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Reliance Retirement Fund – Pension Product in a New Package

Reliance retirement fund

People have finally started to realize the importance of retirement planning and have started discussing the possibilities and options with their respective financial advisors. The answer is very simple – if you look back at the average salary earned by the people 30 years back, it used to be a around Rs. 2500/month which seems to be a very small amount when compared to today’s salary figures. This is how the economy works. Whenever you’ll turn around and look back to your salary figure 30 years ago, it would seem nothing in comparison to the current inflation rate.

Hence, it becomes all-the-more important for you that you start planning today so you won’t find yourself with nothing when you retire after 30 years. For a very long time, the segment of retirement planning has been occupied by insurance companies, however, with the Mutual fund companies getting permissions to launch their products, consumers are going to get new and better options to invest. Reliance Retirement Fund is the very first company that has launched its pension product that not only is the first notified retirement-oriented fund, but is also an equity-oriented scheme, so that you can accumulate more for a healthy & wealthy retirement.

A brief description of Reliance Retirement Fund:

Reliance retirement fund offers two schemes: the first one is Wealth Creation Scheme that offers a high equity exposure (approximately in between 65% - 100%); the second one is Income Generation Scheme that provides with a high debt exposure which ranges in between 70% - 95%.

The investor has unlimited switching option between these two schemes and the basic idea behind providing these 2 schemes is to help the investor maintain the balance between accumulation and distribution stage. The lock-in period is of 5 years and there will be a penalty of 1% if you apply for an exit before you reach 60. You also get the tax benefit with this scheme under Section 80C. The maximum limit for tax concession is upto Rs. 1.50 lakh per year.

Important terms related to Reliance Retirement Fund:

Auto Transfer: The investors can opt for this service, wherein their investments can be switched from Wealth Creation to Income generation scheme at any point of time (or date) mentioned by the investor. This switch option is applicable both for within or after the completion of lock-in period as well as after completing 50 years of age by the investor.

Auto SWP (Systematic Withdrawal Plan): Investors can use this option to get automated redemption of shares on or after completion of 60 years of age. As per analysis done by experts, SWP has been proved to be a much tax efficient way of generating your income in debt-oriented funds.

Step-up Facility: In this feature, the investors get an option to keep on increasing the instalment of SIP amount at specific intervals (set by the investor).

Reliance retirement fund is giving a direct competition to different insurance pension plans available in the Indian market as the specific term ‘Retirement’ has an emotional appeal attached to it which works majorly in the favour of insurance-sale and draws in more & more investors.

Most of us have a habit of procrastinating when it comes to retirement planning. We take our retirement for granted and think that there is abundant of time left for the planning, which is not the case with everyone. Review your current lifestyle and taking your current expenses into account along with your retirement age and future inflation, calculate the retirement balance you’re going to need. Once you’ve got your retirement corpus ready, start working on how much do you need to save for a well-maintained lifestyle after your retirement?

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