Top Retirement Mutual Funds in India for 2025
As the working population aims to secure their financial future and maintain a comfortable lifestyle post-retirement, the importance of investing in retirement funds in mutual funds shouldn’t be overstated. Therefore, in this blog, we will discuss some of the best mutual funds for retirement that you can watch in 2025.
List of Top Retirement Funds in India 2025
Here is a list of top retirement funds for 2025:
| Name | AUM | CAGR 3Y | Expense Ratio | NAV | Exit Load | Absolute Returns - 1Y | Volatility |
|---|---|---|---|---|---|---|---|
| HDFC Retirement Savings Fund-Equity Plan | 6584 | 20 | 1 | 57 | 0 | 0 | 12 |
| UTI Retirement Fund | 4659 | 0 | 1 | 54 | 1 | 0 | 6 |
| Nippon India Retirement Fund-Wealth Creation | 3144 | 19 | 1 | 32 | 0 | -1 | 14 |
| SBI Retirement Benefit Fund-Aggressive Plan | 2949 | 15 | 1 | 21 | 0 | -1 | 13 |
| Tata Retirement Sav Fund - Mod Plan | 2117 | 16 | 1 | 77 | 1 | 1 | 13 |
| Tata Retirement Sav Fund - Prog Plan | 2048 | 17 | 1 | 79 | 1 | -2 | 15 |
| HDFC Retirement Savings Fund-Hybrid-Equity Plan | 1681 | 16 | 1 | 44 | 0 | 2 | 9 |
| SBI Retirement Benefit Fund-Aggressive Hybrid Plan | 1597 | 14 | 1 | 20 | 0 | 2 | 10 |
| ICICI Pru Retirement Fund-Pure Equity Plan | 1333 | 25 | 1 | 36 | 0 | 7 | 17 |
| ICICI Pru Retirement Fund-Hybrid Aggressive Plan | 916 | 22 | 1 | 29 | 0 | 7 | 14 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: Mutual fund schemes where neither the equity nor debt orientation exceeds 65% will now be classified as long-term investments after 24 months. The previous holding period for these funds was 36 months. These will be taxed at the revised LTCG tax rate of 12.5%.
Overview of Top 10 Retirement Investment Funds
HDFC Retirement Savings Fund-Equity Plan
This equity plan aims at long-term wealth creation. It focuses on capital appreciation by investing mainly in high-growth stocks. It offers a strong strategy for retirement planning through equity-based investments.
UTI Retirement Fund
This fund targets long-term retirement goals. It builds a balanced portfolio by investing in equity and debt securities. It helps build wealth over time while keeping a moderate risk profile.
Nippon India Retirement Fund-Wealth Creation
This fund focuses on wealth creation by investing in a diversified mix of equity and debt instruments. It offers a growth-oriented strategy for long-term retirement goals.
SBI Retirement Benefit Fund-Aggressive Plan
This fund takes an aggressive approach to retirement savings. It invests mainly in equity markets to aim for retirement mutual funds with high returns. It helps build wealth for retirement while taking higher risk for significant growth.
Tata Retirement Savings Fund – Mod Plan
This plan uses a moderate risk strategy. It invests in a mix of equity, debt, and hybrid instruments. It offers balanced growth and income for retirement with lower exposure to market volatility.
Tata Retirement Savings Fund – Prog Plan
This plan focuses on higher growth potential by investing mainly in equity instruments. It suits investors aiming for capital appreciation and long-term retirement wealth.
HDFC Retirement Savings Fund-Hybrid-Equity Plan
This hybrid retirement mutual funds invests in both equity and debt. It aims to balance risk and returns for retirement planning. It focuses on capital appreciation while ensuring some stability through debt allocation.
SBI Retirement Benefit Fund-Aggressive Hybrid Plan
This aggressive hybrid plan invests in equity and debt. It aims for high returns by taking calculated risks. It focuses on long-term retirement growth with more equity exposure.
ICICI Pru Retirement Fund-Pure Equity Plan
This fund invests fully in equity markets to target high capital growth for retirement. It holds diversified high-growth stocks and works well for investors with a long-term horizon.
ICICI Pru Retirement Fund-Hybrid Aggressive Plan
This hybrid fund invests in equity and debt with a stronger focus on equities. It targets high returns through diversification while balancing risk and growth for retirement savings.
What are Retirement Mutual Funds?
Retirement mutual funds, also called pension funds, are investment plans that help individuals save a part of their income for retirement. These funds aim to give a steady income after retirement. Investors receive an annuity on their investment until they pass away.
Pension funds usually involve low risk and may offer returns of up to 11% based on the policy. They have a lock-in period of 5 years or until the individual retires, whichever happens first.
