Life Cycle Funds replace solution-oriented schemes

What changed

Under the earlier categorisation, "solution-oriented" schemes covered retirement funds and children's funds. The label described a purpose, but the structure behind it varied considerably from one scheme to another, and the purpose in the name did not always correspond to a defined mechanism.

SEBI's February 2026 categorisation circular discontinues that category and introduces Life Cycle Funds — schemes with a stated target maturity and a fixed glide path.

What a glide path actually is

A glide path is a pre-declared schedule for how the fund's asset allocation shifts as it approaches its target maturity date. Typically the equity share is higher when the target date is distant and steps down as it draws nearer, with the fixed income share rising correspondingly.

The important word is fixed. The path is declared in advance rather than left to a manager's discretion, so an investor can see at the outset how the allocation is intended to change over the holding period. That is a structural answer to a behavioural problem: many investors who intend to reduce risk as a goal approaches never actually get round to it.

The target maturity date is the anchor. A fund with a 2040 target is built for money needed around 2040, and its glide path is calibrated to that horizon.

Key highlights

• The solution-oriented category (retirement and children’s funds) has been discontinued.
• Life Cycle Funds replace it, defined by a target maturity date and a fixed, pre-declared glide path.
• Allocation shifts follow the declared schedule rather than manager discretion.
• The change affects a specific segment of investors — those who held solution-oriented schemes.
• Lock-in and other scheme-specific terms continue to be governed by each scheme’s own documents.

Who this actually affects

If you never held a retirement or children's fund, this is background information. If you did, the AMC will have communicated — or will communicate — how your scheme is being treated under the new framework.

It is worth reading that communication properly rather than assuming continuity, for one reason: a scheme bought years ago because its name matched a goal may now sit in a structure with an explicit target date. Whether that target date matches your actual goal year is a question only you can answer, and it is a better question than the one most people ask about such funds.

What to check

1. Any AMC notice about a solution-oriented scheme you hold, and what structure it has moved into.
2. The target maturity date of any Life Cycle Fund you hold or are considering, against the year you actually need the money.
3. The declared glide path in the scheme document, so you know how the allocation is scheduled to change.
4. Any lock-in that applied to your original scheme, since those terms are scheme-specific and continue to apply.

Frequently asked questions