Amfi moots new MF-VRA plan with tax incentives, portability features

Amfi has proposed a Mutual Fund-Voluntary Retirement Account to boost retirement preparedness, offering tax incentives, portability and lifecycle-based investment options

The Association of Mutual Funds in India (Amfi) has proposed the idea of a Mutual Fund–Voluntary Retirement Account (MF-VRA), a savings product for employees modelled on the US retirement plan.

 

The proposal, outlined in a white paper jointly prepared by Crisil Intelligence and Amfi, is based on the US 401(k) plan. It seeks to provide individuals with a voluntary, employer-linked retirement product managed by mutual funds (MFs), offering features such as tax incentives, portability, and lifecycle-based investment options.

 

Amfi has called upon key stakeholders — including the Securities and Exchange Board of India (Sebi), the Central Board of Direct Taxes (CBDT), and the Ministry of Labour & Finance — to bring in regulatory changes.

 

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According to the proposal, MF-VRA can provide employers with the option to co-contribute with the employee.

 

The dedicated retirement lifecycle funds managed by fund houses would rebalance as investors age. Withdrawals would be restricted until retirement, barring hardship exceptions, to ensure long-term corpus preservation, the association said on Monday.

 

“The mutual fund industry, with its transparent and well-regulated framework, offers a ‘sahi choice’ for building a robust retirement corpus through systematic, long-term investing. In doing so, these investments safeguard personal independence, while channelling savings into productive capital, which fuels India’s growth,” said Amfi Chairman Navneet Munot.

 

With MF assets crossing ₹75 trillion, the industry believes it is well-positioned to channel household savings into long-term retirement security.