With higher allocation to equities (around other products), mutual funds pension plans can generate superior returns in the long run compared to other products like PPF, NPS, insurance plans etc
Due to higher returns, Mutual fund pension plans offer a hedge against inflation
Charges of mutual fund pension plans are much lower compared to insurance products
Investments in Mutual Fund pension plans qualify for Section 80C benefits, under Income Tax Act
Disadvantages of Mutual Fund Pension Plans :
There is limited flexibility, with heavy exit load of up to 3%, in case of withdrawal before 58 years of age
The returns on investments are not tax free, unlike some other products like PPF
NPS offers slightly higher allocation to equities (50%) compared to 40% in the mutual fund pension plans. However, the Tata Retirement Savings Fund offers an aggressive equity allocation option (up to 85%)
There is not a wide array of choices available in the market