Retirement Planning On Rise: More Indians Turn To Mutual Funds For Secure Future - ICRA

In recent years, retirement mutual funds in India have experienced remarkable growth, driven by enhanced transparency, stricter investor protection regulations, and increasing awareness about financial planning. 

According to ICRA Analytics, the Assets under Management (AUM) of retirement mutual funds have surged by over 226% in the last five years, rising from Rs 9,800 crore in June 2020 to a whopping Rs 31,973 crore by June 2025. 

The ratings firm claim that several factors have contributed to this uptrend. The rising life expectancy and increasing healthcare costs mean that individuals need to ensure a steady income post-retirement. Coupled with this, there is growing understanding among investors about the value of building a retirement corpus through mutual funds specifically designed to address such long-term goals.

It is to be mentioned that retirement mutual funds typically invest in a mix of equity and debt instruments—where equities provide growth potential and debt instruments offer stability and income security. Additionally, these funds usually come with a lock-in period of five years or extend till the individual retires, ensuring disciplined savings over a longer horizon.

Also Read: Want a Tension-Free Retirement? These Mutual Funds Do It All for You | Republic World

According to ICRA, investor trust has grown thanks to easy-to-use digital platforms and robo-advisors. These tools make investing simpler by providing personalized recommendations based on an individual’s age, risk level, and retirement goals. 

According to ICRA Analytics, the number of investors, or folios, in retirement mutual funds has grown steadily, reaching 30.09 lakh in June 2025, up from 25.46 lakh in 2020. Similarly, the variety of schemes has expanded to 29, up from 24 five years ago.

Performance-wise, retirement funds have delivered promising returns over time, with 5-year average compound annualized returns around 14.6%, indicating that they are providing value to long-term investors, as per ICRA Analytics.

Meanwhile, some of the top-performing retirement mutual funds over the past five years include ICICI Prudential Retirement Fund - Pure Equity Plan, HDFC Retirement Savings Fund - Equity Plan, and Nippon India Retirement Fund - Wealth Creation Scheme, many of which have delivered returns exceeding 23% annually over this period.