Taxation on Retirement Funds in India
Understanding how retirement funds in India are taxed helps investors plan better and increase their returns. The tax rules depend on the type of fund, contribution amount, returns earned, withdrawal pattern, and the investor’s residency status in India.
| Taxation Type | Details | Tax Rate/Implication |
| Tax on Contributions (EPF, NPS) | Contributions are eligible for deductions under Section 80C (EPF/PPF) and Section 80CCD (NPS). | Deductions up to ₹1.5 lakh (80C) and additional ₹50,000 for NPS (80CCD). |
| Tax on Interest/Returns | Interest on PPF, EPF is tax-free; NPS has tax on withdrawals. | Tax-free for PPF/EPF; 60% of NPS lump sum is tax-free, 40% taxable as annuity. |
| Tax on Withdrawals (EPF, PPF) | Withdrawals from EPF/PPF after the required period are tax-free. Early withdrawals are taxable. | Tax-free after 5 years (EPF) and 15 years (PPF). |
| Tax on NPS Withdrawals | 60% lump sum withdrawal is tax-free; 40% is used to purchase annuity, which is taxable. | 60% tax-free, 40% taxable when annuitized. |
| Annuity Income | Annuity income from NPS/pension plans is taxable as per the individual’s income tax slab. | Taxed as per the applicable income tax slab. |
| Tax on Retirement Fund Mutual Funds | STCG if held < 3 years; LTCG if held > 3 years. | STCG: 15%, LTCG: 10% on gains above ₹1 lakh. |
How to Invest in Retirement Funds?
You can easily start to invest in retirement funds in India by following these steps:
- To invest in the best retirement mutual funds, you can visit a mutual fund investment platform such as smallcase.
- The next step is to research and identify the retirement mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
- Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode and complete the process.
What are the Types of Retirement Mutual Funds?
There are primarily four types of pension funds that one can choose from:
- Large-cap Fund: A large-cap fund is a mutual fund that invests in stocks of large-cap companies. Large-cap companies are typically well-established with high market capitalization. These funds prioritise stability and long-term growth by concentrating on established companies known for their lower volatility.
- Mid-cap Fund: A mid-cap fund is a mutual fund that invests in stocks of mid-cap companies. As the name suggests, these companies fall between large and small companies. These funds can maintain the balance between growth potential and risk with moderate market capitalisations.
- Debt Funds: These funds invest in fixed-income securities like bonds and can offer better post-tax returns than traditional FDs over three years.
- Balanced Fund: A balanced fund, or hybrid fund, is a mutual fund that combines both stocks and bonds in its portfolio. Its primary objective is to offer investors a combination of income and capital growth, making it suitable for investors seeking a moderate level of risk and return.
Features of Retirement Mutual Funds
Here are some of the significant features of retirement funds in India.
- Long-Term Horizon: The retirement mutual funds have a lock-in period of 5 years, which is higher than the ELSS lock-in period of 3 years. The best mutual fund for pension plan may prove to be beneficial due to the power of compounding, and investors can be financially stable even in their golden years.
- Liquidity: The mutual funds good for retirement usually have low liquidity due to charges and substantial exit fees applied during early withdrawals.
- Risk Profiles: Funds are available in different risk profiles, ranging from conservative (income-focused) to aggressive (growth-oriented), to accommodate varying levels of risk tolerance.
- Diversification: The best retirement planning mutual funds provides diversification as it includes stocks, bonds, and other asset classes, thereby mitigating overall risk.
Who Should Invest in Retirement Mutual Funds?
Investing in the best mutual funds for retirement isn’t limited to investors who are in their 50s or 60s. Retirement mutual funds cater to a diverse range of investors, which are as follows:
- Long-Term Investors: Investors who invest for a long period of time and reap the benefits of compounding.
- Investors Seeking Portfolio Diversification: Those who want to diversify their portfolio to mitigate risks.
- Investors with Retirement Goals: Individuals who have retirement aspirations and seek expert investment management.
Factors to Consider Before Investing in Retirement Funds
Here is a list of factors to consider before investing in pension funds
- Investment Goals: Link your investments to clear financial objectives such as retirement planning. This approach builds discipline and gives you a clear sense of purpose.
- Risk Tolerance: Assess how comfortable you are with risk. This helps you decide the right mix of assets from conservative options to more aggressive ones.
- Asset Allocation: Choose a retirement fund that matches your risk tolerance and investment time frame. Make sure it includes a balanced mix of stocks, bonds and other asset types.
- Portfolio Diversification: Check the fund’s diversification strategy and confirm if it supports your risk management goals.
