UTI AMC to offer micro pension schemes to two million poor in 2009

PFW Bureau
Mumbai, April 30:

Invest India Micro Pension Services (IIMPS) and UTI Asset Management Company Limited (UTI AMC) have announced a new strategic partnership with the BASIX Group. Under this partnership, IIMPS will use its proprietary Micro-Pension Model to deliver the UTI-Retirement Benefit Pension Fund (UTI-RBPF) to BASIX customers. In 2009-10, this partnership will target 700,000 working poor, most of whom are women living in 10,000  villages of Andhra Pradesh, Karnataka, Bihar, Orissa, Jharkhand, Maharashtra, Madhya Pradesh, Tamilnadu, Rajasthan, Chattisgarh, West Bengal, Delhi, Uttarakhand, Sikkim and Assam.
IIMPS is promoted jointly by SEWA Bank, UTI AMC and leading pension and development sector experts to provide a low-cost, secure and scalable mechanism to the working poor to save for their old age.  IIMPS directors include Renana Jhabvala (National Coordinator of SEWA), Vijay Mahajan (Chairman of BASIX), Imtaiyazur Rahman (President of UTI AMC), Gautam Bhardwaj (Director, Invest India Economic Foundation), Jayshree Vyas (Managing Director of SEWA Bank), Vijayalaxmi Das (CEO of Friends of Women World Banking) and Ashish Aggarwal (Executive Director).

According to the latest Invest India Dataworks Survey, around 143 million workers in India earn less than Rs.36,000 (US$800) per annum. Nearly all of them are excluded from formal pension arrangements. Of these, 61 million workers are interested in saving for their old age and can afford an annual average pension saving of Rs.3,300. This can produce an aggregate annual pension saving of over Rs.20,000 crore by these working poor. However, a majority of these working poor do not have secure access to customised retirement products that deliver high real returns at low transaction costs. As a result, barely 4.8% of them are presently saving for their old age. Unless this population actively starts saving for their own retirement, most will fall below the poverty line in their old age.
IIMPS and UTI AMC are reaching low income workers in collaboration with leading cooperatives, MFIs, NGOs, worker associations and community based organizations in multiple States. Their first partnership using the IIMPS Micro-PensionTM Model was launched on April 12, 2006 jointly with SEWA Bank. Over 40,000 poor women including street vendors, rag-pickers, head-loaders and other self-employed women have since been saving for their old age under this scheme.

Speaking on the occasion, Gautam Bhardwaj, Director of Invest India Economic Foundation, a pension policy think-tank, discussed the social compulsions and business rationale of the IIMPS Micro-PensionTM model. Renana Jhabvala, National Coordinator of SEWA spoke about the challenges of promoting  the retirement saving concept among the poor, SEWA's efforts to focus on the unique needs of women workers as well as the role for the central and state governments in encouraging the poor to save for their old age through a process of targeted pension co-contributions. Vijay Mahajan, Chairman of BASIX said that while BASIX has been actively catering to the livelihood and insurance needs of the poor, the collaboration with IIMPS and UTI would enable BASIX to effectively fulfil a critical need of the poor in the form of old age income security. He reiterated that the IIMPS Micro-PensionTM model helps also in achieving more meaningful financial inclusion.

Ms Rukmini Parthasarathy, Project Manager at KfW spoke about the importance of the IIMPS Micro-PensionTM model in addressing the lifecycle needs of the poor and the role that donors can play in generic promotions of this concept among the poor. In his special address, U.K. Sinha, Chairman and Managing Director of UTI AMC said that micro-pensionsTM can play a key role in bridging India's Pension coverage gap. According to Sinha, this joint initiative by UTI AMC and IIMPS compliments the larger policy and regulatory efforts in delivering sustainable retirement solutions to the working poor – most of whom have been excluded by formal finance as well as formal pension and provident fund schemes. He reiterated UTI's ongoing commitment to reaching the under-served workforce and in delivering them professionally managed and regulated financial services.

 
In 2009, UTI and IIMPS propose to extend the Micro-PensionTM Model to 300,000 low income SEWA members and customers of SEWA Bank and 700,000 BASIX customers. UTI and IIMPS will also work actively with their current 19 other partner institutions in multiple States to expand Micro-Pension coverage to their full membership. In aggregate terms, this initiative will help over 2 million working poor, a majority of whom are women, to save for their old age, UTI Mutual Fund said in a statement.