An open-ended balance fund with a maximum equity allocation of 40% and the balance in debt, this ensures to provide pension to investors particularly self-employed persons after they attain the age of 58 years, in the form of regular income and liquidity in case of emergencies. The fund is ideally suited for investors looking at building a long-term portfolio for retirement.
It is often asked when one should start planning for retirement. To this Amandeep Chopra – Head of Fixed Income says, “The earlier one starts, the better it would be. Due to the compounding effect, an early investor may accumulate more Retirement Corpus than the one who comes in later.”
The second important question is since when one would start getting pension? UTI-RBP is a pension scheme, under which investors can opt to receive the accumulated investment in the form similar to annuity by repurchasing the units over a period of time in the form of periodical cash-flow, based on the repurchase value of their holding then, through a systematic withdrawal plan, after they reach the age of 58. Young investors can also consider investing early for planning their retirement in UTI RBP as well as saving tax under section 80c of tax window.
While planning for future young investors should comprehend certain misconceptions in retirement planning. The thought that expenses will drop when one retires is not correct. To further simplify this Amandeep Chopra says, “With increase in medical facilities, average life expectancy ratio will go higher hence retirement life will not just be a 10-15 year phenomenon. Also with rising inflation rate, pension amount may not be enough at that age. Hence expenses even at that age will be quite higher”.
UTI Retirement Benefit Plan since inception i.e. 26th Dec 1994 has generated an annualized return of 11.34 % (December 31, 2014). The fund’s tendency to invest at least 60 per cent of the assets in debt can provide a comfort level for conservative investors. Financial services, IT, Automobile and Pharma are some of the top holdings in the equity portfolio while G sec and long term debt papers forms the major part of debt portfolio.