Micro PensionsAn Oppertunity for MFIs                    WorldGranny           Pension & Development Network           Glo...
Population ages – demography changes                           Worldwide                     1950                       >6...
Paradox of development  People live longer, but the costs of living also  increase: both for societies & individuals-Decli...
Micropensions: opportunity for microfinance sectorDemographic change                     global ageingSocio-economic chang...
Micropensions: opportunity for microfinance sectorEffects micro pension• Security against old-age poverty, especially wome...
Challenges micro pension scheme• Collection contributions in safe & efficient way• Secure responsible and productive inves...
Product development       Micro pension provision stakeholders                                                            ...
Product development      Micro pension provisionVariables in micro pensions -eligibility age -length of payment period -mi...
Product development        Micro pension provisionPossible models of micro pension provisions• Defined benefit (DB)- benef...
Opportunity for microfinance sector       Micro pension provisionPotential for MFIs- Long term commitment of client- Attra...
Opportunity for microfinance sector       Micro pension provisionPotential for investors- Long term commitment to MFI- Gro...
The Pension & Development Network                                               Pension                       Insurance   ...
The Pension & Development NetworkRole of the P&D Network: social consultancy- Development procedure of 3 phases:    1. Mar...
Running & future projects of the P&D Network                                      Tajikistan                           Geo...
Lessons learned•Ageing population demands pension provisions;•Future pension coverage will need to cover informal sector;•...
Thank you!ContactCvdullemen@worldgranny.nlwww.pensiondevelopment.orgTwitter: @Pension4All
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Caroline Van Dulleman, When Clients Grow Old

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Caroline Van Dulleman, When Clients Grow Old

  1. 1. Micro PensionsAn Oppertunity for MFIs WorldGranny Pension & Development Network Global Microcredit Summit 2011 in Valladolid Microfinance and the Elderly Caroline van Dullemen
  2. 2. Population ages – demography changes Worldwide 1950 >60+ yrs = 205 mil 2000 x3 >60+ yrs = 606 mil 2050 x3 >60+ yrs = 2 billion
  3. 3. Paradox of development People live longer, but the costs of living also increase: both for societies & individuals-Decline of economic growth-Increase of old-age related costs-Increasing budget strain for emerging economies-Increasing burden for those living longer- Women/mothers! are affected more than men-Poor & informal sector workers uncovered-Developments proceed rapidly!
  4. 4. Micropensions: opportunity for microfinance sectorDemographic change global ageingSocio-economic change breakdown of family support structuresPension system 1st Pillar 2nd Pillar 3rd Pillar • Social • Occupational • Personal pensions private private (government) pensions pensionsReality in developing countries:• In 86 low/middle income countries 1st pillar social pensions• 2nd pillar available civil servants, military & middle class (provident funds)• Exclusion of many informal sector workers in emerging markets
  5. 5. Micropensions: opportunity for microfinance sectorEffects micro pension• Security against old-age poverty, especially women/mothers• Improve living standards in retirement incl family• Shift of resources from survival towards investment;• Through old-age income, older people play supportive role in family structure;• costs depend on scale/design/context
  6. 6. Challenges micro pension scheme• Collection contributions in safe & efficient way• Secure responsible and productive investment of contributions• Paying benefits timely and correctly• Building trust, improve pension awareness and Longevity Contractual maintain effective communication savings risk-sharing• Ensuring effective and reliable governance• Asset management• Making optimal use of existing structures and combine local and international expertise
  7. 7. Product development Micro pension provision stakeholders InstitutionalHow is the product Macro- economic & aspects Administration financialdeveloped? environment Asset Government management Contractual Longevity savings risk-sharing Target group Risks Cultural aspects Pension … model
  8. 8. Product development Micro pension provisionVariables in micro pensions -eligibility age -length of payment period -minimum investment period -minimum pension amount -maximum amount of premium a client can afford- operated through partner – agent model
  9. 9. Product development Micro pension provisionPossible models of micro pension provisions• Defined benefit (DB)- benefit is guaranteed, inflation poses biggest threat, higher risk investments, risk is carried by MFI• Defined contribution (DC) -benefit depends on investment returns (reliable & profitable), risk with participant• Hybrid solutions – DB up to a basic level, DC on top of that basic level – Collective DC; participants share risks and returns collectively• Payout - Options of either lump sum or buying annuity
  10. 10. Opportunity for microfinance sector Micro pension provisionPotential for MFIs- Long term commitment of client- Attract savings & mobilize deposits- Provide high quality product- Solid base for scaling up (insurance)- Realize market segment
  11. 11. Opportunity for microfinance sector Micro pension provisionPotential for investors- Long term commitment to MFI- Growing demand & need- Establish developing market segment- Low cost (mobile banking)- Compulsory option- Product easily expandable
  12. 12. The Pension & Development Network Pension Insurance Banks management companies org. Asset managers Supervisor WorldGranny Pension & Development Network Government Unions Advisory NGOs Universities organisations Aims •Building bridges between financial experts in the Netherlands and the microfinance sector in emerging markets; •Exchanging knowledge and experience.
  13. 13. The Pension & Development NetworkRole of the P&D Network: social consultancy- Development procedure of 3 phases: 1. Market research/feasibility 2. Product Development 3. Implementation & execution Timeline of 1 – 2 years- Provide consultancy and Tech Ass / training
  14. 14. Running & future projects of the P&D Network Tajikistan Georgia MongoliaGuatemala, PhilippinesHonduras & Nicaragua Kenya Laos & India Sri Vietnam Lanka
  15. 15. Lessons learned•Ageing population demands pension provisions;•Future pension coverage will need to cover informal sector;•Most emerging economies lack private pension scheme;•Insurance sector is scaling up & attracting investments;•Strong need for reliable savings product amongst middle class, Contractual Longevity savings risk-sharinglower class and the poor;•Understanding of changing traditional family support system;•Global ageing not yet on agenda governments;•Micro pensions are not a quick win•Trust is the most important issue
  16. 16. Thank you!ContactCvdullemen@worldgranny.nlwww.pensiondevelopment.orgTwitter: @Pension4All

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