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E-Workshop - 6/9/2015 Aging and Financial Inclusion (Micropensions)


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The Microcredit Summit Campaign is proud to present the next installment in our Campaign Commitment E-Workshops Series. Co-hosted with the Center for Financial Inclusion, which launched a Campaign Commitment in 2014, this E-Workshop will focus on helping clients to prepare for old age, including through providing micropensions.

The issue of aging is a new global reality, given increasing life expectancy, shrinking family sizes, and better health systems. Today, the microfinance community has the opportunity to be a leader in addressing this issue, helping people to prepare for their older years and providing financial services for older people. The Center for Financial Inclusion recently published a report titled Aging and Financial Inclusion: An Opportunity addressing the issue and identifying priority actions for financial service providers that will be presented during the E-Workshop.

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E-Workshop - 6/9/2015 Aging and Financial Inclusion (Micropensions)

  1. 1. Aging and Financial Inclusion Helping Clients to Prepare for Old Age Parul Khanna Associate Director-Projects Live-tweet the session! @MicroCredSummit, @CFI_ACCION use #Commit100M Sonja Kelly Fellow Use the Q&A box on the top-right to send questions to the Panelists. Eppu Mikkonen-Jeanneret Head of Policy
  2. 2. The Center for Financial Inclusion (CFI) commits to bringing greater attention to the issue of aging and financial services, by: • Conducting supply-side research in the fall of 2014 on the obstacles to older adults accessing and using the financial services that could help to improve their lives. CFI will also partner with HelpAge International to conduct demand-side research in the fall of 2014 to better understand the income streams and expenses of older adults in Colombia. • Publishing a white paper on these two research efforts and conduct two roundtable discussions -- one focused on the Latin America region and one focused globally -- that will galvanize support around this issue. CFI Campaign Commitment in 2014 See more at
  3. 3. StrategiestoCoverOld-AgeExpenses,Colombia(2013)
  4. 4. The Micro-Pension® Ecosystem and Model Micro Pension Foundation | Micro-Pension® is a Registered Trade-mark and Brand-name of Invest India Micro Pension Services Private Limited The microPension-VISA LAB is an India-based non-profit entity focussed on retirement literacy and on developing innovative technology-led solutions to improve access to contributory social security programs by low income unbanked informal sector workers in developing countries
  5. 5. Lifetime poor, dis-savers Unpaid workers and workforce aged >60 Excluded informal workers who can save for old age Formal sector workers with pension benefits India's Pension Coverage Gap
  6. 6. 1. Children 2. God 3. Government 4. Kismet Retirement Portfolio of Most Indians
  7. 7. Retirement Outcomes of Most Indians
  8. 8. ● The Lab is a specialised R&D facility housed within the non-profit Micro Pension Foundation. ● The Lab develops innovative technology-led solutions to improve access to contributory social security programs by low income unbanked informal sector workers in developing countries. ● It also provides technical assistance and expert advisory services to governments, regulators and multilateral aid agencies in design and turn-key implementation of inclusive pension and social security programs. MicroPension-VISA Inclusion Lab
  9. 9. Micro-Pension® Operating Model
  10. 10. 1. A young person is educated and encouraged by a credible outreach partner (MFI, cooperative, NG 2. She starts saving a small part of her income into an integrated social security solution. Her contrib 3. Even if she changes her location or job, she is able to continue transmitting her micro-savings dire 4. When she is old, her accumulations are paid back directly into her repaid card or bank account as 5. Along the way, she has easy and simple access to objective information and an effective complain Simple, Secure, Convenient, Affordable
  11. 11. Micro Pension® Impact Footprint 14.5% 16% 18.8% >100,000 customers Between 25,000 and 100,000 customers <25,000 customers Aggregate base of ~1.1 mn clients as on March 2014
  12. 12. Education & Enrolment Clients are educated and enrolled by trained/ certified field staff for an integrated product solution. Each client gets a unique and portable "micro-pension" account number using a central IT platform that stores static, transactional and savings value data over time. Clients also receive government co- contributions directly into their NPS- Lite and AABY accounts. Ongoing Contributions Clients periodically deposit micro- savings into their own bank a/c or prepaid card. Prepaid savings are kept in escrow pending transfer to relevant financial institution for investment. Micro-savings are debited using a standing instruction mandate (SI) on each client's prepaid card or through an SI or ECS on their bank a/c. Reconciled micro-savings are transferred by regulated payment partners directly to product providers. Services and Benefits Social security contributions and government co-contributions grow over time. Redemptions, insurance claims and pension benefits are transferred directly into each client's bank a/c or prepaid card. Clients receive periodic account statements showing contributions and accumulations over time. For information, redemptions, claims or compliants, clients simply call the national Micro Pension® HelpLine. Micro-Pension® Operating Model
  13. 13. Micro-payments Secure, low-cost and portable bank accounts or prepaid-cards based micro-payment solution for cash-in and cash-out of micro-savings, redemptions and claims settlement; Bank accounts and prepaid cards issued by Ratnakar Bank Life Insurance Term and endowment insurance products cover mortality risk and deliver predictable savings outcomes to IIMPS clients. Micro-Saving Products Medium market risk micro-mutual fund products that enable clients to accumulate micro-savings for known future expenses; The RBPF doubles up as a long-term PF-type product with a liquidity option and simplified KYC NPS-Lite/ JBY The LIC partnership provides access to government sponsored/ subsidized social security products like the NPS-Lite and the Janshree Bima Yojana Health Insurance Cashless group health insurance of Rs.50,000 for a family of 4 that covers pregnancy and all pre-existing illnesses and provides insurance cover immediately following premium payment. Integrated Product Solution
