Dhaval Kapadia, Director, Portfolio Specialist, Morningstar Investment Adviser (India) answers queries in The Financial Express, from where the below has been taken.
I am 50 years old and looking for pension schemes with equity exposure. I can invest for 10 years and then would like a monthly payout once I am 60.
I do not want any insurance-related annuity schemes. How can I do that in mutual funds? Please suggest.
— Sudeep Manoj
There are a few pension or retirement funds available on the mutual fund platform.
Some of these funds also provide tax benefits under Section 80C of the Income Tax Act with a deduction of up to Rs 1,50,000 per annum available on the amount invested in such funds.
These funds invest in a mix of equity and debt instruments. The investments are in varying proportions ranging from 30% to 100% in equity and the remainder in debt, during the accumulation or pre-retirement phase and typically up to 40% in equity during the post-retirement or withdrawal phase.
Some funds also offer separate investment options for the pre-retirement and post-retirement phases with varying levels of equity investment. After retirement (at the age 58 to 65 years), one can withdraw from the scheme using a Systematic Withdrawal Plan, or SWP, either at a monthly, quarterly, semi-annual or annual frequency.
The SWP amount can be fixed at the time of retirement and would continue till the investment corpus is exhausted. Since the corpus is invested in market linked instruments, including equity and debt, it could fluctuate based on the market value of the underlying holdings.
