> Posted by Center Staff

A new micro-pension platform targeting those working as domestic laborers, appropriately named Gift a Pension, launched in India last month. The platform is run by the Micro Pension Foundation (MPF) nonprofit and gives employers of domestic laborers a convenient way to support their workers in enrolling for the National Pension Scheme (NPS) Lite government product, a smaller version of the NPS offering. Across the country an estimated 40 million work for households in roles including maids, guards, cooks, and drivers. In the weeks since the program opened, over 1,000 domestic employers have registered themselves and gifted pensions to their workers. The platform offers more than its name suggests, as gifting workers five-year term life insurance is also available.

Here’s how the service works. First, MPF encourages employers ensure that their workers understand the structure and benefits of any accounts before enrollment happens. The Gift a Pension site includes a collection of educational tools and videos for employers to use to aid their workers’ familiarity with products and with the importance of managing finances for the long-term. Once this initial learning phase is complete, the employer registers themselves with the Gift a Pension site and enrolls their worker using information from the various documents that satisfy the necessary know-your-customer requirements. To open the account, the employer pays a one-time servicing fee (Rs 300) as well as the first contribution into the account. The worker then receives in the mail a guide to go along with their new account and their personal prepaid pension card. In a few weeks’ time the worker will also receive a government-issued Permanent Retirement Account Number (PRAN).

The pension product is contribution-based, with the enroller having the ability to select their desired payment interval and amount. The card-holder is able to make payments online or through designated retail outlets. Account settings can be set so that SMS payment reminders are sent. If they so wish, the employer is able to continue making contributions, as well. Subscribers will receive an annual contribution of Rs 1,000 from the government so long as they satisfy the minimum requirement of adding an annual sum of Rs 1,000. The pensions account can carry over to new jobs.

The five-year term life insurance product offers Rs 30,000 in coverage for enrolled individuals, with annual premiums depending on the age of the account-holder.

Gift a Pension was developed by the Micro Pension Visa Inclusion Lab, a facility that develops technology-enabled solutions for micro-payments and financial inclusion. In its work the Lab is targeting the excluded client segments of domestic help, truck drivers, contract labor, those who belong to tribes, and youth. The International Finance Corporation (IFC), Visa, Grameen Foundation, and Invest India Micro Pension Services (IIMPS) are collaborators with the Lab.

In India, roughly 12 percent of the population has a pension. In 2009, the National Pension System was extended beyond public employees to also include employees of private companies meeting certain size requirements. Lots of room for pension progress remains however. Statistics from the Indian Ministry of Labor and Employment indicated that, as of 2011, 26 million employees worked in the organized public and private sectors in India, while 433 million worked at small organizations or through informal means and so they are not covered by the National Pension System.

Image credit: Meena Kadri

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