Retirement is one of the most important stages in an individual’s life. With rising inflation and increased medical expenses, an individual investor would be exposed to the risk of not being able to provide for his regular expenses in his retirement years.
With this in mind, Tata Mutual Fund has come out with retirement specific mutual fund scheme with auto switch facility. Called Tata Retirement Savings Fund, it has a structured suite of plans designed to meet the investment needs of investors in different age brackets. It offers three options to investors — progressive plan, moderate plan and conservative plan. with varied percentage of equity and debt assets. The scheme is open from October 7 to 21. The scheme would be more beneficial for those entering the scheme at the age of 30. The minimum initial investment is Rs. 5,000 and Rs. 500 every month.
Addressing presspersons here on Saturday, Sanjay Sachdev, President and CEO, Tata Asset Management, said it was estimated that the approximate number of senior citizens is 10 crore in 2011.
“Tata Retirement Savings Fund is specifically designed keeping in mind the young and middle aged working generation. The fund is tailor-made to support the monetary needs of investors post their retirement so that they can meet the 30:30 challenge. With increasing life expectancy, one can assume a post-retirement life of 30 years after 30 earning years. The challenge clearly is the ability to maintain the same life style post retirement. This may sound like future shock, but it is the reality of life. Therefore, it is crucial to plan for retirement” he said.
The scheme has “auto-switch” feature which does away the hassles of adjusting the equity-debt proportion with increasing age. Normally, an investor depends on his advisor for switching assets between equity and debt with increasing age. In case of Tata Retirement Savings Fund, however, the investor has the facility of an “Auto-Switch” feature where the fund does the necessary asset allocation automatically as the investor crosses into a different age bracket.
Regular cash flows
Another feature is the “auto-systematic withdrawal” facility designed with the objective of providing investors with regular cash flows after they turn 60. It comes with two options of monthly — one per cent of market value of investment as on date of completion of 60 years or quarterly — three per cent of market value of investment as on date of completion of 60 years of age.
Speaking about the industry, Mr. Sanjay Sachdev said with a lot of regulatory changes, people got confused and the industry was witnessing only 5 per cent compounded annual growth rate. With the Securities and Exchange Board of India and the Association of Mutual Funds taking initiatives such as educating investors, removing entry load and bringing in new technologies, the industry was well positioned to register 25-30 per cent growth in the next five years, he said.
