Micropensions – The Scope and Progress to Date
MicroSave's India Focus Note 94 examines if there is an adequate business case for micropensions in India. It also identifies the characteristics of existing micropension models. The Note states that there are insufficient pension products for the low income and unorganized sector in the country, although Invest India Income and Savings Survey 2007 indicated sufficient interest from the sector in saving for retirement. The survey also indicated that nearly 25.8 million of India's approximately 61 million low income unorganized workers can afford and are willing to pay for a private contributory pension scheme. Currently there are three models of micropension in India, namely NPS-Lite, Invest India Micro Pension, and Abhaya Hastham. The Note states that the success of any micropension scheme in India will ultimately depend upon the following:
- Level of trust a distributor enjoys from its clients, which is necessary for a long-term association;
- Outreach of the distributor, to bring scale;
- Efficiency to handle operations in a timely manner;
- Revenue model of the scheme, which will decide whether the commission is sufficient to motivate the distributor to mobilize resources.