Retirement is inevitable and that’s why it is very important to plan your retirement well in advance to avoid facing financial difficulties post-retirement. Nowadays, many individuals and investors have started planning for retirement in their 20s. Starting early helps to save the desired corpus for retirement well on time.

There are many different savings & investment options available that help in planning for retirement. Mutual funds are popular among investors for their high return potential, especially on long-term investments. This makes them an ideal choice for planning our regular savings & investments through mutual funds for building a retirement corpus.

In mutual funds, too, many schemes specifically have the objective of building a retirement fund through regular contributions by the investors. In this article, we have discussed everything about retirement planning, funds to opt for retirement and have also discussed the features of some of the popular retirement mutual funds.

Also, investors can consider investing in a diversified portfolio consisting of different sub-categories of equity or/and debt mutual funds depending on their requirements, risk tolerance, and current situation. A well-diversified mutual fund portfolio can also help in building a desired corpus for retirement through disciplined investments over the long term.

What is Retirement Planning?

Retirement planning includes the process of evaluating retirement income goals and the right approach to pursue it. Retirement planning in India is especially important for people who work in the private sector or are self-employed as they are not obliged with pension income like government employees. Evaluating the long-term nature of retirement planning, Mutual funds come across as the best fit for a stable retirement plan.

What are retirement funds?

Retirement funds are solution-oriented mutual fund schemes which help the investors to save for their retirement through disciplined investments over the long term. They have the potential to generate high returns on the invested capital and therefore can help in accumulating a desired corpus to meet post-retirement needs.

Why choose retirement funds for retirement planning?

Retirement fund is considered as the best retirement investment option as it beats inflation, offers investment plans options over a wide horizon, flexible with pension plans according to personal needs, transparent with schemes and most importantly, mutual funds are tax efficient.

In simple words, a retirement fund pools money from different investors and further invests that amount through active selection by diversifying in various equity stocks, money market instruments and fixed income securities. Offering the investors a wide array of risk/return profiles for different time periods to choose from.

List of Best Retirement Funds in India for 2024

Scheme Name	AuM (Cr)	1Y	2Y	3Y	5Y
ICICI Prudential Retirement Fund - Pure Equity Plan - Regular Plan - Growth	979.54	53.20%	37.14%	26.20%	25.87%
HDFC Retirement Savings Fund - Equity Plan - Regular Plan- Growth	6,016.24	40.17%	33.74%	22.31%	25.67%
ICICI Prudential Retirement Fund - Hybrid Aggressive Plan - Regular Plan - Growth	642.23	45.31%	31.82%	19.81%	20.31%
Nippon India Retirement Fund - Wealth Creation Scheme - Growth	3,467.01	43.74%	33.12%	19.57%	18.91%
HDFC Retirement Savings Fund - Hybrid- Equity Plan - Regular Plan- Growth	1,587.24	30.00%	25.88%	16.18%	18.78%
Tata Retirement Savings Fund - Regular Plan - Progressive Plan - Growth	2,131.58	41.21%	28.59%	15.67%	18.18%
Tata Retirement Savings Fund - Regular Plan - Moderate Plan - Growth	2,205.81	34.20%	24.90%	14.48%	16.76%
Aditya Birla Sun Life Retirement Fund - The 30s Plan - Growth	409.59	37.76%	26.53%	14.49%	15.86%
UTI Retirement Benefit Pension Fund	3,624.16	23.73%	18.87%	12.97%	14.34%
UTI Retirement Fund - Regular Plan - Growth	4,704.68	23.73%	18.87%	12.97%	14.34%

Benefits on choosing Mutual funds for Retirement Planning

Many investors will be tempted to choose pension funds over mutual funds for retirement planning due to the pre-conceptions, but mutual funds are comparatively safer and a better option. Below listed are the benefits of choosing a mutual fund over pension fund.

Flexibility: Mutual funds offer flexibility with no restrictions on partial or full withdrawal at any time period. It gives you the flexibility to switch between equity and debt instruments with systematic transfer plans which helps you reduce risk as you moderately age. You can invest in mutual funds with as low as Rs. 500 through SIP with no upper limit.
Tax Efficient: Mutual funds are comparatively more tax efficient than pension funds, as income from pension funds is added to an individual’s income for taxation with no exception. Whereas, with equity mutual funds, long term gains are exempted up to Rs. 1 lakh annually. In the case of debt funds, the gains are taxed at 20% with the benefit of indexation for long term capital gains. In case of investments made in ELSS (Equity Linked Savings Scheme), the tax from contribution to ELSS, to the extent of Rs.1,50,000 annually is deducted under Section 80C of the Income Tax Act. This helps in saving Rs.46,800 per year in taxes.
Transparency: Mutual Funds are comparatively more transparent than pension funds as one can access all the information about their fund. Mutual funds are transparent with the securities they have invested into. Whereas, pension funds do not provide such information about their investment. At an old age, you want to have a stable source of income to be able to accomplish your post-retirement goals. Through mutual funds you can minimize the risk involved and easily plan for a stable future.\

List of Best Retirement MF in India for 2024

1. ICICI Prudential Retirement Fund - Pure Equity Plan - Regular Plan - Growth

The ICICI Prudential Retirement Fund - Pure Equity Plan is designed for maximizing long-term capital appreciation by investing in equity markets. This fund is best for investors who are looking for aggressive growth, as these funds invest in different high-growth companies of various sectors. The growth option allows investors to reinvest the income generated by the fund which will eventually enhance the potential of compounding over time. The fund manager invests 60-80% in equities and the remaining 20-40% in debt and other instruments. With a one-year return of 53.20% and a five-year return of 25.87%.

