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Low-income women need pensions too

February 29, 2016
By Veronica Karpoich, Senior Associate, Finance

A breakout session at Women’s World Banking’s Making Finance Work for Women Summit in November brought together experts from financial institutions and the nonprofit sector to discuss the role of pensions in financial inclusion. Eppu Mikkonen-Jeanneret of HelpAge International, Parul Khanna of Micro Pension Foundation, and Bhumika Joshi of SEWA Bank held an animated conversation moderated by Women’s World Banking’s Chief Strategy Officer, Harsha Rodrigues.

Harsha kicked off the session by asking the panelists to discuss why the microfinance sector should offer pensions for women and how each of their institutions contributes to this growing space. All three speakers highlighted the risks faced by low-income populations as they age, particularly by women in the informal sector: the lack of savings from which to live after they stop working is one. Though these challenges are significant, the panelists agreed there is an enormous opportunity for pension products to help mitigate such risks.

Breakout Session: Pensions, Making Finance Work for Women Summit, Germany, 11-12 November 2015Bhumika explained how SEWA Bank’s pension offering has filled a gap in the institution’s suite of products. SEWA aims to meet clients’ changing financial needs throughout their lifetime but was previously missing this critical component. Client response to the pension offering has been extremely positive: over 80,000 members have enrolled since the product’s recent launch. Micro Pension Foundation also offers a pension product, but with a unique approach to outreach. “Gift a Pension” enables employers in India to assist their domestic workers with planning for old age. The product’s slogan, “10 minutes of your life can change 20 years of your domestic help’s life,” highlights its two key characteristics: ease of use and long-term impact. Such marketing and consumer information campaigns are critical to the successful implementation of pension products, which are often unfamiliar to potential clients. Both Parul and Bhumika emphasized the importance of financial education in helping low-income women understand the value of planning for their future and the processes for uptake and use of pensions.

The speakers also discussed the importance of policy in helping to ensure that low-income women are able to support themselves and their families later in life. Eppu discussed HelpAge’s efforts to advocate for policies that promote decent working conditions for older people in developing countries. The organization works to raise awareness of the difficulties this segment of the population faces in securing appropriate scale of work, including substandard working conditions, exclusion from training opportunities, and lack of job opportunities. Eppu stressed the important role of public-private partnerships in facilitating dignified, secure, active and healthy lives for older people. Bhumika and Parul reinforced this message, noting that the Indian government plays a critical role not only in regulating pension products but also encouraging those in the informal sector to save for old age during their productive life.

The panel’s key takeaway was that development and implementation of pension products benefits all stakeholders: financial institutions better serve their clients and increase customer retention through more comprehensive product offerings; governments mitigate the costs of caring for a rapidly aging population; and individuals – particularly low-income women – are empowered to secure a better future.

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