Best Mutual Funds for Retirement Planning

In August 2023, Max Life Insurance’s India Retirement Index Study (IRIS) findings revealed that 2 out of 5 individuals haven’t started investing for retirement yet. 

As you earn today, it’s easy to overlook the future, but once you hit retirement age, the need for financial security remains. Without a steady income, you’ll still need enough money to maintain a healthy lifestyle.

That’s why retirement planning is essential to securing the golden years of your life. In a world where financial stability is paramount, identifying the best retirement funds in India becomes a crucial task. 

Below, we have curated a list of the best retirement funds in India based on 5 years of annualised returns. 

List of Best Retirement Funds in India (Based on 5Y Returns)

(As of 20th March 2025)

Overview of the Best Retirement Mutual Funds

ICICI Prudential Retirement Fund Pure Equity Plan Direct Growth

• 5-Y annualised returns: 32.28%
• AUM: ₹981.86Cr
• Minimum SIP amount: ₹100
• Expense Ratio: 0.83%
• Asset Allocation
• Equity: 95.8%
• Cash: 4.2%

HDFC Retirement Savings Fund Equity Plan Direct Growth

• 5-Y annualised returns: 31.00%
• AUM: ₹5,571.31Cr
• Minimum SIP amount: ₹100
• Expense Ratio: 0.85%
• Asset Allocation
• Equity: 88.5%
• Cash: 10.7%

Nippon India Retirement Fund Wealth Creation Scheme Direct Growth

• 5-Y annualised returns: 25.96%
• AUM: ₹2,849.23C
• Minimum SIP amount: ₹500
• Expense Ratio: 1.03%
• Asset Allocation
• Equity: 97.9%
• Cash: 2.1%

HDFC Retirement Savings Fund Hybrid Equity Plan Direct Growth

• 5-Y annualised returns: 22.72%
• AUM: ₹1,485.44Cr
• Minimum SIP amount: ₹100
• Expense Ratio: 0.96%
• Asset Allocation
• Equity: 65.3%
• Cash: 17.3%
• Debt: 16.5% 

Tata Retirement Savings Fund Progressive Plan Direct Growth

• 5-Y annualised returns: 22.27%
• AUM: ₹1,803.24Cr
• Minimum SIP amount: ₹150
• Expense Ratio: 0.60%
• Asset Allocation
• Equity: 89.9%
• Cash: 10.1%

Factors to Consider Before Investing in the Retirement Funds

The following are the factors you need to consider before investing in the best mutual funds for retirement planning:

• Define Your Investment Goals

Align your investment goals with the objectives of the mutual funds you choose, ensuring they meet your needs and keep you motivated. Define your retirement goals, including the age you plan to retire, desired lifestyle, and any major expenses you anticipate, such as healthcare or travel.

• Past Performance

Analyse the historical performance of the mutual fund during different time periods. Look for the funds that have been providing consistent returns in the past and compare the performance of the mutual fund against its benchmark.

• Choose Your Payout Method

Decide whether you prefer receiving a lump sum or periodic payments at the end of your investment period, based on your future needs and goals.

• Tax Implications

You must be aware of the tax implications of retirement funds, as returns are taxable upon redemption. Choose tax-efficient investments to optimise your retirement savings, considering factors like the tax rates on capital gains for equity and debt funds.

• Time Horizon

Consider your time horizon until retirement. Longer time horizons may allow for more aggressive investment strategies, while shorter time horizons may require more conservative approaches.

• Consider Your Risk Tolerance

Look into what types of assets retirement funds invest in to understand the level of risk and volatility you will face through it. Assess your risk tolerance based on your age, financial situation, and comfort level with market fluctuations. Generally, younger investors can afford to take on more risk, while older investors may prefer more conservative investments.

• Liquidity

Evaluate the liquidity of the mutual funds, especially if you anticipate needing access to your funds before retirement. Some funds may have restrictions or penalties for early withdrawals.

The Bottom Line

Buying the best retirement funds can be a profitable choice for those individuals who are looking to secure a better financial future. However, remember to consider the above-mentioned factors before investing in these funds and review your portfolio while making investment decisions.

Also, remember that mutual funds are subject to market risk. You should pick mutual funds carefully for your portfolio or consider consulting a financial advisor for more guidance.