What is Mutual Fund Pension Plan?

Pension plans offered by Mutual Funds do not get as much of mention, compared to the other retirement planning solutions. These funds are similar in nature to balanced funds, in that the portfolio has both a debt and an equity component. However, unlike balanced funds the equity exposure and portfolio risk is much lower. While most balance funds have 60 – 70% of their portfolio invested in equities, pension plans have only 40% or so invested in equities. The balance is invested in fixed income securities. Investors can invest either in lump sum amounts or through systematic investment plans. Post retirement the investors can withdraw their corpus on a lump sum basis or through systematic withdrawal plan chosen intervals (e.g. monthly, quarterly etc.) for regular income during retirement. The balance units post withdrawals in either case remain invested and continue to grow.