Promoting Inclusive Markets and Financial Systems
Micro-pension: Adding value to the lives of the elderly poor, especially women
Ageing people receive less and less support from their family. What is available for their livelihood at an old age? What happens to people who worked their whole life in the unorganised sector? What initiatives for pension income are taken by the states in the South and are they accessible to all people? What can we learn from various micro-pension initiatives around the world? What steps are needed to establish a micro-pension entity?
These questions will be central to the discussions in our next Expert Forum to be held on
December 19 at 2 PM CET, with guest speakers:
- Caroline van Dullemen, Director at Blue Print Pension Services, Netherlands
- Samuel Waterberg , Director at People's Pension Trust Ghana, Ghana
- Fennie Lansbergen, Advisor at People's Pension Holding, Netherlands
- Gayathri Sakthirajan, CEO at DHAN Foundation People Mutuals, India
In rapidly ageing countries, the rising life expectancy associated with low productivity poses an increasing threat to the poor – in particular on the older female poor. The state pension is often insufficient to pay for living costs. Supplementary pension schemes are hardly available and if they are available at all, they are mostly the privilege of civil servants and/or employees of companies in the formal sector. The greater part of the population in developing countries often works in the informal sector in which there is no form of pension provision.
Various states have introduced a Pillar 1 pension for people from the unorganised sector, but due to a lack of awareness or corruption the pensions seldom reach the intended beneficiaries. Women especially are not reached by microinsurance, let alone micro-pension.
Women are often extra vulnerable because men are working elsewhere in the city or abroad. They have less income and less financial literacy. They often work out of their homes or in garment factories, under worse labour conditions. The health situation of women is worse, especially around pregnancy and old age ailments. Women live longer, however there is no old age protection available for them. Their assets are seldom protected. Women take better care of the future of their children and family members. (From the IFC compendium, currently available on the GIZ website in draft form).
Micro-pensions can help offer people in the informal sector some form of old age provision. The system is based on accruing an old age pension via small contributions. The participants often pay these contributions in cash, though sometimes payment of the contributions may be arranged in another way. Micro-pensions are usually defined contribution schemes in which the saved contributions are invested and in which the ultimate pension benefit depends on the investment returns obtained and the interest rate at the moment the accrued capital is converted into a pension benefit. In both India and Ghana women are reached and attracted to the micro-pension protection of their future livelihood.
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