The mutual fund space saw two retirement solution-oriented funds being launched in February. One was from ICICI Prudential Mutual Fund and the other from Aditya Birla Sun Life Mutual Fund. Should you consider them for your retirement goal?What are these?UTI Mutual Fund, Franklin Templeton Mutual Fund, Tata Mutual Fund and others already offer retirement funds.Typically, these are hybrid funds with allocation to equity and debt. The proportion of equity and debt depends on the investor profile. For example, the Aditya Birla Sun life retirement fund has four plans—the 30s plan, the 40s plan, the 50s plan and the 50+ plan—each with distinct asset allocation reflecting the time to retirement and the risk of volatility that the investor can take. The 30s plan invests at least 80% in equity, while the 50s plan invests up to 25% in equity. ICICI Prudential Retirement Fund offers a pure equity and pure debt plan, an aggressive hybrid plan and a conservative hybrid plan. The retirement schemes already in the market offer similar combinations of equity and debt.The mutual fund retirement schemes now have a lock-in period of 5 years or till the age of retirement, whichever is earlier. For the existing schemes, this lock-in applies to units alloted post the categorisation and rationalisation of schemes mandated by Sebi. All other features are similar to other mutual fund schemes.A retirement savings fund does not add any particular value to the activity of investing for the retirement goal as compared to any other mutual fund. “It may work for a layman who is new to mutual funds and investing independently,” said Taresh Bhatia, a Sebi-registered investment advisor and partner, Advantage Financial Planners LLP. But if you work with a financial advisor, he or she will be able to put together a combination of schemes after considering individual preferences and financial situation, he added.When you are young, you may be capable of making aggressive equity investments for the retirement goal. You may already be contributing to Employees’ Provident Fund and other debt products. A hybrid fund will only add to your debt allocation. A pure equity fund, such as a well-established multi-cap fund, may be a better option.When you are older, you may consider hybrid funds after considering debt investments that have already been made. A very high allocation to debt will mean lower growth in the accumulation stage.Are they good?In comparison to general mutual fund schemes that are just as suitable for the retirement goal, retirement funds lose out on the lock-in period of five years that is restrictive. The lock-in means that even if the fund is not performing well, investors do not have the option to switch to better performing funds. If the under-performance persists, then you will be condemning your portfolio to many years of lower returns. Moreover, the money will be out of reach even in an emergency.On performance too, the retirement products offered by different fund houses typically lag their peers in the general category. An exception is the retirement product offered by Tata Mutual Fund that has been a top performer among comparable schemes with similar asset allocations.While some of the earlier crop of pension plans offered by mutual funds were eligible for deduction under Section 80C, not all retirement schemes including the recently launched ones offer tax benefit. The National Pension System (NPS), which also offers a hybrid portfolio, has tax benefit in the form of deductions to the extent of ₹2 lakh at the stage of investing. The accumulated corpus is also partially exempt from tax at the time of withdrawal. The retirement schemes offered by mutual funds are subject to long term capital gains tax on redemption.Both retirement and general mutual funds score on flexibility. NPS investors have to use at least 40% of the final corpus to buy an annuity within the specified time.Do you need them?Who are these funds suitable for? If you like to put a name to the savings to keep it ring-fenced, then this product may help. But you can do that with your other mutual fund investments too.If you like the facility of the investments automatically transitioning to lower-risk assets like debt, linked to your age, then some of these funds provide that facility. NPS too does this in the lifecycle fund and is a lower cost option. Also, age-based shifts offered by mutual fund schemes lead to tax liability from capital gains when the funds are switched. There is no such tax in NPS.Don’t restrict your universe to schemes with a “retirement” tag because they don’t bring any particular benefit. Include these schemes if they are suitable for your allocation and select the one that has managed risk and returns well and the portfolio’s integrity consistently. The other caveats that apply to investing for long-term goals, such as investing regularly, allowing the portfolio to grow over time and rebalancing periodically, apply to this goal too.