Amfi Seeks Retirement Plans Nod

The Association of Mutual Funds of India (Amfi) has urged the Central government to allow the country's mutual funds to introduce individual retirement schemes (IRS) on a tax deferment basis.

Amfi chairman A P Kurian told Business Standard," The developed countries have the IRS scheme with tax benefit provision. In India, the government will have to amend the Income Tax Act to provide the tax deferment benefit."

He added, "Its time to come out with such schemes so that an individual could plan saving to look after his retired life. And if the government allows this scheme, mutual funds are the best in the country to handle such a huge and widespread scheme."

 

Quoting statistics, he said the mutual funds have collectively raised Rs 59,739 crore last year. Of 137 fund, 101 have outperformed the 36 per cent growth registered by the BSE Sensex. Others recorded a growth of around 20 per cent. he said.

In its suggestions, the association recommended that each IRS product should have three different combinations of exposures in equity, money and debt markets so that an individual could be guided by his choice and preferences.

He said while the first combination suggests that the product would have a 90:10 exposure in government securities and money market, the second one will be having a 50:20:20:10 exposure in government securities, AAA rated debentures, equity and money markets.

The proposed IRS, if cleared by the government, will have a lock-in period of five years after which the individuals will be allowed to withdraw a part of the investment for certain specific needs like funding treatment or daughter's marriage.

However, the investors will come under the tax net at the time of withdrawal as the basic idea of nurturing the scheme is to defer withdrawal, he said.

According to him, the proposed IRS is designed to serve the people who are not having pension scheme as well as to boost the money, debt and equity markets by investing back the amount raised through the scheme in the markets.

Meanwhile, Amfi will shortly start certifying the MF agents. The certification process will be done in two phases. Amfi, in consultation with the Securities & Exchange Board of India (Sebi), prepared text books which will be distributed to the agents.

In the first phase, the agents will sit for the written examinations in the NSE computer centers. In the second phase, Indian Institute of Banking will conduct written examinations for the agents of remote areas. The agents, who will secure pass marks, will be awarded certificates.