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Pension Builder


An Investment Plan, which provides an opportunity to create a personalized retirement fund through monthly investments in MCB-PSM and PIF, with allocations adjusted according to the age & risk taking capacity of the investor.

Pension Planning

When it comes to investing for retirement, one is posed with the dilemma of choosing between good returns and the safety of life savings. Table-1 shows the results for a person starting with savings of Rs.2,500 per month at the age of 30 and investing the amount in two different types of investments, debt only investment assuming a yield of 7% per annum, and debt and equity investment (Pension Builder), assuming a yield of 15% per annum, further assuming that this person can increase his/ her investment by 10% each year. The result is that in the debt- only case, the investment accumulates to about Rs.12 million in 30 years or 60 years of age and in the case of Pension Builder, the investment accumulates to about Rs. 29 million.
Every now and then one comes across friends, relatives and acquaintances facing problems of either not having enough savings to take them through retired life or not knowing how to invest their savings to get a good enough return which keeps them going comfortably. The cause of course being the lack of investment opportunities available, and perhaps even the lack of foresight and awareness to start building pension early enough.

In our society, by the time an individual recognizes the need to create a retirement fund, he/she is usually around 50 years old. As a result the retiree finds it difficult to keep up the lifestyle he/she has maintained prior to retirement. Surely, to have a comfortable retired life one would need a regular (monthly) stream of income which is somewhat close to the last drawn monthly income, if not exactly equal.

The Pension Builder is a unique plan designed specifically to meet the requirement of an individual after his/her retirement. Unlike other saving instruments (NSS) and financial securities (common stocks and bonds), which allow an investor to accumulate wealth, these are not designed to work as pension plan.

Investment Policy of the Pension Builder

The Pension Builder recognizes that at a young age, pension savings will not be needed for several years, thus it invests a major portion of savings in MCB-PSM at the early stages of ones life and then gradually, as one approaches retirement, it reduces the investment in MCB-PSM and transfers these to fixed income instruments (such as PIF). This gives the perfect blend of balancing risk and reward through time diversification. Thus you get high returns from MCB-PSM when you can ride through the price volatility and at later stage in life you move to the safety of being invested in PIF when you can no longer take the risk. At retirement the exposure in MCB-PSM is reduced to only 20% of the investment.

How much to invest to be able to maintain your lifestyle after retirement

To build a pension fund one would have to first determine the amount required on a monthly basis after the time of retirement. In addition, one will have to work out how much will he/she need to set aside on a monthly basis to come up with a lump sum amount large enough to create an annuity, which provides a desired monthly income after retirement. We estimate that a person needs to invest around 20% of his/her income every month throughout his working life to accumulate adequate savings for a lifestyle commensurate with his/her income.

Term of the Plan

The term of the Plan would depend on the age of the investor, as the plan would mature at the age of 60 years. However, the investor is free to disinvest as and when desired, without any penalties and with returns up to the day of redemption.

Monthly Contribution

The Pension Builder offers an opportunity where individuals can conveniently and gradually accumulate a pension of their own. The Plan could be started with a monthly contribution of as little as Rs.1,000 or more (not multiples of Rs.1, 000 but any amount of over Rs.1,000). It is desirable that the investor increases the investment by a certain percentage every year according to the rise in income levels to make the Plan work best.

Salient Benefits

  • The investor will, at all times, have the flexibility to increase the monthly contribution as earning levels rise.
  • Facility of redemption, as and when desired, without any penalties or delays.
  • No penalties on delayed payments.
  • However, delay in optional insurance premium may cause problems.

Options available at maturity of the plan

The Investor will have an option to claim a lump sum at the time of maturity or opt for a monthly plan in shape of annuity or invest in the MCB Funds Monthly Income Plan.


MCB Funds will only be responsible for matters pertaining to the two unit trust schemes. It can only facilitate and coordinate as far as insurance arrangements are concerned. Full responsibility of all matters pertaining to claims etc. will be of the Insurance Company chosen by the Investor.