UTI RBP and Franklin India Pension Plan - FIPP
Why is it unique? More products from mutual funds may hit the Street, but there are only two pension products available in the market now--UTI Retirement Benefit Pension (RBP) Fund and Franklin India Pension Plan (FIPP).Who can benefit? Investors who want to save for the long term. Since more sophisticated products are expected from the mutual fund stable in the coming months, there is no need to rush.
These pension products came in very early (UTI RBP in 1994 and FIPP in 1997) and, subsequently, the government did not allow any other pension product by mutual funds the benefits under Section 80C. Early withdrawals are discouraged with an exit load before the age of 58. Both products have up to 40% equity exposure and the balance in debt. Since these are pension products, they are also managed in a unique manner. While our investment process and philosophy are same for this scheme, the equity component is managed in a little more conservative manner than those in pure equity funds.
These schemes may be unique now, but may not remain so because the Union Budget has already cleared the way for more such pension products from fund houses. Recently, a Sebi appointed committee submitted its report on how to structure these pension products. Though it is not sure whether all the proposals will be accepted, the future is promising. This is because new pension plans may allow investors to select the equity portion they want and may also allow them to change it midway. So, should you wait for the launch of new schemes or opt for the existing pension products from mutual funds? It makes sense to wait for the new launches. Until then, a simple SIP in an established equity fund will do the job of ensuring that you do not miss opportunities while you wait.
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