Tata MF to launch retirement savings plan

Domestic mutual fund industry seems to be adopting newer ways to approach investors, in an under-penetrated market. Tata Asset Management Company (AMC) plans to bring its Retirement Savings Fund this week with an aim to meet the investment need of investors in different age brackets.

Early this year, Franklin Templeton AMC came up with family solutions schemes, to help investors plan their life goals, including retirement, child's future and wealth building. Sanjay Sachdev, president & CEO of Tata AMC, said, “With increasing life expectancy, the challenge is to maintain the same life style, post retirement. This fund is designed keeping in mind the young and middle aged working generation."

The new fund offer (NFO) from the basket of Tata AMC will be launched on October 7 and will remain open till October 21. It offers three options to investors — progressive plan, moderate plan and conservative plan — with varied percentage of equity and debt assets. For instance, the progressive plan is for investors below 45 years of age, with 85-100 per cent of funds allocation in the equity assets. Once the investor turns 45 he/she would be automatically switched to the moderate plan, where the equity allocation will come down to 65-85 per cent.

Thereafter, at the age of 60, investors will be shifted to the conservative plan, where fund allocations in debt assets will reach as high as 100 per cent. In short, a single scheme will turn out to be a debt scheme after being an equity scheme. According to Bhupinder Sethi, co-head, equities at Tata AMC, “The equity investment will be primarily in the large cap stocks with a mix of good mid-cap stocks."

Investors will also be given an auto systematic withdrawal facility which will ensure regular cash flows to them after they turn 60. They can choose options of either monthly withdrawal, which will be one per cent of the investment value as on date of completion of 60 years, or quarterly withdrawal of three per cent of the investment value. This regular cash flow will continue till the corpus lasts.