{"id":116057,"date":"2025-09-03T16:21:17","date_gmt":"2025-09-03T16:21:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/116057\/"},"modified":"2025-09-03T16:21:17","modified_gmt":"2025-09-03T16:21:17","slug":"amfi-proposes-mutual-fund-voluntary-retirement-account-scheme-similar-to-us-401k-plan","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/116057\/","title":{"rendered":"AMFI proposes Mutual Fund-Voluntary Retirement Account scheme, similar to US 401(k) plan"},"content":{"rendered":"

The Association of Mutual Funds<\/a> in India (AMFI<\/a>) has proposed the Mutual Fund- Voluntary Retirement<\/a> Account (MF-VRA<\/a>) scheme, which aims to provide a voluntary, employer-linked retirement product managed by mutual funds, similar to the US 401(k) plan.<\/p>\n

According to the whitepaper jointly prepared by Crisil Intelligence and AMFI, the scheme would offer features such as voluntary participation, employer-sponsored options, managed by mutual funds, tax incentives<\/a>, portability, and flexibility.<\/p>\n

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The MF-VRA scheme would build on the long-term policy laid out by SEBI<\/a>, enhancing the reach and promoting financial inclusion, and would ride on the growth of mutual funds in India, which has crossed Rs 75 lakh crore of assets as of July 2025. The success of the MF-VRA scheme depends on the collaborative efforts of regulatory enablers, operational design stakeholders, and other key players.<\/p>\n

The whitepaper further mentioned that the benefits of the MF-VRA scheme would be multifaceted, enhancing pension penetration and coverage in the country, having a positive impact on economic growth, and reducing the burden of social security on the exchequer. The scheme would also channel household financial savings into the financial markets, providing long-term stability and depth, and increasing the scale and efficiency of the mutual fund industry.<\/p>\n

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Additionally, the MF-VRA scheme would provide supplemental retirement planning and long-term allocation to productive assets for investors, ultimately leading to a more secure and sustainable financial future for individuals\u201cTo make the MF-VRA scheme a success, stakeholders must work together to define the product structure, introduce tax deductions, establish portability provisions, create retirement lifecycle funds, and design user-friendly onboarding and goal-tracking tools. By doing so, India can develop a robust pension system, supplementing retirement planning and providing individuals with a secure and sustainable financial future,\u201d the whitepaper said.Taking cues from global pension systems, the Mutual Fund \u2013 Voluntary Retirement Account can be designed with features like voluntary participation, employer-sponsored option, managed by mutual funds, tax incentives, portability and flexibility, and withdrawal rules.<\/p>\n

AMFI has asked stakeholders, including Sebi, CBDT, and the Ministry of Labour & Finance, to bring in regulatory changes to create a conducive environment for the MF-VRA scheme.<\/p>\n

AMFI has asked fund houses to create \u201cRetirement Lifecycle Funds\u201d with aggressive to conservative glide paths, catering to the diverse needs of contributors. These funds should be designed to automatically adjust the asset allocation based on the contributor\u2019s age, risk tolerance, and retirement goals. Additionally, fund houses should enable systematic investment and withdrawal options, allowing contributors to invest regularly and withdraw funds as needed during retirement.<\/p>\n

This scheme offers a co-contribution model voluntarily, where employers can contribute to their employees\u2019 MFVRA accounts, promoting a culture of retirement savings and enhancing the overall attractiveness of the scheme.<\/p>\n

Distributors\/Fintechs should design user-friendly onboarding and goal-tracking tools, enabling contributors to easily set up and monitor their MF-VRA accounts.<\/p>\n

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\u201cBy working together and fulfilling their respective roles, these stakeholders can ensure the success of the MFVRA scheme, promoting a culture of retirement saving and providing individuals with a secure and sustainable financial future,\u201d the whitepaper said.<\/p>\n

According to Navneet Munot, Chairman, AMFI, this whitepaper is a reminder that retirement security must move from the periphery to the core of our financial priorities. It is a call for every working individual to start early, invest regularly, and stay the course. <\/p>\n

\u201cThe mutual fund industry, with its transparent and well-regulated framework, offers a \u2018Sahi choice\u2019 for building a robust retirement corpus through systematic, long-term investing. In doing so, these investments safeguard personal independence, while channelling savings into productive capital, which fuels India\u2019s growth,\u201d he said.<\/p>\n

\u201cYet, retirement planning is not just a personal imperative \u2014 it\u2019s a national one. When individuals invest with a long-term horizon, especially through instruments like mutual funds, their savings contribute to capital formation and economic development. These investments help fund infrastructure, businesses, and innovation, ultimately driving national growth and stability,\u201d said Venkat Nageswar Chalasani, Chief Executive, AMFI.<\/p>\n

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