Mutual Funds
Retirement Fund: Reliance MF plans to launch a pension scheme

When launched, it would be just the third mutual fund scheme to be notified as a pension fund

Reliance Mutual Fund recently filed an offer document with the Securities and Exchange Board of India (SEBI) to launch a notified tax savings-cum-pension scheme—Reliance Retirement Fund. The scheme will get tax benefit (up to Rs1 lakh) as a Notified Pension Fund U/S 80C of the Income Tax Act, 1961, subject to the fund being notified by the central government under Section 80C(2)(xiiic) of the Income Tax Act, 1961. The two other mutual fund schemes notified as pension funds are Templeton India Pension Plan and UTI Retirement Benefit Pension Fund.

An initial lock-in period of five years would be applicable in the scheme from the date of allotment of units. The exit load would be 1% if redeemed/switched out before attainment of 60 years of age. Compared to the other two pension schemes, the Templeton India Pension Plan has a three-year lock-in period and an exit load of 3% before 58 years of age and UTI Retirement Benefit Pension Fund has no lock in period and after three years no exit load is charged.

The scheme will have two plans: Wealth Creation Plan and Income Generation Plan. The Wealth Creation Plan, having the BSE 100 index as the benchmark, will invest 65% to 100% in equity and equity related instruments and the rest in debt and money market instruments. The Income Generation Plan, as the name suggest will invest 70% to 95% in debt and money market instruments and 5% to 30% in equity instruments. The performance of this plan will be benchmarked against the Crisil MIP Blended Index. The aggressive plan of the scheme provides higher allocation towards equity compared to UTI Retirement Benefit Pension Fund and Templeton India Pension Plan which put in not more than 40% in equities. Those investing for a term of 10-15 years should benefit with the higher allocation towards equity.

There would be no long-term capital gain tax in the Wealth Creation Plan, as it would invest 65% or more in equity. The other plan would be subject to long-term capital gain tax.

The scheme would also provide an Auto Transfer Facility from the Wealth Creation Plan to the Income Generation Plan (without any exit load) upon completion of 50 years of age or as specified by the investor. This is an optional facility wherein investors’ entire investment (Lump sum/SIP) shall be switched automatically from the Wealth Creation Plan to the Income Generation Plan.

Investors can also opt for an Auto SWP (Systematic Withdrawal Plan) facility by automatic redemption of units (monthly/quarterly/annual) on or after 60 years of age or age after completion of the five-year lock in period, whichever is later.

Though the scheme looks ideal for investors saving for their retirement, from a tax saving point of view, the performance of the scheme is crucial. The annual scheme recurring expenses is the upper limit of that charged for equity and non-equity schemes. In terms of liquidity, this scheme scores better than the NPS (New Pension System), where the lock-in period is till the age of 60. It is also interesting to note that Reliance Capital Pension Fund is one of the pension fund manager for NPS.

The scheme will be managed by three fund managers—Sanjay Parekh, Senior Fund Manager–Equity Investments who has over 17 years of experience in capital market; Anju Chajjer, Fund Manager-Debt Investments, with over 11 years of experience; and Jahnvee Shah, Fund Manager-Overseas Investments, having six years experience in the capital market.

Reliance as a fund house has done well in the past. Most of their equity schemes have beaten their benchmarks in all of the last 12 five-year rolling periods with a monthly frequency. Few of the schemes have been top performers in their category in the past, as well. It would be interesting to see how this scheme performs.

Additional Details

For Lump sum: Rs5, 000 and in multiples of Rs500 thereafter

For SIP:

i. Monthly Frequency: Rs500 and in multiples of Rs500 thereafter

ii. Quarterly Frequency: Rs1,500 and in multiples of Rs500 thereafter

iii. Annual Frequency: Rs.5, 000 and in multiples of Re. 500 thereafter

Entry load: Nil

Exit Load: 1% if redeemed/switched out (other than Auto Transfer) before attainment of 60 years of age


IRDA seeks feedback on its draft national strategy for financial education

IRDA’s national strategy seeks to create a financially aware and empowered India


Insurance Regulatory and Development Authority (IRDA) has released draft National Strategy for Financial Education on its website

According to a release from the insurance regulator, financial literacy and financial education play a vital role in financial inclusion and inclusive growth. It envisages ways towards creating awareness and educating consumers on access to financial services, availability of various types of products and their features; changing attitudes to translate knowledge into responsible financial behaviour; and making consumers of financial services understand their rights and obligations, the release said.

The national strategy seeks to create a financially aware and empowered India, IRDA said. It aims at undertaking a massive Financial Education campaign to help people manage money more effectively to achieve financial well being by accessing appropriate financial products and services through regulated entities with fair and transparent machinery for consumer protection and grievance redressal.

The draft national strategy has been prepared under the aegis of the Sub Committee of the Financial Stability and Development Council (FSDC) and is being simultaneously released for comments by all financial sector regulators, IRDA said in the release.

For draft details -

Comments can be emailed to [email protected] or [email protected] by 15 August 2012.


Gujarat Pipavav Port raises Rs350 crore via private placement

Both the QIP and the preferential issues were done at Rs58.45 per share and the funds would be used for repayment of Gujarat Pipavav Port's existing loans


Mumbai: Gujarat Pipavav Port on Monday said it raised Rs350 crore through a qualified institutional placement (QIP) of shares and preferential issue to its promoter APM Terminals, reports PTI.

The infusion will be used for repayment of the existing loans which will enable it to tie up funds for its Rs1,097-crore expansion, the company said in a statement.

It raised Rs199.48 crore through a QIP of 3.41 crore shares to a clutch of investors like Bajaj Life Insurance, SBI Life Insurance, Franklin Templeton, Kotak Mahindra, Vanguard International Explorer Fund, Schroder Asia Pacific Fund, Jardine Fleming, the statement said.

Apart from that, 2.58 crore shares were issued to the promoter to raise Rs152.52 crore, it added.

Both the QIP and the preferential issues were done at Rs58.45 per share, which was trading 1.1% up at Rs56.20 apiece on the BSE at 1355 hrs versus the 30-share Sensex's 0.05% slip.

Promoter APM Terminals' shareholding in the company will continue to be maintained at 43.01% after the capital raising, it said.

The company is undertaking a capital expenditure of Rs1,097 crore to increase capacity at the port and enhance operational efficiencies.

"We propose to increase capacity for container cargo to around 1.5 million TEUs and for bulk cargo to around 10 million tonne," its managing director Prakash Tulsiani was quoted as saying.

The plans include constructing a new container berth of 348 metres to provide contiguous berth of 735 metres which will help it handle two post-Panamax vessels simultaneously, dredging, three new cranes, increasing yard capacity, it said.

On the bulk cargo side, it will be constructing a new container berth which will enable the port to dedicate the existing multi-purpose berth exclusively for bulk cargo services and extending the berth by 110 metres, the statement added.


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