Category: Equity Fund
Risk: High
5Y Return (%): 25.87
AUM (Cr): ₹979.54

2. HDFC Retirement Savings Fund - Equity Plan - Regular Plan - Growth

HDFC Retirement Savings Fund - Equity Plan - Regular Plan - Growth is designed for long-term capital growth in the market. The fund mainly invests in equities and equity-related instruments. This fund is best for investors who are looking to invest their large amount of funds in a large cap and still want to get the benefits of capital appreciation. The growth option allows for reinvestment of returns which will provide investors with excellent compounding opportunities. The fund manager invests 50-60% in large cap funds and remaining 40-50% in mid cap, small cap and other instruments. With a one-year return of 40.17% and a five-year return of 25.67%.
Category: Equity Fund
Risk: High
5Y Return (%): 25.67
AUM (Cr): ₹6,016.24

3. ICICI Prudential Retirement Fund - Hybrid Aggressive Plan - Regular Plan - Growth

The ICICI Prudential Retirement Fund - Hybrid Aggressive Plan is the combination of equity and debt instruments which make it suitable for investors who want a balance between risk and return. The fund manager aims to generate high returns on investment while managing market risk through diversification. The growth option allows for the reinvestment of earnings which will give investors the benefit of compounding over time. The fund is best for investors who are looking for better growth opportunities with moderate risk. With a one-year return of 45.31% and a five-year return of 20.31%.

Category: Hybrid Fund
Risk: Moderate to High
5Y Return (%): 20.31
AUM (Cr): ₹642.23

4. Nippon India Retirement Fund - Wealth Creation Scheme - Growth

Nippon India Retirement Fund - Wealth Creation Scheme - Growth is the fund that invests its major amount in large cap followed by mid and small cap funds. The funds aim to build wealth over the long term. The fund is designed for investors who are looking for significant capital appreciation over the long term. The growth option enables investors to reinvest the gains, which is beneficial for compounding over time. With a one-year return of 43.74% and a five-year return of 18.91%.

Category: Equity Fund
Risk: High
5Y Return (%): 18.91
AUM (Cr): ₹3,467.01

5. HDFC Retirement Savings Fund - Hybrid-Equity Plan - Regular Plan - Growth

The HDFC Retirement Savings Fund - Hybrid-Equity Plan is the combination of equity and fixed-income securities. The fund follows a balanced approach strategy for capital appreciation and risk management. This fund is best for investors who are looking for moderate growth with lower volatility as they invest in both equity and fixed-income securities. With a one-year return of 30.00% and a five-year return of 18.78%.

Category: Hybrid Fund
Risk: Moderate
5Y Return (%): 18.78
AUM (Cr): ₹1,587.24

6. Tata Retirement Savings Fund - Regular Plan - Progressive Plan - Growth

The Tata Retirement Savings Fund - Progressive Plan is designed for long-term capital appreciation. The fund follows a balance risk strategy where they invest 90-80% in equities and remaining 20-10% in debt instruments. This fund is suitable for investors who are looking for moderate risk with high growth potential. The growth option in the fund allows investors to reinvest and take the benefits of compounding. One-year return of fund is 41.21% and a five-year return is 18.18%.

Category: Hybrid Fund
Risk: Moderate
5Y Return (%): 18.18
AUM (Cr): ₹2,131.58

7. Tata Retirement Savings Fund - Regular Plan - Moderate Plan - Growth

Tata Retirement Savings Fund - Regular Plan - Moderate Plan - Growth is designed for investors seeking a conservative approach. The fund manager invests in the combination of 70-80% in equities and remaining 30-20% in fixed income to provide stable growth. This fund is best for investors who are looking to invest in funds which have low volatility with capital appreciation. The growth option encourages investors to reinvestment the gains for long-term benefits. With a one-year return of 34.20% and a five-year return of 16.76%.
Category: Hybrid Fund
Risk: Moderate
5Y Return (%): 16.76
AUM (Cr): ₹2,205.81

8. Aditya Birla Sun Life Retirement Fund - The 30s Plan - Growth

Aditya Birla Sun Life Retirement Fund - The 30s Plan - Growth is designed for substantial retirement corpus over time. The fund manager invests in most of the funds in the equity market. The growth option in the fund allows for the reinvestment of gains and enhances the benefit of compounding. With a one-year return of 37.76% and a five-year return of 15.86%, the fund is an excellent opportunity for younger investors.
Category: Equity Fund
Risk: High
5Y Return (%): 15.86
AUM (Cr): ₹409.59

