lined up plans to launch such product. LIC Nomura MF has become the latest fund house to approach the capital markets regulator SEBI to launch retirement product. LIC Nomura MF Retirement Benefit Fund is an open ended scheme comprising of three plans - Conservative, Moderate and Dynamic.

"The investment objective of the scheme is to provide a comprehensive retirement saving solution that serves the needs of the investors through long-term diversified investments in major asset classes," the fund house said in its draft papers. Apart from LIC Nomura MF, several fund houses, including IDBI MF and Birla Sun Life MF, DSP Blackrock MF, Axis MF and SBI MF have already approached Securities and Exchange Board of India to launch retirement-linked mutual funds.

Moreover, many other fund houses are expected to join the fray. Besides, Reliance Capital Asset Management Company, in December last year, had got the government's approval for first-ever equity-oriented pension scheme, giving tax benefits to investors. Fund houses are lining up such schemes as retirement funds floated by fund houses have been given tax benefits in line with pension funds to attract long-term domestic savings into the equity market in the Budget 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 two fund houses have retirement-linked pension plans - Franklin Templeton Pension Fund and UTI Retirement Benefit Pension Fund. Globally, retirement is one of the largest categories of investments, whereas in India it is still at a nascent stage.