Plan your retirement with HDFC retirement savings fund

Written on Monday, February 8, 2016
By Vijay Thapliyal- Manager, Mutual Funds Operation, Bajaj Capital Ltd.

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Most of us push back the very thought of retirement and give it the least preference in one’s life. A retirement survey shows nearly 78 percent of Indians haven’t planned their retirement. With increasing life expectancy and rising cost of living, one cannot expect to maintain the same lifestyle during post retirement days. If you fall in the category of people with no retirement plans, it’s high time to think about it and act. We live in a great country and we are proud of it but we have to accept the fact that India has very minimal number of effective social security benefits. This gives you another reason to plan your second innings of life.


When it comes to selection of plans offered by different companies, we often get confused and the initiative again gets pushed back. HDFC retirement savings fund is definitely one plan which you cannot afford to miss. Let’s discuss the plan in detail so that you have all the required information before to invest. This is an open ended tax saving cum pension fund which has been specified as notified pension fund by the central government. Further, the scheme has been approved by central board of direct taxes, Ministry of Finance insuring tax benefits to the investors. The investors are eligible for tax benefits under section 80C of income tax for the assessment year 2016-17 and subsequent assessment years.


The investment objective of the Plans offered under the Scheme is to generate a corpus to provide for pension to an investor in the form of income to the extent of the redemption value of their holding after the age of 60 years. The scheme invests in a mix of securities comprising of equity, equity-related instruments and/or Debt/Money Market Instruments. However, these units can be redeemed, if the investor so desires, after the end of lock-in period i.e. five years from date of allotment.

HDFC Retirement Savings Fund offers three different plans to suit investors of different age groups and risk profiles.




Now let’s have a look at the detailed taxation benefits of this scheme which is a major attraction.


Tax Benefits Under Section 80C: The investment made by Individuals in the fund is eligible for tax benefits U/s 80C of the Income-tax Act, 1961 for a deduction up to Rs.1.5 Lakh (along with other prescribed investments u/s 80C) from Gross Total Income. Please note this 80C tax benefit is available in all the three plans.


Long Term Capital Gains Tax on Equity plan & Hybrid Equity Plan: The investments made in the Equity plan & Hybrid – Equity Plan will be treated as investments in equity oriented funds and income earned at the time of redemption on these investments will be treated as long term capital gains which are exempt from income taxes.


Long Term Capital Gains Tax on Hybrid Debt Plan: Any capital gains arising out of the Hybrid – Debt Plan at the time of redemption would be taxable as per the applicable tax rates and indexation benefits thereof. As per the current tax structure, the Long Term Capital Gains Tax on such non-equity oriented funds is levied at 20% with indexation.


Adult resident Indians, either single or jointly (not exceeding three), NRIs and persons of Indian origin are eligible to invest on repatriation basis or on non-repatriation basis. The investor having completed 18 years of age is eligible to invest in the scheme. Age shall be computed with reference to years completed on the date of allotment. NRI citizens of US/Canada region are not eligible for the scheme.


Note: NFO closes on 19th Feb 2016.



#Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing.   

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