SBI Retirement Benefit Fund NFO opens ; should you invest?

he scheme provides features like life cover up to a maximum of Rs 50 lakh per investor

Staff Writer   /   January 22, 2021

SBI Mutual Fund has launched SBI Retirement Benefit Fund, a solution-oriented fund that offers four plans across risk profiles. The scheme also provides features like life cover up to a maximum of Rs 50 lakh per investor, option of two investment facilities of auto transfer and quarterly systematic withdrawal facility. The fund opened for subscription on January 20 and closes on February 3. Here is all you wanted to know about the fund. 

What is 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.

What are the different plans available under the scheme?

The SBI Retirement Fund offers four investment plans – aggressive (equity-oriented), aggressive hybrid (equity-oriented), conservative hybrid (debt-oriented) and conservative (debt-oriented). 

Will the fund invest in gold? 

Every plan can take up to 20% exposure to Gold ETFs and up to 10% exposure to REITs/InVITs. 

What about foreign stocks exposure? 

The plans of SBI Retirement Fund can also invest in foreign securities including overseas ETF to the tune of: up to 35% in Aggressive Plan, up to 15% in Aggressive Hybrid Plan and Conservative Hybrid Plan and up to 10% in Conservative Plan.

Is there a lock-in period? Is it at a plan level or scheme level?

Yes, there is a lock-in period of 5 years or until retirement (i.e. completion of 65 years), whichever is earlier. The lock-in period is at the scheme level  which means an investor can switch among the different plans available in the scheme (switch from Aggressive Plan to Conservative Plan or vice versa) during the lock-in period.

How can one decide which plan is suitable?

The suitability will be a function of one’s age, investment horizon and risk appetite. Under ‘My Investment Plan’ there are two facilities: 

Auto Transfer: Under the ‘Auto Transfer’ facility, the investment plan is chosen based on the investor’s age at the time of investment. 

Each investment plan corresponds to a certain age group. For instance, for those upto 40 years age, you are ‘aggressive’. If age is between 40 to 50 years, its ‘moderate’. Age between 50 to 60 years, then be ‘conservative’ and for those above 60 years, its ‘low’ risk. 

In this facility, the investor does not choose a plan but is allotted one based on their age at the time of investment. As the investor advances in age, the invested assets get automatically transferred to the next low-risk investment plan corresponding to the investor’s age. No exit load is applicable in case of this switching of assets between plans. However, tax will be applicable as per prevailing taxation laws.

My Choice: Under the ‘My Choice’ facility, the initial investment plan chosen by the investor will continue even as the investor advances in age and crosses over to the next low-risk age bracket. Incremental investment made will also be added to the initial investment plan. If the investor does not opt for auto transfer, then existing and incremental investments will continue in the plan chosen at the time of initial investment. 

Further, any number of switches are allowed between the four plans of the scheme. Eg: An investor can move from Aggressive Plan to Conservative Plan or vice versa.

What is SIP Insure facility? Is there any minimum age, minimum amount and minimum tenure to avail this facility?

Under this facility of SBI Retirement Benefit Fund, investors will be provided with a life insurance cover with their SIPs 

 – Any investor between the age of 18 and 52 years can avail this facility 

 – SIP of minimum Rs 1,000 per month is required to be eligible for this facility 

 – SIP tenure should be minimum three years at the time of registration

What will be the life insurance cover under SIP Insure facility?

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

Year 1: 20 times the monthly SIP installment

Year 2: 50 times the monthly SIP installment

Year 3: 100 times the monthly SIP installment 

Year 4 onwards: 100 times the monthly SIP

The above-mentioned limits are subject to a maximum limit of Rs 50 lakh in insurance cover per investor across all schemes.

Till what age the SIP Insurance cover remain?

The cover is available till an investor reaches 55 years of age.

What is SWP (A)* facility? Is there a minimum folio balance required to avail this?

Under this facility of SBI Retirement Fund, the investor can redeem a fixed sum of money periodically at the prevailing net asset value depending on the investment plan selected by the investor. The SWP (A) facility will be available on a quarterly basis with applicable quarters being the end of December, March, June and September quarters. The SWP (A) withdrawals will be effective on the 25th of each month of that quarter and will be treated as redemptions. The withdrawals would be subject to the lock-in period and exit load. A minimum account balance of Rs 1 lakh is required at the time of registration of this facility. This facility is available only in the dividend option of the scheme.

What will be the expense ratio for the different plans?

For Aggressive Plan and Aggressive Hybrid Plan: up to 2.25% of net assets

For Conservative Hybrid Plan & Conservative Plan: up to 2.00% of net assets

The actual expense ratio will be decided at the time of launch. 

Is there any tax exemption U/s 80CCC (sub section under 80C) for investments in this scheme?

No, there is no tax exemption available in SBI Retirement Fund.

What is the minimum initial investment in the fund? 

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

What is the minimum redemption amount?

The minimum redemption that can be done is of Rs 500 or 1 Unit, whichever is lower. 

Is there a SIP facility available during NFO?

 The schemes offer the Daily, Weekly, Monthly, Quarterly, Semi-annual and Annual frequencies for SIP. 

Is there an exit load in SBI Retirement Fund? 

There is no exit load in the scheme. Further, no exit load is applicable in case of switching from one plan of the scheme to another.

If you need help with investing in retirement funds, open an account at wealthzi.com

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