# Best Mutual Funds for Retirement Planning
Author: Ankur Choudhary
Author URL: https://getbelong.com/blog/author/ankur-choudhary/
Published: 2025-12-20
Category: NRI Investment
Category URL: https://getbelong.com/blog/category/nri-investment-guide/
Meta Title: Best Mutual Funds for Retirement Planning - NRIs Guide
Meta Description: Compare retirement mutual funds by returns, ratings & AUM. Transparent criteria-based lists for NRIs planning retirement in India.
Tags: Mutual Funds
Tag URLs: Mutual Funds (https://getbelong.com/blog/tag/mutual-funds/)
URL: https://getbelong.com/blog/mutual-funds/best-funds-retirement-planning/
Search "best mutual funds for retirement" and you will find dozens of lists. Each claims to have found the perfect fund. Most never explain how they picked those funds.
We have spent many years helping NRIs plan their retirement at [Belong](https://getbelong.com).
One thing I have learned: there is no single "best" fund for everyone. Your ideal retirement fund depends on your age, risk appetite, return expectations, and how soon you plan to retire.
This guide takes a different approach. Instead of giving you one list and calling it definitive, I am sharing multiple lists. Each list uses a different criterion.
Each criterion is clearly disclosed.
Why? Because transparency matters more than picking winners. You deserve to know _why_ a fund made the list, not just that it did.
👉 **Tip:** Before choosing any fund, use Belong's [Residential Status Calculator](https://getbelong.com/tools/nri-residential-status-calculator/) to confirm your NRI status. Your tax treatment depends on it.
## **How We Built These Lists (And Why You Should Care)**
Most "best of" lists mix different criteria without telling you. One fund might rank high because of past returns. Another because of brand recognition. A third because of advertising budget.
That approach does not help you make informed decisions.
### **Why No Single Fund is "Best for Everyone"**
Consider two NRIs in Dubai. Both are 42 years old. Both earn similar salaries.
Rahul plans to retire in India at 55. He wants aggressive growth now while he can tolerate volatility. An equity-heavy retirement fund suits him.
Priya plans to stay in Dubai until 60, then split time between India and UAE. She prefers stability over maximum returns. A hybrid or conservative retirement fund makes more sense for her.
Same age. Same location. Completely different ideal funds.
### **The Criteria We Use**
Each list in this guide uses ONE clear criterion:
- **5-Year Returns:** Pure historical performance. Does not predict future returns.
- **Morningstar Ratings:** Risk-adjusted returns compared to category peers.
- **AUM (Assets Under Management):** Indicates investor trust and fund stability.
- **Recently Launched:** Unranked list of newer options worth watching.
Want to compare FD alternatives while building your retirement portfolio? Check our [NRI FD Comparison Tool](https://getbelong.com/tools/nri-fd-rates/) to see how fixed deposits stack up.
## **What Are Retirement Mutual Funds?**
Retirement mutual funds are solution-oriented schemes designed specifically for building a retirement corpus. They come with a mandatory 5-year lock-in period or until the investor reaches retirement age, whichever comes earlier.
These funds typically offer multiple plans within the same scheme:
- **Aggressive/Pure Equity Plans:** 80-100% equity allocation. Higher risk, higher potential returns.
- **Hybrid Plans:** 60-80% equity, rest in debt. Balanced approach.
- **Conservative Plans:** 20-40% equity, rest in debt and government securities. Lower volatility.
👉 **Tip:** If you are 15+ years away from retirement, equity-heavy plans make sense. If retirement is 5-10 years away, consider hybrid options. For a deeper understanding of asset allocation, read our guide on [asset allocation for NRIs](https://getbelong.com/blog/asset-allocation-investing-india/).
## **List A: Best Retirement Funds by 5-Year Returns**
**Ranking Criteria:** Funds ranked by 5-year CAGR (Compound Annual Growth Rate) as of December 2025. Higher returns rank higher.
**Important Disclaimer:** Past performance does not guarantee future returns. Markets are cyclical, and high returns often follow low returns and vice versa.
Fund Name
5-Year CAGR
Category
Risk Level
ICICI Pru Retirement Fund Pure Equity
**27.58%**
Pure Equity
Very High
HDFC Retirement Savings Fund Equity Plan
**24.98%**
Equity
Very High
Nippon India Retirement Fund Wealth Creation
**21.95%**
Hybrid
High
Aditya Birla SL Retirement Fund 30s Plan
**16.50%**
Aggressive Hybrid
High
Axis Retirement Fund Aggressive Plan
**14.60%**
Aggressive Hybrid
High
_Data Source: Value Research, INDmoney, Tickertape as of December 2025_
The ICICI Prudential fund tops this list with nearly 28% CAGR over 5 years. That is exceptional. But notice the "Very High" risk rating. This fund invests over 90% in equities, meaning your corpus can drop 30-40% in a market crash.
