1. Mutual Funds are More Flexible Investment Products:
Unlike pension plans it does not have any restrictions on the regular premium payment, or making complete or partial withdrawals in between.You can discontinue your investments or make partial withdrawals, with no penalties.
2. Mutual Funds are Tax Efficient Instruments:
Long-term capital gains booked under equity mutual funds are completely tax-free. In case of debt mutual funds, it is 10% before indexation and 20% after indexation.
Thus Systematic Withdrawal Plan (SWP) proves to be a tax-efficient option as compared to pension which is added to your income and thus is taxable.
3. Mutual Funds are More Transparent and Investor Friendly:
Mutual Funds have a wide variety of schemes. The information regarding the fund manager, investment objective, strategies, past returns, risks associated etc. are publicly available.
On the other hand, pension products are not so transparent.
Sourced originally: moneycontrol.com