Uti Alters Pension Fund, Simplifies Exit Route

The Unit Trust of India (UTI) has decided to simplify the exit route from its investment-linked pension fund, the Retirement Benefit Unit Scheme & Plan (RBUP).

Unitholders can now repurchase RBUP units on attaining the age of 58 and need not wait for completion of 70 years for withdrawal, as stipulated in the offer document, a top UTI official said.

The move aims at offering more liquidity to the pensioner whose life expectancy has increased sharply over the years. The change will take place with immediate effect. RBUP was launched in 1994.

UTI has also opened the fund to corporate houses which can now invest in the pension scheme on behalf of its employees, sources said.

The open-ended scheme open to resident individuals between 18-60 years requires a minimum investment of Rs 10,000, payable in lumpsum or in instalments up to 52 years of age.

The trust has slashed the penalty levied on failure to invest the minimum amount before 52 years, from 15 per cent of the repurchase amount to 10 per cent, sources said.

The scheme has a balanced portfolio whereby 40 per cent of the investible funds under the plan are equity-oriented while the remaining is invested in fixed-income securities and money market instruments.

There is no guaranteed rate of return and income from the scheme is distributed on a monthly basis after the unitholder completes 58 years. For investors who join the scheme late between 53-60 years the income starts flowing in after a lock-in period of five years.

Repurchase of the units is allowed at net asset value (NAV)-related prices plus income up to the month immediately preceding the month of repurchase.

In the event of pre-mature repurchases the trust deducts an administrative charge of 10 per cent from the repurchase amount calculated on NAV-based repurchase price.

Meanwhile, UTIs medical insurance scheme Senior Citizen Unit Plan (SCUP) has found a rich investment base among military personnel. At a meeting on October 31, 1996, the Naval Group Insurance Fund (NGIF) of the Indian Navy has made it compulsory for all servicing naval and coast guard personnel to enrol themselves to the post retirement medical benefits of SCUP.

The move, UTI sources say, will bring in an additional 35,000-40,000 unitholders to the scheme this year.

The number is expected to rise considerably over the years as more navy personnel are inducted into the service.

The NGIF has already become an UTI agent for selling the insurance scheme SCUP to naval servicemen.

Ex-servicemen, according to NGIF, suffer due to lack of adequate medical facilities in service hospitals and there is no provision by the government for reimbursement of medical expenses of ex-servicemen if they are treated in civil hospitals.

SCUP, which has empanelled 184 hospitals in 55 cities, will be the most appropriate medical insurance scheme for navy personnel, NGIF noted.

The scheme offers the unitholder the benefit of medical treatment for self and spouse at any of the selected hospitals on completion of 58 years.