For NRIs who want to balance returns with stability, explore how [hybrid mutual funds](https://getbelong.com/blog/hybrid-mutual-funds-nri) blend equity and debt exposure.
## **List B: Best Retirement Funds by Morningstar Ratings**
**Ranking Criteria:** Funds ranked by Morningstar star rating (5 stars = highest). Morningstar compares risk-adjusted returns against category peers over 3, 5, and 10-year periods.
### **What Morningstar Ratings Actually Mean**
Morningstar is a globally respected investment research firm. Their star ratings measure how well a fund performed compared to similar funds after adjusting for risk.
- **5 Stars:** Top 10% of category
- **4 Stars:** Next 22.5%
- **3 Stars:** Middle 35%
- **2 Stars:** Next 22.5%
- **1 Star:** Bottom 10%
Fund Name
Rating
Expense Ratio
Min SIP
HDFC Retirement Savings Fund Equity Plan
**4 Stars**
0.70%
Rs 100
ICICI Pru Retirement Fund Pure Equity
**4 Stars**
0.67%
Rs 100
Nippon India Retirement Fund Wealth Creation
**3 Stars**
0.98%
Rs 500
Tata Retirement Savings Fund Progressive
**3 Stars**
0.89%
Rs 150
_Data Source: Morningstar India, ClearTax as of December 2025_
Notice the HDFC fund appears in both lists. It ranks second by pure returns but shares top spot by Morningstar rating. This suggests consistent risk-adjusted performance, not just high returns during bull markets.
👉 **Tip:** Compare expense ratios carefully. A 0.30% difference might seem small, but over 20 years on a Rs 50 lakh corpus, it can cost you Rs 3-4 lakhs in fees.
## **List C: Best Retirement Funds by AUM & Stability**
**Ranking Criteria:** Funds ranked by Assets Under Management (AUM). Higher AUM indicates more investors trust the fund with their money.
### **Why AUM Matters for Retirement Planning**
Large AUM offers several advantages:
- **Lower Impact Costs:** Bigger funds can buy/sell large quantities without moving market prices.
- **Investor Confidence:** More money flowing in suggests investors trust the fund management.
- **Fund Stability:** Less likely to be shut down or merged.
Fund Name
AUM (Cr)
Fund Age
Fund House
HDFC Retirement Savings Fund Equity Plan
**Rs 6,968**
9+ Years
HDFC AMC
Nippon India Retirement Fund Wealth Creation
**Rs 3,244**
10 Years
Nippon AMC
SBI Retirement Benefit Fund Aggressive
**Rs 3,124**
4 Years
SBI AMC
ICICI Pru Retirement Fund Pure Equity
**Rs 1,589**
6 Years
ICICI Pru AMC
Axis Retirement Fund Aggressive Plan
**Rs 782**
5 Years
Axis AMC
_Data Source: AMFI, Fund House Websites as of November 2025_
The HDFC fund dominates AUM rankings, nearly double the second-place fund. This reflects strong brand trust and distribution network. Notice the ICICI fund, which topped the returns list, ranks fourth by AUM. High returns alone do not guarantee investor preference.
## **List D: Recently Launched Funds (Unranked)**
**Note:** These funds are NOT ranked. They lack the 5-year track record needed for fair comparison. Including them here for awareness only.
New retirement funds deserve monitoring but not immediate investment. Here is why:
- No Track Record: One or two years of data cannot predict long-term behavior.
- Untested Fund Managers: New funds might have less experienced teams.
- Market Cycle Exposure: Funds launched in bull markets might not have faced real downturns.
Fund Name
Launch Date
Why Watch
SBI Retirement Benefit Fund Aggressive Hybrid
Feb 2021
SBI brand, hybrid structure
Kotak Retirement Fund
2022
Strong fund house reputation
UTI Retirement Benefit Pension Fund
2023
UTI legacy, conservative focus
Prefer proven funds? Consider exploring [GIFT City mutual funds](https://getbelong.com/tools/gift-city-mutual-funds/) which offer NRIs unique tax advantages.
## **Special Considerations for NRIs**
Investing in Indian retirement funds as an NRI comes with unique considerations that domestic investors do not face.
### **FATCA Compliance (US/Canada NRIs)**
If you are based in the US or Canada, your options are limited. The Foreign Account Tax Compliance Act (FATCA) creates additional reporting requirements. Only about 8 AMCs currently accept investments from US/Canada NRIs.
AMCs that accept US/Canada NRIs include: HDFC, ICICI Prudential, SBI, UTI, Birla Sun Life, L\\&T, Sundaram, and PPFAS.
👉 **Tip:** Before starting any mutual fund investment, complete your KYC process. Many AMCs now offer video KYC, saving you a trip to India.
