SBI Mutual Fund has filed an offer document for an open-ended retirement benefit scheme called SBI Retirement Benefit Fund.

This would be the third scheme after UTI Retirement Benefit Pension Fund and Franklin Templeton Pension Fund launching pension schemes.

In fact, the two schemes were launched in 1994 and 1997, respectively. According to Value Research, the former gave out a return of 23.52 per cent for one-year period and the latter 21.97 per cent.

The SBI scheme plans to apply to the Central Board of Direct Taxes for approval as a notified pension fund to obtain tax benefits under Section 80 (C) of the Income Tax Act. All investors under this scheme will be covered by a group life insurance policy.

Allocation of funds This scheme will invest in multiple asset classes — equities, gold, foreign securities, real estate investment trusts (REITs), debt and money market securities and has been colour coded yellow — meaning medium risk to the principal amount invested.

This follows SEBI’s long-term policy for mutual funds in India (unveiled this February) which had recommended the introduction of a mutual fund linked retirement plan (MFLRP) as a strategy to increase the assets base of mutual funds. The maximum allocation to equity and equity-related instruments would be 85 per cent under the opportunistic plan with a maximum total overseas investment allocation of 40 per cent.

The other plans — moderate growth, balanced, protective growth and conservative — will invest in equities in descending order from 70 per cent for moderate growth, 50 per cent for balanced, 30 per cent for protective growth and 20 per cent for conservative plans. As the proportion of equity decreases, investments in debt, realty and gold rise.

The minimum investment would be ₹5,000. For investors aged 55 and above, there would be no entry or exit loads.

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