- Performance History: Review the fund’s past performance to understand how it has done before. Remember that earlier results do not promise the same outcomes in the future.
What is the Mode of Investing?
There are primarily two ways of investing in the top-rated mutual funds for retirement that are mentioned below:
- Lumpsum Investment: Lumpsum or one-time investment is one way of investing where the investors invest the full amount in one go. This method is usually followed by investors who have a healthy amount of cash in hand. With the smallcase lumpsum calculator, investors can easily get a brief idea of the amount by entering the specific details.
- SIP: A mutual fund Systematic Investment Plan (SIP) is a disciplined way to plan your retirement. One can easily do the best SIP for retirement by investing a specific amount every month for the set time horizon. Additionally, one can seamlessly calculate returns with a smallcase SIP calculator.
Risks Involved While Investing in Retirement Funds
Let’s look at the potential risks of investing even in the best pension plan in a mutual fund.
- Tax Exemption: Apart from Equity Linked Savings Schemes, no other mutual funds are eligible for tax exemption under Section 80C of the Income Tax Act, 1961. Therefore, retirement mutual funds may not be suitable for investors seeking tax exemption under Section 80C of the Income Tax Act, 1961.
- High Volatility: Equity mutual funds are characterised by high volatility, making them unsuitable for investors who are not comfortable with or do not understand such fluctuations. Therefore, for these investors, traditional retirement schemes offering stable and fixed income are more suitable options.
- Illiquidity: Certain retirement funds in India restrict withdrawals until reaching retirement age, which could be challenging if funds are urgently required.
Benefits of Investing in Retirement Mutual Funds
Since we’ve covered the potential risks, let’s look at the significant advantages of investing in retirement funds.
- Flexibility: Unlike traditional retirement plans, pension mutual funds are flexible. Investors have the option to select a lifetime annuity or withdraw a lump sum to meet their financial commitments.
- Tax Advantages: Certain retirement funds offer tax benefits of up to ₹1.5 lakh under Section 80CCC of the Income Tax Act. Moreover, any long-term retirement mutual funds gains up to ₹1 lakh are tax-exempt.
- Fund Management: Good retirement mutual funds are typically managed by skilled fund managers who understand the market well. Comparing the rates of different retirement funds allows you to identify the most suitable option.
- Transparency: Mutual fund companies are required to disclose all scheme-related information regularly. Thus, this helps investors to monitor the mutual fund portfolio, its performance, and market value periodically.
- Protection Against Inflation: Many retirement funds protect against inflation by allowing investors to withdraw a portion of their accumulated corpus after retirement, typically one-third. Thus, the remaining investment is allocated towards a monthly annuity for the investor, enabling them to maintain their funds invested and receive returns through periodic withdrawals.
How to Calculate the Amount You Would Need for Retirement Planning?
When calculating a retirement fund, individuals must consider various factors such as their anticipated retirement age, life expectancy, inflation rate, and expected rate of return. For instance, an individual in their 30s will typically have around 30 years to save or invest for retirement. If their annual expenses amount to ₹7,20,000, they would need a retirement corpus of ₹54,80,824 (factoring in a 7.00% annual inflation rate) to ensure financial stability post-retirement.
Thus, utilising tools that are based on retirement planning can simplify this process by helping individuals determine the necessary retirement savings.
To Wrap It Up…
In conclusion, retirement mutual funds offer a practical way to save for the future. By understanding how these funds work and their tax implications, individuals can make informed decisions about their retirement savings. Planning for retirement is a crucial aspect of financial well-being, and mutual funds for retirement provide a structured and tax-efficient way to build a corpus for the golden years ahead.
As always, it is important to do your own research and/or consult a financial advisor before investing.
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Frequently Asked Questions(FAQs) on Retirement Mutual Funds
To mitigate volatility and risk, retirement funds commonly allocate investments across both stocks and debt assets. As participants approach retirement age, the fund progressively adjusts its asset allocation towards a more conservative profile, prioritising capital preservation.
Ideally, one should stay invested in top-rated mutual funds for retirement for 5+ years since the lock-in period is usually 5 years. Investing for a longer period can mitigate risks and ride out fluctuations to achieve favourable returns.
As per the fund’s rules and regulations, one can transfer between different retirement mutual funds with high returns offered by the same mutual fund company or across different fund houses.
One should start investing in tax-saving retirement funds as soon as possible. The earlier you start, the more money you will have during retirement. Keep in mind that the optimum investment horizon should be at least five years.
If an individual starts investing early, one can achieve their financial goals with the help of the best retirement savings mutual funds through SIPs. SIPs are cost-effective as they allow allocating a specific amount every month for investments.