### **Tax Treatment for NRIs**
For retirement mutual funds with equity orientation (65%+ in equity):
- **Short-Term Capital Gains (less than 1 year):** 20% TDS
- **Long-Term Capital Gains (more than 1 year):** 12.5% TDS on gains exceeding Rs 1.25 lakh
India has DTAA agreements with 90+ countries including UAE. You can claim tax credits in your residence country for taxes paid in India. For detailed guidance, read our comprehensive [India-UAE DTAA guide](https://getbelong.com/blog/india-uae-dtaa-guide-for-nris/).
### **Currency Risk**
Your retirement fund returns in INR. But you earn in AED, USD, or GBP. The rupee has depreciated roughly 3-4% annually against major currencies over the past decade.
A fund returning 15% in INR might effectively return 11-12% in USD terms after currency depreciation. Track this using our [Rupee vs Dollar Tracker](https://getbelong.com/tools/rupee-vs-dollar-tracker/).
## **Consider GIFT City Alternatives**
For NRIs concerned about currency risk and tax complexity, GIFT City offers an interesting alternative.
GIFT City (Gujarat International Finance Tec-City) is India's first International Financial Services Centre. It allows NRIs to invest in USD-denominated products, protecting against rupee depreciation. Interest earned on [GIFT City fixed deposits](https://getbelong.com/blog/nri-fixed-deposits-in-gift-city/) is tax-free for NRIs.
[Belong](https://getbelong.com/) specializes in helping NRIs access GIFT City products. We offer USD fixed deposits, [GIFT City mutual funds](https://getbelong.com/products/mutual-funds/), and [Alternative Investment Funds](https://getbelong.com/tools/gift-city-alternative-investment-funds/) through a simple digital process.
👉 **Tip:** Compare [GIFT City FDs with traditional NRE/NRO FDs](https://getbelong.com/blog/gift-city-fds-vs-bank-fds/) using our FD Comparison Tool before deciding.
## **Making Your Decision**
There is no single "best" retirement mutual fund. The best fund for you depends on:
- Your years to retirement
- Your risk tolerance
- Your country of residence (FATCA restrictions)
- Your currency exposure preferences
- Your tax situation in both countries
Use the lists above as starting points, not final answers. Cross-reference funds across multiple criteria. A fund that appears in all three ranked lists deserves serious consideration.
Questions about which fund suits your situation? Join our [WhatsApp community](https://chat.whatsapp.com/EaxmhRZ6fTiChXQAZhqFK4) where many NRIs discuss their retirement planning strategies. Or [download the Belong app](https://app.getbelong.com/LywZ/blogs) to explore GIFT City investment options that might complement your retirement portfolio.
## **Sources**
- Morningstar India - morningstar.in
- Value Research Online - valueresearchonline.com
- AMFI India - amfiindia.com
- HDFC Mutual Fund - hdfcfund.com
- ICICI Prudential AMC - icicipruamc.com
- Nippon India Mutual Fund - nipponindiaim.com
- SBI Mutual Fund - sbimf.com
- Tickertape - tickertape.in
- INDmoney - indmoney.com
* * *
_Disclaimer: This article is for educational purposes only and does not constitute investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. Past performance does not guarantee future returns. Consult a SEBI-registered investment advisor for personalized advice._
## FAQs
Q: Can NRIs invest in retirement mutual funds in India?
A: ​Yes. NRIs can invest in Indian retirement mutual funds through NRE or NRO accounts. You need to complete KYC and provide FATCA/CRS declarations. US and Canada NRIs have limited AMC options due to regulatory requirements.​
Q: What is the lock-in period for retirement mutual funds?
A: ​Retirement mutual funds have a mandatory lock-in of 5 years or until you reach retirement age (typically 58-60), whichever comes earlier. Early withdrawal is not possible except in exceptional circumstances.​
Q: How are retirement fund returns taxed for NRIs?
A: ​For equity-oriented retirement funds, short-term gains (under 1 year) attract 20% TDS. Long-term gains (over 1 year) are taxed at 12.5% on gains exceeding Rs 1.25 lakh. DTAA benefits may reduce effective tax burden.​
Q: Should I choose SIP or lump sum for retirement investing?
A: ​SIP (Systematic Investment Plan) works well for regular income earners as it averages out market volatility. Lump sum suits those with large one-time amounts like UAE gratuity. For most NRIs, a combination works best. Read our detailed comparison of SIP vs lump sum for UAE NRIs.​
Q: Are GIFT City mutual funds better than regular retirement funds?
A: ​GIFT City funds offer USD denomination (currency hedge), tax benefits, and simpler repatriation. They suit NRIs concerned about rupee depreciation. Regular retirement funds offer more scheme variety. Compare both using Belong's mutual fund explorer.​
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