The mere mention of the word ‘Retirement’ brings a certain relief to those who have been working for decades at their respective jobs.

You see, retirement are those golden years and the awaited phase of life were the daily struggles come to an end, but only if you have an effective retirement plan. However, it also exhibits that your fixed source of income will stop and expenses will continue. Thus, you would agree that, to relish financial independence for a blissful retired life, retirement planning is a crucial investment goal.

Often in our busy schedules, we forget to foresee the future and keep delaying the plan and now with ever-increasing costs of living, planning for retirement is essential to ensure financial independence post-retirement. After experiencing the uncertainties last year, you need to realize that, the sooner you start, the more you shall be able to accumulate till retirement and the money saved for your retirement can help you tide over any untoward circumstances in the future.

A well-chosen retirement plan can help you rise above inflation, thanks to the power of compounding. Retirement Funds are designed to offer the investor a regular source of income after retirement through monthly or lump sum withdrawal at the time of retirement. These funds allow investors to build a corpus for your retirement by investing according to your risk tolerance.

In India, traditional investment avenues for your retirement include the Public Provident Fund (PPF), Employees Provident Fund (EPF) and National Pension Scheme (NPS). Besides, there are some mutual fund schemes that focus on retirement planning too.

SBI Mutual Fund has made a new ‘nest egg’ offering with addition of SBI Retirement Benefit Fund to the list of retirement solution-oriented schemes. SBI Retirement Benefit Fund is an open-ended retirement solution-oriented scheme having a lock-in of 5 years or until retirement age (whichever is earlier).

The fund offers 4 various Investment Plans according to the age bracket and risk tolerance of an individual. Each of the Investment Plans will be managed as separate portfolios.

Table 1: Details of SBI Retirement Benefit Fund

Type An open-ended retirement solution-oriented scheme having a lock-in of 5 years or till retirement age (whichever is earlier) Category Special solution-oriented scheme (retirement fund)
Investment objective of SBI Retirement Benefit Fund
The investment objective of the scheme is to provide a comprehensive retirement saving solution that serves the variable needs of the investors through long-term diversified investments in major asset classes.
However, there can be no assurance that the investment objective of the Scheme will be realized.

Investment objectives of Investment Plans under the Scheme are as given below:
  1. Aggressive Plan
    To generate long-term capital appreciation the total assets of this plan will be predominantly invested in equity and equity related instruments.

    However, this plan also provides for flexibility of investment in debt and money market securities,in Gold ETF or units issued by REITs & InvITs for wealth creation.

  2. Aggressive Hybrid Plan
    The total assets of this plan will be invested in a mix of equity and equity related instruments and Debt / Money market instruments with an objective of generating long-term capital appreciation.

    The Investment Plan may also invest in units of Gold ETF or units issued by REITs & InvITs for wealth creation.

  3. Conservative Hybrid Plan
    To generate steady long-term capital appreciation with relatively low levels of risk, the total assets of this plan will be primarily invested in Debt and Money market instruments.

    However, this plan also provides for flexibility of balance investment in equity and equity related instruments, in units of Gold ETF or units issued by REITs & InvITs for wealth creation.

  4. Conservative Plan
    The objective of this plan is to invest the total assets predominantly in Debt and Money market instruments.

    The Investment plan may also invest remaining in equity and equity related instruments, in units of Gold ETF or units issued by REITs & InvITs for capital appreciation.

Min Investment Rs 5,000 and in multiples of Re 1 thereafter Face Value Rs 10/- per unit
Investment Plans SBI Retirement Benefit Fund – Aggressive Plan
SBI Retirement Benefit Fund – Aggressive Hybrid Plan
SBI Retirement Benefit Fund – Conservative Hybrid Plan
SBI Retirement Benefit Fund – Conservative Plan
Plans
  • Direct
  • Regular
Options
  • Growth
  • Dividend
Entry Load Not Applicable Exit Load Nil Fund Manager
  • – Mr Dinesh Ahuja
  • – Mr Gaurav Mehta
  • – Mr Mohit Jain (for overseas investments)
Benchmark Index
SBI Retirement Benefit Fund – Aggressive Plan: S&P BSE 500 TRI
SBI Retirement Benefit Fund – Aggressive Hybrid Plan: CRISIL Hybrid 35+65 – Aggressive Index
SBI Retirement Benefit Fund – Conservative Hybrid Plan: CRISIL Hybrid 65+35 – Conservative Index
SBI Retirement Benefit Fund – Conservative Plan: NIFTY Composite Debt Index
Issue Opens: January 20, 2021 Issue Closes: February 03, 2021

(Source: Scheme Information Document

How will SBI Retirement Benefit Fund allocate its assets?

