Senior Citizen Savings Scheme (SCSS) vs Retirement Funds: The returns from retirement funds have not been as high as small or mid-cap funds but some of them have given better returns than Senior Citizen Savings Scheme (SCSS) in the last five years. Since 2018, the highest interest rate for SCSS has been 8.7% (between 01-10-2018 to 30-06-2019). This means, if a senior citizen had invested in the SCSS scheme between October 2018 to June 2019, s/he would have earned 8.7% annual interest income. The current SCSS interest rate is 8.2%.
In 5 years, returns from a few retirement mutual funds have been over 10%. However, barring two retirement funds from HDFC AMC, none of the retirement funds has beaten its benchmark index in 5 years, according to data on the website of the Association of Mutual Funds in India (AMFI) at the time of writing.
Annual returns from retirement Funds’ in 5 years
Following is a list of retirement funds and the returns they have given in 5 years.
Tata Retirement Savings Conservative
The direct plan of Tata Retirement Savings Conservative has given a return of 7.85% while the regular plan has given a return of 6.54% in 5 years. The scheme tracks CRISIL Short Term Debt Hybrid 75+25 Index, which has given a return of 9.15% in this period.
Also Read: Best Flexi Cap funds in one year: Top 10 schemes with 18% to 24% SIP returns (June 2023)
Tata Retirement Savings Moderate
The direct plan of Tata Retirement Savings Moderate scheme has given a return of 10.47% while the regular plan has given a return of 8.88% in 5 years. The scheme tracks CRISIL Hybrid 25+75 Aggressive Index, which has given a return of 12.40% in this period.
Tata Retirement Savings Progressive
The direct plan of Tata Retirement Savings Progressive has given a return of 10.66% while the regular plan has given a return of 8.94% in 5 years. The scheme tracks NIFTY 500 Total Return Index, which has given a return of 12.78% in this period.
UTI Retirement Benefit Pension Fund
The direct plan of UTI Retirement Benefit Pension Fund has given a return of 8.70% while the regular plan has given a return of 8% in 5 years. The scheme tracks CRISIL Short Term Debt Hybrid 60+40 Index, which has given a return of 10.16% in this period.
Nippon India Retirement Fund – Wealth Creation Scheme
The direct plan of Nippon India Retirement Fund – Wealth Creation Scheme has given a return of 8.39% while the regular plan has given a return of 7.31% in 5 years. The scheme tracks S&P BSE 500 Total Return Index, which has given a return of 13.01% in this period.
Also Read: What is Total Expense Ratio (TER) of a mutual fund and how it affects your SIP returns?
Nippon India Retirement Fund – Income Generation Scheme
The direct plan of Nippon India Retirement Fund – Income Generation Scheme has given a return of 8.58% while the regular plan has given a return of 7.31% in 5 years. The scheme tracks CRISIL Hybrid 85+15 Conservative Index, which has given a return of 8.96% in this period.
HDFC Retirement Savings Fund – Hybrid Equity Plan
The direct plan of HDFC Retirement Savings Fund – Hybrid Equity Plan has given a return of 13.91% while the regular plan has given a return of 12.45% in 5 years. The scheme tracks NIFTY 50 Hybrid Composite Debt 65:35 Index, which has given a return of 11.88% in this period.
HDFC Retirement Savings Fund – Hybrid Debt Plan
The direct plan of HDFC Retirement Savings Fund – Hybrid Debt Plan has given a return of 8.91% while the regular plan has given a return of 7.62% in 5 years. The scheme tracks NIFTY 50 Hybrid Composite Debt 15:85 Index, which has given a return of 9.12% in this period.
HDFC Retirement Savings Fund – Equity Plan
The direct plan of HDFC Retirement Savings Fund – Equity Plan has given a return of 17.18% while the regular plan has given a return of 15.68% in 5 years. The scheme tracks NIFTY 500 Total Return Index, which has given a return of 12.78% in this period.
Franklin India Pension Fund
The direct plan of Franklin India Pension Fund has given a return of 7.93% while the regular plan has given a return of 7.11% in 5 years. The scheme tracks CRISIL Composite Bond Index(60.00), NIFTY 500 TRI(40.00), which has given a return of 10.27% in this period.
Also Read: Should Senior Citizens close old SCSS account and invest in a new one for higher interest?
Is a retirement fund better than SCSS?
The simple answer is no as both schemes serve different purposes. SCSS scheme provides guaranteed quarterly interest along with tax deduction benefits under Section 80C to senior citizens to support their post-retirement lives.
In contrast, retirement mutual funds can be used to accumulate a corpus during working years to support your post-retirement life. These funds follow different asset allocation strategies for investing in debt or equity, which investors can choose as per their risk appetites. Retirement funds also have a lock-in period of 5 years or till retirement age, whichever is earlier.
With the recent hike in the SCSS deposit limit and interest rate to 8.2%, the scheme has become more lucrative for senior citizens looking for guaranteed returns and peace of mind.
Disclaimer: The above content is for information purposes only. Retirement Fund returns are based on AMFI website data as of June 6, 2023. Mutual Funds are subject to market risks. There is no assurance or guarantee that the above funds will give the same returns in future. Investors are advised to consult their financial advisors before investing.