Story Pitch

News. Views. Reviews.

SBI Retirement MF

SBI Retirement Benefit Fund will have some exposure in foreign equities, gold ETFs.

SBI Retirement MF with free term cover. Want to invest?

SBI Mutual Fund has launched the new fund offer (NFO) of SBI Retirement Benefit Fund which will help create a retirement corpus. The fund is a solution-oriented retirement-linked mutual fund that will give you term insurance up to a maximum of ₹50 lakh free of cost. The NFO of SBI Retirement Benefit Fund is open and will close on 3 February 2021. So, what is NFO? When an asset management company (AMC) offers a new scheme in the market, it is called a New Fund Offer (NFO). It is offered to help the asset management company raise capital for buying securities.

Here are things that investors should know about the SBI Retirement Benefit Fund:

SBI Retirement Benefit Fund is an open-ended, retirement solution-oriented scheme where the investment amount is locked in for five years or until retirement (i.e. completion of 65 years), whichever is earlier. No investor above the age of 65 years will be allowed to subscribe to the scheme.

Although there is a lock-in period of 5-year or until retirement, switching between different plans of the scheme (like from Aggressive Plan to Conservative Plan or vice versa) is allowed during the lock-in period as well.

SBI Retirement Benefit Fund offers 4 investment plans

The Scheme offers four investment plans – aggressive (equity-oriented), aggressive hybrid (equity-oriented), conservative hybrid (debt oriented) and conservative (debt oriented). Schemes may also invest in Foreign Equities, Gold ETFs and REITs/InVITs depending on the asset allocation & investment strategy.

The minimum initial investment amount that one can make in the scheme is ₹5,000 and in multiples of ₹1 thereafter, while the minimum additional purchase amount is ₹1,000 & in multiples of ₹1 thereafter.

Also Read: Why SBI, ICICI and HDFC Bank are ‘too big to fail’

The fund offers SIP facility during the NFO period as well. The frequency of the SIP can be daily, weekly, monthly, quarterly, semi-annually or annually. The minimum SIP amount should be ₹500 for daily SIP, ₹1,000 for weekly and monthly SIP, ₹1,500 for quarterly SIP, ₹3,000 for semi-annual SIP and ₹5,000 for annual SIP mode.

SBI Retirement Fund offers two investment options– Auto transfer plan and My choice plan

Auto Transfer Plan allows the age-based transfer of accumulated corpus to a suitable investment plan. 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 e.g. – Investors up to 40 years of age will get the aggressive investment plan, between 40 – 50 years of age to get the Aggressive Hybrid investment plan, between 50 – 60 years of age to get the Conservative Hybrid investment plan and above 60 years of age to get the Conservative investment plan.

Under the ‘My Choice’ facility, the investor can choose the plan as per his choice, irrespective of his/her age and may continue investing in the same plan even if eligible to switch over to a plan in the next low-risk age bracket.

The fund offers a facility called, ‘SIP Insure’ –Monthly SIPs registered under SBI Retirement Benefit Fund with a tenure of three years and above. The investor may opt for term insurance cover which would benefit the registered nominee in an unfortunate event. The uniqueness of SIP Insure is that insurance coverage would increase for the first three years, it will start from 20 times the monthly SIP installment or ₹50 lakh whichever lower of in the first year, 50 times of the monthly SIP amount in year two or ₹50 lakh whichever lower of and then go up to 100 times or Rs. 50 lakh whichever lower of the monthly SIP installment from the third year onwards.

SIP registered under this facility will be eligible for life insurance cover as defined below:

  • Year 1: 20 times the monthly SIP instalment
  • Year 2: 50 times the monthly SIP instalment
  • Year 3: 100 times the monthly SIP instalment
  • 4th year onwards: 100 times the monthly SIP

SBI Retirement Fund: Highlights

-NFO closes on February 3
-The scheme will have a lock-in period of 5 years
-The scheme will have some exposure in foreign equities, gold ETFs and REITs/InVITs
-Available in four variants – Aggressive, Aggressive Hybrid, Conservative Hybrid and Conservative
-Term insurance of up to Rs 50 lakh if you start SIPs

Should you invest?

If you are looking for a retirement plan, SBI Retirement Benefit Fund could be a good option. The fund’s exposure to foreign equities may make the returns attractive. However, according to some analysts, the lock-in period is an issue. And, one more thing, investors in the fund cannot claim deductions under Section 80C of the Income Tax Act. But, before you go ahead with putting money in the scheme, you should know it is not necessary to invest in the NFO stage. It’s always advisable to compare it with other retirement benefit fund options.