  1. SBI Retirement Benefit Fund – Aggressive Plan

    Under normal circumstances the asset allocation will be:

    Table 2a: Asset allocation for Aggressive Plan

    Instrument Indicative Allocation(% of net assets) Risk Profile
    Minimum Maximum High/Medium/Low
    Equity & Equity related instruments 80 100 High
    Debt, Debt related instruments& Money Market Instruments 0 20 Low to Moderate
    Units issued by REITs & InvITs 0 10 Medium to High
    Gold ETFs 0 20 Medium to High
    (Source: Scheme Information Document)

  2. SBI Retirement Benefit Fund – Aggressive Hybrid Plan

    Under normal circumstances the asset allocation will be:

    Table 2b: Asset allocation for Aggressive Hybrid Plan

    Instrument Indicative Allocation(% of net assets) Risk Profile
    Minimum Maximum High/Medium/Low
    Equity & Equity related instruments 65 80 High
    Debt, Debt related instruments& Money Market Instruments 0 35 Low to Moderate
    Units issued by REITs & InvITs 0 10 Medium to High
    Gold ETFs 0 20 Medium to High
    (Source: Scheme Information Document)

  3. SBI Retirement Benefit Fund – Conservative Hybrid Plan

    Under normal circumstances the asset allocation will be:

    Table 2c: Asset allocation for Conservative Hybrid Plan

    Instrument Indicative Allocation(% of net assets) Risk Profile
    Minimum Maximum High/Medium/Low
    Equity & Equity related instruments 10 40 High
    Debt, Debt related instruments& Money Market Instruments 60 90 Low to Moderate
    Units issued by REITs & InvITs 0 10 Medium to High
    Gold ETFs 0 20 Medium to High
    (Source: Scheme Information Document)

  4. SBI Retirement Benefit Fund – Conservative Plan

    Under normal circumstances the asset allocation will be:

    Table 2d: Asset allocation for Conservative Plan

    Instrument Indicative Allocation(% of net assets) Risk Profile
    Minimum Maximum High/Medium/Low
    Debt, Debt related instruments& Money Market Instruments 80 100 Low to Moderate
    Equity & Equity related instruments 0 20 High
    Units issued by REITs & InvITs 0 10 Medium to High
    Gold ETFs 0 20 Medium to High
    (Source: Scheme Information Document)

What will be the Investment Strategy?

SBI Retirement Benefit Fund would adopt investment strategy in line with the investment objective.

SBI Retirement Benefit Fund – Aggressive Plan

The Aggressive plan aims to generate long-term capital appreciation by investing the total assets of this plan primarily in equity and equity related instruments. However, this plan also provides for flexibility of investment in debt and money market securities.

This portfolio will be actively managed within equities and debt to optimize returns within the respective asset class. It may also invest in Gold ETFs or units issued by REITs & InvITs.

SBI Retirement Benefit Fund – Aggressive Hybrid Plan

This Aggressive Hybrid Plan has an objective to invest the total assets in a mix of equity and equity related instruments and Debt / Money market instruments for long-term capital appreciation as well as income generation.

This Investment Plan may also invest in Gold ETFs or units issued by REITs & InvITs.

SBI Retirement Benefit Fund – Conservative Hybrid Plan

This Conservative Hybrid Plan is for investors nearing their retirement and have lower risk tolerance. The total assets of this plan will be primarily invested in Debt and Money market instruments.

However, this plan also provides for flexibility of balance investment in equity and equity related instruments, in units of Gold ETFs or units issued by REITs & InvITs for wealth creation.

SBI Retirement Benefit Fund – Conservative Plan

The Conservative Plan of this scheme will be predominantly investing in Debt and Money market instruments. This Plan seeks to generate steady long-term capital appreciation with relatively low levels of risk.

This Investment Plan may also invest in Gold ETFs or units issued by REITs & InvITs

Who will manage the SBI Retirement Benefit Fund?

SBI Retirement Benefit Fund will be managed by Mr Gaurav Mehta for equity investments, Mr Dinesh Ahuja for debt investments and Mr Mohit Jain for overseas investments.

