Tata's retirement fund: Regular cash flow after 60

With the stock markets crashing, inflation eating into your savings and gold prices going beyond your reach, saving for retirement seems to be getting more and more difficult. A good retirement plan is the right solution for consumers who are concerned about which fund to pick. Tata Mutual fund has come out with a new scheme called the “Tata Retirement Savings Fund” which caters to the young and middle class generation.

Fund closes on 21 October and offers three plans

Launched on 7 October , this New Fund Offer (NFO) closes on 21 October and has three plans (progressive, moderate and conservative) which varies between equity and debt. The basic idea behind the fund is that it assumes you to have a post-retirement life of 30 years after 30 years of earnings. And the idea is for you to be able to maintain the same lifestyle as you did earlier.

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[caption id=“attachment_107007” align=“alignleft” width=“380” caption=“Minimum investment is Rs 5,000 while the minimum investment through the SIP route is Rs 500. Kenteegardin/Flickr”]  [/caption]

An interesting feature of this would be the “Auto-Systematic Withdrawal Plan” (SWP) facility which was designed with an objective to provide investors with regular cash flow after they turn 60. It has two options, first is the monthly payment option where one can withdraw up to one percent of the market value of the investment as on the date of completion and second, is the quarterly payments in which you can remove up to 3 percent of the market value of investment on the day you complete 60 years of age.

Fund caters to three types of investors

The fund caters to three type of investors - progressive, moderate and conservative with a varied percentage of equity and debt. For example, the progressive plan, which caters to the age group of 45 and below will have 85-100 percent of funds allotted in the equity space. On turning 45, the investor would be automatically switched to the next plan, in this case the moderate plan where the allocation would fall to 65-85 percent.

Post the age of 60, investors would move to the ‘conservative plan’ where a large proportion would be allotted towards debt and money market instruments. Here only 0-30 percent would be in equities.

It has an exit load of 1-4 percent on withdrawals before five years. Minimum investment is Rs 5,000 while the minimum investment through the SIP route is Rs 500.