12/8/2014 MicroPensionFoundationsGiftaPension:Aninitiativethathelpsmaids,drivers,cookssavefortheirretirementTheEconomicTimes

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MicroPensionFoundationsGiftaPension:Aninitiativethat
helpsmaids,drivers,cookssavefortheirretirement
ByMaliniGoyal,ETBureau|7Dec,2014,03.43PMIST PostaComment

ThisSeptember,AMary,47,gotsomethingsheneverthoughtsheevercouldnotacar
orahomebutapension.Ahousehelpandamotheroftwowhosehusbandisadriver,
DelhibasedMaryalwaysviewedapensionassomethingonlytheaffluentcouldafford
untilheremployerKurtStrasser,aseniorsectorspecialistatGermandevelopmentbank
KfW,broughtitwithinherreach.

MaryisabeneficiaryoftheMicroPensionFoundation'sGiftaPensioninitiative.Every
month,StrassergivesherRs500extracashaspartofhersalarythatshedepositsinher
pensionaccountviaoneofthe2.5lakhdesignatedoutlets.TheMicroPensionFoundation
hastieupswithcompaniessuchasEko,ItzCashandPayWorld,andwhenMarydeposits
themoneyatoneoftheseoutlets,itgetscreditedinstantly,withanSMSconfirmation."Old Indiasburgeoningmiddleclass,whoselifewillgrindtoa
standstillwithouttheirmaids,drivers,cooksetal,cannow
agecareisachallengefacingIndia.GiftaPensionisanexcellentinitiativetomakea
returnthefavour.
pensionproductaccessibletolowincomeIndians,"saysStrasser.

GiftaPensionisafirstofsortsintheworld,wherealowcostfinancialproducthasbeen ETSPECIAL:
Saveprecioustimetrackingyour
createdforthepoor.Itisalsorelevantinacountrywhereover90%ofsome487million investments
workersareintheunorganisedsector.Moreover,Indiahasover100millionwhoareover
60,andnotevenatenthofthemhaveaccesstoapensionproduct.

Atatimewhenthegovernmentislayingathrustonfinancialinclusion,GiftaPensiondemonstratesanefficientmechanismtodelivera
financialproducttoIndia'spoor."Itisagreatinitiative.NofinancialproducttodayinIndiaaddressesthissegment.Hightransactioncosts
forlowvalueproductsareabigdeterrent.MicroPensionFoundationhasdonesomethingthatwasdifficulttodo,"saysYSPThorat,a
formerchairmanofNationalBankforAgricultureandRuralDevelopmentandaboardmemberofMicroPensionFoundation.

GiftaPensionistargetedatover35milliondomesticworkers(maids,cooks,cleaners,driversandthelike)whoearnenoughtomake
endsmeetbutnotenoughtocreateafinancialcushionfortheautumnsandwintersoftheirlives.Whilstthefacilitatorsoftheschemeare
employers,theydon'tneedtoworryaboutbeingweigheddownbythescheme'sfinancialandlogisticalburden.

Thekeyroleoftheemployersisatthebeginningunderstandingandexplainingtheproductdetailsandenablingonlineenrollment.
Theircocontributiontothepensionaccountisoptional.Andtheproductisstructuredsuchthatilliterateworkerscaneasilymanageit
evenastheychangeemployersandswitchcities.

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12/8/2014 MicroPensionFoundationsGiftaPension:Aninitiativethathelpsmaids,drivers,cookssavefortheirretirementTheEconomicTimes

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12/8/2014 MicroPensionFoundationsGiftaPension:Aninitiativethathelpsmaids,drivers,cookssavefortheirretirementTheEconomicTimes

SoundStart

LaunchedinSeptember,theresponsehasbeenencouragingwithover1,000employersregisteringsofar.Over350havegifteda
pensiontotheirdomestichelp.MostoftheenrollmentsarefromDelhi/NationalCapitalRegion(91%),withBengaluru(5%)andMumbai
(4%)bringingintherest,saysParulKhanna,associatedirector,MicroPensionFoundation.Mostofthebeneficiariesaremaids(45%),
followedbydrivers(27%)andcooks(13%).Sofar,almosthalfoftheenrollmentshavebeenmadeusingAadhaarasproofofidentity.
Over70%prefermonthlysavingand38%areputtingawayoverRs500monthlyintotheirpensionaccount.About10%oftheemployers
havealsosetupasystematicinvestmentontheircreditcardsforautomaticdeductions."Ihaveenrolledmymaidofeightyears.Ihelped
herenrollandpaidtheRs300signupfee.Now,shetakescareofit,"saysMumbaibasedSonaliMehtaRao,cofounder,
MelaArtisans.com.

