A majority of India's working poor, and especially low income women workers in rural India, have traditionally been excluded by formal pension provisions. This population is very vulnerable to old age poverty as barely 5% of them are presently saving for retirement and less than one in five have some form of insurance. IIMPS and UTI have developed a low-cost, secure, scalable and sustainable mechanism to assist and enable India's working poor to achieve a dignified retirement through thrift and self-help. Over 250,000 low income workers in roughly 125 districts across 14 Indian States are already saving for their old age through the IIMPS Micro-Pension® model.
The 6.1 million SHGs established under the NABARD SHG-Bank Linkage Program and bank correspondents (BCs) seeking to expand bank penetration can serve as an effective channel for delivering regulated pension and mutual fund products to low income informal sector workers and therefore more meaningful achieve financial inclusion among India's rural poor. Accordingly, NABARD, IIMPS and UTI AMC have jointly launched a national-level project to design and develop a sustainable and scalable strategy to encourage and enable individual members of bank-linked SHGs and other economically vulnerable rural poor to save for their old age through a new, integrated SHG-Bank linked Micro-Pension® model.
Prior to its nation-wide expansion, this new model is being rigorously field-tested on a "pilot" scale at 2 rural districts each in Uttar Pradesh, Bihar, Odhisa and Tamil Nadu. This IIMPS-NABARD Rural Micro-Pension® Project targets an aggregate Micro-Pension® coverage of 40,000 rural poor over one year. The NABARD Financial Inclusion Department (FID) is implementing this project with IIMPS and has sanctioned a grant to fund studies, district-level capacity building and stakeholder training, field promotions, public education and retirement literacy interventions, local project management capacity, mass-production of IEC material and the establishment of Micro-Pension® Help- Desks at the 8 pilot districts. Operating expenses and commercial incentives for SHGs, banks, PACs, NGOs and SHPIs for supporting retirement literacy efforts, enrolments, data entry, service delivery and operations are being met by IIMPS and UTI AMC. IIMPS is also receiving support and technical assistance from a range of existing Micro-Pension® partner institutions including KfW, MicroSave and ACCION in certain aspects of the Project implementation that are described ahead.
Once the pilot project is completed, IIMPS and UTI AMC will continue to service the retirement savings needs of the rural poor in the 8 pilot districts using the capacity created through this Project. This first Interim Report of Phase- 1 of the IIMPS-NABARD Rural Micro-Pension® Project encapsulates the actions and outcomes achieved over the first four months of this study (i.e. March through June 2011).
