Mutual funds (MFs) in India are keen on developing a model on the lines of the one in the US whereby mutual funds can launch retirement schemes for individuals.

The move, advocated by the Association of Mutual Funds of India (AMFI) has received SEBI's (the industry watchdog) approval. The latter will advance this proposal to the government at the time of the pre-budget memorandum. In the US, MFs launch pension schemes for individuals under K401.

AMFI is mooting an income tax exemption (at the time of investing) for investors who apply for this scheme. However, it is in favour of taxing the investor's income at the time of maturity on the rationale that at that time, the individual's income level is much lower.

A mutual fund official remarked, 'We do not have a pension fund industry in the country. For individuals, there is no option today to ensure that they get steady pension on retirement. We are seeking deferred taxation and SEBI has assured us that it would take up the issue on our behalf. So far as AMFI is concerned, this is our only proposal for the year and it could change the lives of investors.' This was reported in a leading financial daily.

As pointed out by the industry official, the Indian MF industry is still in the nascent stages and has yet to develop into a mature market as in Western countries. The Indian investor has missed out on a retirement scheme whereby he can plan his investment over a period of years. This is a very big market and Indian MFs have lost out on it for all this time. Having taken a cue from their US counterparts, Indian MFs now want to tap this segment of investors. If the government allows MFs to tap the huge pension funds market, the Indian MF industry can then claim to be heading towards a somewhat developed MF model.

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