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A systematic investment plan (SIP) is designed to continue till the end date mentioned in the application form. A few mutual funds now offer the option to `pause’ the systematic investment for a limited period. This allows the investor to keep the investment habit, while providing temporary liquidity. The SIP restarts automatically after the pause period.
Pause period
SIPs can be paused only for a specific period of time. The shortest and longest periods for which a SIP is allowed to be paused is specified by the AMC.
Form
A SIP Pause form must be filled out by the investor. This form can be obtained from the AMC or the Investor Service Centre. It can also be downloaded from the mutual fund website.
Details
The start date and end date of the pause must be clearly mentioned in the form. The form also asks for details of the existing SIP, as well as the investor’s name and folio number. All unit holders are required to sign the SIP Pause form.
Bank mandate
The form also contains a bank mandate, which needs to be filled in and signed by the investor. The mandate lets the AMC instruct the bank not to debit the investor’s account for the pause period.
Submission
The SIP Pause form has to be submitted to the AMC at least one month prior to the SIP date from which the investor wants to pause the SIP. The form can be submitted at any of the branch offices of the AMC.
Resumption of SIP
After the SIP pause period is over, the SIP will automatically resume with the same conditions as were prevalent when the SIP was in effect.
Points to note
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