The Hindu Business Line : Templeton India Pension Plan: Invest

If you are planning your retirement portfolio, you may consider Templeton India Pension Plan (TIPP), one of the few pension products that is debt-oriented, has a five-year track record and has delivered impressive returns.

It is the only such scheme, apart from UTI Retirement Benefit Pension Plan, that enjoys tax benefits under Section 80C (investments up to Rs 1 lakh qualify for tax exemption). The plan invests a maximum of 40 per cent in equity and the rest in debt. The debt-equity mix is suitable for a pension plan as it reduces the overall long-term risk of the portfolio and peps up returns with an equity component.

Suitability: This plan is suitable for investors who are looking at retirement after 58 years and are willing to stay with the fund for the long term. If you are looking at retiring early or want more flexibility in your payment options or seek a certain income for the rest of your life, then ULIP pension plans may be a better option.

Plan features: You can invest a minimum of Rs 10,000, either lumpsum or through a systematic investment plan. The plan has a minimum lock-in of three years. It has an entry load of one per cent and a hefty exit load of three per cent if withdrawn before age 58.

You can choose your mode of withdrawal after age 58. There are four withdrawal options: lumpsum withdrawal, income through dividends, partial lump-sum withdrawal and rest through dividends, and systematic withdrawal as long as the units last. You may opt to receive regular monthly, quarterly, half-yearly or annual cash flows.

Performance: The plan has delivered an impressive cumulative annual return of 18 per cent for the last five years, beating its peer UTI Retirement Benefit Plan by a good margin.

As most balanced funds invest up to 65 per cent in equities, TIPP's performance may not be strictly comparable with that of balanced funds.

The fund has been able to beat its benchmark returns and has also recorded lower losses than its benchmark in the last quarter, when the market turned weak.

TIPP has increased its exposure to IT stocks in the latest quarter and reduced exposure to stocks in the metals space such as Hindalco. A well-diversified equity portfolio with limited exposure to mid-caps makes it a less risky portfolio. Some of its low-profile picks in the mid-cap space are Emami, Pidilite and IFGL Refractories. For its debt portfolio, TIPP invests predominantly in less risky Triple-A-rated securities.

Fund facts: TIPP was launched in March 1997. Mr S. Chellappa manages the fund. The NAV is Rs 40.36. The fund size is Rs 119.87 crore.

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