Mr Gaurav Mehta is an Analyst and Fund Manager at SBI Mutual Fund. He has over 14 years of experience in Indian financial markets. He has completed PGBM from (IIM, Lucknow), B.Tech from (IIT, Bombay), CFA Charter holder, CFA Institute, USA.

Before joining SBI Mutual Fund, he worked at SBI Funds Management Private Limited as an Equity Analyst, at Ambit Investment Advisors as a Portfolio Manager, Equity research analyst at Ambit Capital and he began his career with Edelweiss Capital in May 2006.

Currently, Mr. Mehta is managing SBI Multi Asset Allocation Fund.

Mr Dinesh Ahuja is a Fund Manager at SBI Mutual Fund. He holds over 22 years of experience in Indian financial services, capital markets and in managing debt schemes. Prior to this, Mr Ahuja was associated with L&T Investment Management Ltd. as Fund Manager. He has worked with Reliance Asset Management Ltd and Reliance General Insurance Co. Ltd. He holds a bachelor’s degree in commerce (B. Com) and a degree in Master of Management Studies (MMS).

Currently he is the fund manager of SBI Magnum Income FundSBI Magnum Gilt FundSBI Dynamic Bond FundSBI Magnum Medium Duration FundSBI Magnum Constant Maturity FundSBI Debt Hybrid Fund (debt portion)SBI Equity Hybrid Fund (debt portion) and SBI-ETF 10 year Gilt, and SBI Magnum Children’s Benefit Fund – Investment Plan (debt portion).

Mr Mohit Jain is a dedicated Fund Manager for managing overseas investments of the schemes of the Fund, which have the mandate to invest in overseas securities. He holds over 8 years of experience in the area of financial services.

He holds a B.E (Engineering) degree and is CFA (level III candidate). Mr Jain joined SBI Funds Management Private Limited (SBIFMPL) in May 2015 as Credit Analyst, Prior to joining SBIFMPL; Mr. Jain was working with Crisil Limited as Research Analyst.

Fund Outlook -SBI Retirement Benefit Fund

SBI Retirement Benefit Fund is a solution-oriented fund that offers 4 investment plans across a range of risk-profile – Aggressive, Aggressive Hybrid, Conservative Hybrid, and Conservative.

In this scheme, the presence of 4 plans with varying allocations to equity and debt means that you can select a retirement plan, depending on your age and the number of years to retirement. Younger investors can take more risk with their investments considering aggressive plan, while investors closer to retirement should be more conservative.

The ‘Auto Transfer’ feature will help you manage your investments as per your age by switching funds to more conservative options, as you grow older. You need to change the asset allocation of your portfolios with age. Generally, you may do it yourself, but with the ‘auto transfer’ in the scheme, the fund house will take care of it. This ensures that the asset allocation moves with your age. As you grow older, you can shift to options where equity portfolio is lesser.

‘Auto Transfer’ will be available to individual/HUF investors only. Association of Investment Plan to age groups and risk appetite of investors is illustrated in the following table.

Plan Age Range (Years) Risk
Aggressive Up to 40 Aggressive
Aggressive Hybrid 40 to 50 Moderate
Conservative Hybrid 50 to 60 Conservative
Conservative Above 60 Low

(Source: Scheme Information Document

Invested assets will be automatically switched to the Investment Plan of immediate lower risk as the investor crosses the maximum age associated to their current Investment Plan. Auto switch of funds between Investment Plans will not be subjected to the exit load of the scheme.

However, SBI Retirement Benefit Fund does not offer 80C tax benefit currently, as earlier until 2011 there use to be only two designated retirement schemes UTI Retirement Benefit Pension Fund and Franklin India Pension Fund. Later, mutual funds selectively rolled out schemes focussed on retirement as a financial goal and offered tax deduction benefits under Section 80C.

You can invest in SBI Retirement Benefit Fund through a systematic investment plan. But do remember, each instalment gets locked in for five years. The ‘Auto-switch’ option, though convenient, comes with a small caveat; any switch is treated as a sale and attracts capital gains tax.

Although these solution-oriented retirement funds offer benefits of asset allocation through 4 different plans, the noteworthy points are that this scheme holds a 5-year lock-in and does not provide tax benefit, which you may get through traditional retirement plans such as PPF, NPS, etc.

So, while planning for your retirement do consider regular equity/debt mutual funds along with solution oriented funds to form an suitable and effective plan for long-term capital appreciation.

This article first appeared on PersonalFN here


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