  14. 14. 1. Education and Enrolment
  25. 25. 2. Secure Micro-Payments
  26. 26. Life insurance eal-time accounting ciliation in a simple, yment transaction a BC outlet ebited and transferred to each product provider's accounts as per client SI mandate The microPension-VISA Prepaid Solution Prepaid account balance is kept safely in escrow in the client's name with a scheduled commercial bank Health, accident insurance Children's education/ marriage Retirement savings Low income, unbanked, excluded informal sector person with intermittent income and unpredictable cash-flow in a remote location Integrated basket of well regulated Social Security and Micro-saving Products
  27. 27. Acquisition Payments ● Field staff of MFIs, SHG federations and NGOs trained in educating an ● Commercial incentives are linked to education quality and persistency ● Incentives also linked to long-term informational and transactional serv ● Network of secure, convenient and low-cost third-party payment accep ● Commercial incentives for BC linked to value of contributions ● Central “switch” by VISA manages interoperable payment outreach, re Strategy: Delink Acquisition from Payments
  28. 28. ● Simple: Easy for everyday citizens to understand and use; Identical to loading talk- time onto a prepaid mobile phone ● Secure: Real-time, automated reconciliation; Zero risk of fraud or errors ● High governance and compliance: Micro-savings kept in escrow with a scheduled commercial bank and directly transferred from individual's prepaid account to product providers ● Portable and convenient: Nationwide, interoperable payments outreach for cash-in and cash-out; Ideal solution for people who face frequent migration ● Flexible: Allows individuals to make contributions based on their own cash-flows ● Automated electronic contributions: Card balances and individual Standing Instructions managed by a customized and secure prepaid program platform Why Does This Work?
  29. 29. ● Affordable: Transaction fees linked to transaction size; Does not penalize the poor ● Near zero capital cost for microPOS device and prepaid cards ● Immediately implementable: Does not await bank penetration to remote locations; Harnesses VISA's existing secure back-office capacity and global experience with electronic payments; Harnesses existing telecom outreach. Why Does This Work? /2
  30. 30. 3. Ongoing Servicing
  31. 31. Centralised Back-office Central document processing unit Verification of application forms and KYC documents; Data entry and scanning of product applications and SI mandate forms; Managing inventory and delivery of application forms, prepaid cards and IEC material to field units Central Record-keeping IT Platform Central issuance, record-keeping and administration of portable, individual “micro-pension” accounts; Electronic record of individual static and transactional data for multiple social security products; Repository for scanned copies of application forms and documents related to claims and payouts; Printing of digitally filled application forms; De-duplication for efficient targeting and prevention of leakages; Dashboard and MIS for stakeholders Prepaid program management platform Recording of individual standing instructions; Real-time accounting and reconciliation of micro-payments (cash- in); Electronic (feeds-based) processing of individual prepaid debit transactions; Triggering aggregated transfer of funds to product partners 1 2 3 A central back-office, and extensive use of IT in record-keeping, administration and electronic, straight-through processing of transactions and payments produces lower costs through economies of scale and significantly lower operations risk The sCube Micro-Pension Platform was developed with KfW. The prepaid program platform was developed with VISA
  32. 32. Excluded low income individual 1. Standard, Aadhaar-enabled “e-KYC” for citizens who would otherwise struggle with identity documents 2. Multiple financial product access with a single authentication 3. Low cost: Physical KYC, data-entry and verification not required 4. Shorter enrollment process 1. Multiple KYC documents not required for different product providers for static data changes – client uses biometric authentication service to update UID database with multiple product providers 2. Secure authentication-based cash-out of insurance claims, withdrawals from mutual fund or receipt of pension benefits, etc. using a microATM Convenient, low cost enrolment Secure cash-out “Aadhaar” is the brand name of the unique identity number issued to every Indian by the Unique Identification Authority of India (UIDAI). As on date, over 600 million Aadhaar numbers have already been issued by the UIDAI. Most of the Micro-Pension target population may already have an Aadhaar. IIMPS is registered with UIDAI as a KYC User Agency (KUA) and Aadhaar Authentication Agency (AUA) Integration with Aadhaar
  33. 33. National Multilingual HelpLine Field compliance audit Call-backs to new clients to verify knowledge of concepts, product features, benefits, rights and process and also verify enrollment process compliance Reminders Calls to new clients and to irregular savers to encourage continued savings discipline HelpDesk Centralised port for collating, reporting and resolving complaints and queries and effectively addressing requests for claims settlement, changes in static data, withdrawals, statements, etc. Surveys Periodic calls for behavioral finance studies among persistent, irregular and dormant clients to produce business-level MIS for IIMPS and partner stakeholders Field-staff support Support to field-staff and certified counselors to more effectively address client queries; Also used in training needs assessment surveys Client protection Verifying receipt of payouts including pension payments, insurance claims settlement and withdrawals of liquid savings 1 6 2 3 5 4 The national MicroPension HelpLine was launched in 2011 with support from NABARD. Over the last 24 months, the HelpLine has made ~300,000 outbound calls to both existing and new clients to confirm client knowledge and verify education process compliance
  34. 34. This is beginning to work...
  35. 35. THANK YOU For more information, please write to
  36. 36. Aging and Financial Inclusion Helping Clients to Prepare for Old Age Don’t forget to tweet your takeaways of this E-workshop @MicroCredSummit using #Commit100M To follow up with the panelists: Parul Khanna: Sonja Kelly: Eppu Mikkonen-Jeanneret: Join CFI in announcing YOUR CAMPAIGN COMMITMENT: Feel free to write to us at