Mumbai : Enhanced transparency and investor protection regulations have helped boost investor confidence in mutual funds as a retirement vehicle, ICRA Analytics said. The Assets under Management (AUM) of Retirement Mutual Funds has increased by 226.25 per cent in the last five years to touch Rs 31,973 crore in June 2025, up from Rs 9,800 crore in June 2020.
Increasing awareness about the importance of financial planning among people and the need to build a corpus for retirement coupled with higher life expectancy and the surge in healthcare costs seems to be encouraging the aging populations in India to increasingly look for retirement-focused investment products, including mutual funds.
A retirement mutual fund is a specialised solution-oriented mutual fund whose objective is to ensure that the investor has a comfortable and secured post-retirement life. Such funds have exposure to both equity and debt where the equity segment fosters wealth appreciation while the debt segment ensures wealth preservation and stability. A retirement mutual fund helps provide a regular stream of income when one retires and there is no regular monthly income and come with a lock in period of 5 years or till retirement.
“Equity mutual funds have captured significant inflows due to optimism about market recovery and growth, which is appealing for long-term retirement portfolios. This apart, enhanced transparency and investor protection regulations have boosted investor confidence in mutual funds as a retirement vehicle,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.
The total number of folios under such schemes has increased by 18.21 per cent at 30.09 lakh in June 2025, up from 25.46 lakh in June 2020. The number of schemes, which stood at 24 in June 2020, has increased to 29 in June 2025. The average compound annualized returns on these funds stood at 6.79%, 15.72% and 14.64% for a 1-year, 3-years and 5-years period respectively.
The rise of user-friendly digital platforms and robo-advisors has made retirement investing more accessible. “These tools offer personalized portfolio recommendations based on age, risk tolerance, and retirement goals, encouraging more participation,” Kumar added.
Source: MFI360Explorer
| June 2020 | June 2021 | June 2022 | June 2023 | June 2024 | June 2025 | |
| Net AUM (Rs. Crore) | 9,800 | 14,742 | 15,673 | 20,199 | 28,713 | 31,973 |
| Number of Folios (In lakhs) | 25.46 | 26.36 | 26.96 | 27.47 | 29.24 | 30.09 |
It is important that one has a well-thought-out retirement plan which is in sync with his risk tolerance, investment horizon and investment objective as regular income will cease to exist post-retirement. Taking into account the higher price levels, increasing healthcare costs, increasing trend of nuclear families and higher life expectancy, retirement funds is expected to gain traction in the coming years
Source: MFI360Explorer
Top 10 performing Retirement Mutual Funds
| Scheme Name | 1 Year | 3 Years | 5 Years |
| ICICI Prudential Retirement Fund – Pure Equity Plan – Reg – Growth | 11.7873 | 28.1344 | 30.3241 |
| HDFC Retirement Savings Fund – Equity Plan – Reg – Growth | 5.7033 | 23.9876 | 27.4593 |
| Nippon India Retirement Fund – Wealth Creation Scheme – Reg – Growth | 2.9339 | 22.925 | 23.014 |
| ICICI Prudential Retirement Fund – Hybrid Aggressive Plan – Reg – Growth | 8.4381 | 23.9906 | 22.7146 |
| HDFC Retirement Savings Fund – Hybrid – Equity Plan – Reg – Growth | 6.2683 | 18.6011 | 20.017 |
| Tata Retirement Savings Fund – Progressive Plan – Reg | 7.2963 | 21.2838 | 19.4445 |
| Tata Retirement Savings Fund – Moderate Plan – Reg | 8.3672 | 19.3611 | 17.8317 |
| Aditya Birla Sun Life Retirement Fund – The 30s Plan – Reg – Growth | 7.7529 | 19.2052 | 16.2238 |
| Axis Retirement Fund – Dynamic Plan – Reg – Growth | 7.3373 | 18.1318 | 15.6126 |
| UTI Retirement Fund | 8.3493 | 14.5394 | 14.9295 |
