The Microfinance Review

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Micro Pension Programme:Need and Assessment of its Working in Odisha


Affiliations
1 Small Industrial Development Bank of India (SIDBI), Lucknow, India
     

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The main purpose of this paper is to understand the need for a Micro Pension (MP) product for clients of MFIs in India in general and Odisha in particular. This paper also tries to analyse the need for MP in India and the major challenges in implementing such a programme in the state. Microfinance clients in Odisha are mostly engaged in informal sector and thus become especially vulnerable to old age-related poverty. Microfinance's clients are generally women, who are even more vulnerable to old age-related poverty than men. In order to secure the steady old age income for the poor, MP plays a crucial role.

This paper is based on first-hand experience after the roll out of, 'NABARD Rural Micro Pension Programme' in Odisha. Using data of 300 MP's clients in Odisha, the study found that the ideal MP scheme needs to be flexible, provide adequate return, liquidity and portability to succeed. The study recommends that an effective and efficient institutional architecture coupled with intensive and sustained field-level efforts are required to (a) educate and encourage MFIs' clients in Odisha to set aside a part of their current incomes for their old age, and (b) establish a secure, scalable and sustainable mechanism to enable them to accumulate micro-savings for their retirement through the MFI-led MP model.


Keywords

Micro Pension, Informal Sector Workers, Annuity, Variable Return.
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  • Micro Pension Programme:Need and Assessment of its Working in Odisha

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Authors

Jeeban Jyoti Mohanty
Small Industrial Development Bank of India (SIDBI), Lucknow, India

Abstract


The main purpose of this paper is to understand the need for a Micro Pension (MP) product for clients of MFIs in India in general and Odisha in particular. This paper also tries to analyse the need for MP in India and the major challenges in implementing such a programme in the state. Microfinance clients in Odisha are mostly engaged in informal sector and thus become especially vulnerable to old age-related poverty. Microfinance's clients are generally women, who are even more vulnerable to old age-related poverty than men. In order to secure the steady old age income for the poor, MP plays a crucial role.

This paper is based on first-hand experience after the roll out of, 'NABARD Rural Micro Pension Programme' in Odisha. Using data of 300 MP's clients in Odisha, the study found that the ideal MP scheme needs to be flexible, provide adequate return, liquidity and portability to succeed. The study recommends that an effective and efficient institutional architecture coupled with intensive and sustained field-level efforts are required to (a) educate and encourage MFIs' clients in Odisha to set aside a part of their current incomes for their old age, and (b) establish a secure, scalable and sustainable mechanism to enable them to accumulate micro-savings for their retirement through the MFI-led MP model.


Keywords


Micro Pension, Informal Sector Workers, Annuity, Variable Return.

References