9. UTI Retirement Benefit Pension Fund

The UTI Retirement Benefit Pension Fund offers a balanced investment approach with exposure to both equities and debt. This fund is suitable for investors looking for a moderate risk profile and stable long-term growth. The growth option allows for the reinvestment of earnings which make it suitable for retirement planning. With a one-year return of 23.73% and a five-year return of 14.34%
Category: Hybrid Fund
Risk: Moderate
5Y Return (%): 14.34
AUM (Cr): ₹3,624.16

10. UTI Retirement Fund - Regular Plan - Growth

Similar to the UTI Retirement Benefit Pension Fund, the UTI Retirement Fund - Regular Plan focuses on a mix of equity and debt instruments, providing a balanced approach to retirement savings. This fund is ideal for investors seeking moderate growth with manageable risk. The growth option enables reinvestment of returns, supporting long-term wealth accumulation. With a one-year return of 23.73% and a five-year return of 14.34%, It is an excellent choice for retirement-focused investors.

Category: Hybrid Fund
Risk: Moderate
5Y Return (%): 14.34
AUM (Cr): ₹4,704.68

Comparison of different retirement instruments

Investment Instrument	Risk Level	Expected Returns	Liquidity	Tax Implications	Ideal For
Public Provident Fund (PPF)	Low	7-8%	Low	Tax-free on maturity	Conservative investors seeking safety
Employee Provident Fund (EPF)	Low	8-9%	Low	Tax-free on maturity	Employees looking for long-term savings
National Pension System (NPS)	Moderate	8-12%	Moderate	Tax benefits, partial withdrawals allowed	Investors looking for a mix of equity and debt
Mutual Funds (Equity)	High	10-15%+	High	Capital gains tax applicable	Aggressive investors seeking growth
Mutual Funds (Debt)	Moderate	5-8%	High	Capital gains tax applicable	Conservative investors wanting regular income
Stocks	High	Variable (10-20%+)	High	Capital gains tax applicable	Experienced investors seeking high returns
Real Estate	Moderate	Variable (5-10%+)	Low	Long-term capital gains tax	Investors looking for passive income
Fixed Deposits (FD)	Low	5-7%	High	Tax on interest income	Conservative investors seeking guaranteed returns
Gold (Physical or ETFs)	Moderate	Variable (5-10%+)	Moderate	Long-term capital gains tax	Investors looking for a hedge against inflation
Annuities	Low to Moderate	Variable	Low	Tax on interest income	Investors seeking guaranteed income in retirement

Conclusion

Choosing the right investment instruments for retirement is important for financial future. Each retirement option has some unique benefits and risks that can cater to different investment styles and goals. But investing in mutual funds is one of the popular choices for investors as it can give you a better return than other investment options but always take the financial decision by understanding the characteristics of each investment, their risk and according to your goals. You can also take investment advice from experts to make your journey sahi or asaan.

FAQ of Retirement Funds

Q. What Type of Fund is Best for Retirement?

The best type of fund for retirement depends on your risk tolerance, investment horizon, and financial goals. There are various type of mutual funds:

Equity Mutual Funds: It is suitable for investors who want to take high risk with significant long-term growth.
Hybrid Funds: It is suitable for investors who want to invest in both equity and debt which provide them a balance of risk and return.
Debt Funds: It is suitable for investors who want stability and regular income.
National Pension System (NPS): It is suitable for investors who want to invest in equity, corporate bonds, and government securities. It also offers tax benefits and retirement-focused investment.

Q. Which Mutual Fund is Best for a Retired Person in India?

For retired individuals, the best mutual funds often include:

Debt Mutual Funds: It is suitable for investors who want to invest in short-term or liquid funds with regular income.
Hybrid Funds: It is suitable for investors who want some growth while maintaining lower volatility.
Equity Income Funds: It is suitable for investors who want dividend-paying stocks, so that they can get a regular income while still providing growth potential.

Q. Are Mutual Funds Good for Retirement Planning?

Yes, mutual funds can be an effective tool for retirement planning. They provide you with diversification, flexibility and tax benefits as well.

Q. Which is the Best Investment for Retirement?

The best investment for retirement is mutual fund but always choose according to your risk and your financial goal

Q. What are the Top retirement funds?

There are many retirement funds available in India. Some of them are:

ICICI Prudential Retirement Fund - Pure Equity Plan
HDFC Retirement Savings Fund - Equity Plan
ICICI Prudential Retirement Fund - Hybrid Aggressive Plan
Nippon India Retirement Fund - Wealth Creation Scheme
HDFC Retirement Savings Fund - Hybrid-Equity Plan

Q. Do retirement funds have a lock-in period?

Yes, generally retirement funds come with a compulsory lock-in period of 5 years or till the retirement age, whichever is earlier. Any investment made in these funds, cannot be redeemed before the completion of 5 years from the date of the investment.

Q. Does the investment made in retirement funds give the tax deduction benefits?

No, the investments made in these funds are not eligible for any tax deductions. However, it will offer tax-efficient returns over long periods.

Q. How to invest in Retirement mutual funds?

To invest in retirement funds, you can simply download the ZFunds app and start investing with a few clicks.