TheGiftaPensionschemehasahelplinethatisopenfrom8.30amto6.40pmonallworkingdays,withastaffof20inPuneand
Bengaluruthatcantakequeriesin14regionallanguages.ThemanbehindGiftaPensionisGautamBhardwaj,directorofMicroPension
Foundation,forwhomtheschemehasbeenagleamintheeyesince1990.Thethinktankhefounded,InvestIndiaEconomic
Foundation,wasthemainarchitectoftheNationalPensionSystem(NPS),whichwasrolledoutbythegovernmentin2004forits
workers.Forthenextfiveyears,heworkedwiththegovernmenttoopenupNPSforall.

In2010,afterWorldBankandAsianDevelopmentBank(ADB)fundedpilots,BhardwajhelpedlaunchNPSLiteforthelowincome
segment.Alongside,hesetupInvestIndiaMicroPensionServicesthatworkedwithcooperativesandfederationslikeSEWAandtoday
hasover1millionpensionaccounts.HealsoworkedwithstategovernmentslikeRajasthantohelpdevelopacocontributionpension
productwherethegovernmentchipsinRs1,000ayear.Thisplanwaslateradoptedbythecentralgovernmentandrolledoutas
Swavalambanschemeapensionschemefortheunorganisedsector.

TheGiftaPensionjourneybeganin2012."Wewerefacingissuesincollectionofmoneyinourmicropensionwork.Therewereissuesof
theftsincemostoftheaccountholdersdonothaveabankaccountandthecollectionwasincash,"recallsBhardwaj.Itwasthenthathe
setupthenotforprofitMicroPensionFoundation,whichworkedcloselywithVISAtobuildalowcost,scaleableecommercebased
platformbywhichcashcouldbecollectedandtransferredinstantlyinasafe,secureandeasymannerintopensionaccounts.

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"WhenImetGautamtwoyearsback,itwasfascinatingtoseeabunchofpeoplesopassionateaboutpension.Buttherewasnowaythey
couldscaleupdoingphysicalcashcollections,"recallsUttamNayak,globalhead,emergingmarketsdigital,VISA.So,Nayakworkedwith
Bhardwajtodigitizetheentiretransaction."Wecreatedalowcostcustomizedplatformandgotasmartcardbasedsolutionforthem,"
saysNayak.ForVISA,thisisanotforprofitinitiative.TheRatnakarBankVISAprepaidsmartcardisnowgiventoeveryaccountholder.
Andatover2.5lakhoutlets,accountholderscandepositmoneythewaytheyrechargetheirphonesinasecuremanner.
"Whilethisbusinessdoesnotmaketoomuchmoney,itgivesusanadditionalhookforourcustomers,"saysDeepakBhatia,general
manager(businessdevelopment),ItzCash,whichcollectsinsurancepremiumandevenEMIsforMaxLife,nonbankingfinancial
companies(NBFCs)suchasCholamandalamandL&TFinanceandisnowalsocollectingdepositsforGiftaPensionaccounts.

ChallengesAhead

WhiletheGiftaPensioninitiativeisanimportantmilestone,itfacesafewchallenges.Thebiggestispoorliquiditywithdrawalbefore
theageof60isnotpossible.Andforasegmentwithlittlefinancialcushion,itisabigdeterrent."Ifthereisademand,theyshouldmake
theproductmoreflexibleoraddonasavingscomponenttoit,"saysThorat.Bhardwajtooadmitsthattheproducthasthatconstraint.He
isnowworkingwithRelianceGeneralInsuranceandotherfinancialservicesfirmstoaddthesavingsandhealthinsurancecomponentsto
themicropensionoffering.

Althoughthereare2.5lakhoddoutlets,locatingoneisnotalwayseasy.IttookMarysometime,effortandcallstothehelplinetofindan
outletinherneighbourhood.Also,whiletheoutletsaresupposedtotakedepositswithoutanytransactionfee,shesaysshehasbeen
payingRs10pertransaction.EventhoughtheminimummonthlydepositrequiredintheaccountisjustRs100,forthissegment
sometimeseventhatbecomesdifficult."Dropoutandlapsationratesareveryhigh,"saysDebashishMohanty,president(retail)UTIAMC,
whichisalsothefundmanager.Volatileincomesandlittlefinancialcushionmeanmanystopdepositingmoneyintheaccountaftersome
time.

Also,rightnow,thecentralgovernmentcocontributesRs1,000ineverypensionaccountannuallyinwhichtheannualdepositdoesnot
exceedRs12,000.Thisisabigdrawforlowincomeworkersenlistingforthepensionaccount.Butthiscocontributionbythegovernment
isonlytill2017.Therearehopesthatthegovernmentmightextendthebenefitasithasdoneinthepast.Butthenthatisintherealmof
uncertainty.Despiteitsconstraints,GiftaPensionisagreatstepforayoungcountrytotackletheoldageproblem,especiallyamongits
poor.Italsoofferstheconscientiousmiddleclasswitharetinueofdomestichelpachancetodotheirbitasanemployerwithlittleeffort.

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