Between 2000 and 2001, the Bangladesh MFI Grameen Bank launched a commitment savings account, called the 'Grameen Pension Savings' (GPS). The GPS scheme was introduced as part of Grameen II, the bank’s fundamental changes of its product range. It has proven very popular.

The GPS scheme operates in the following way: subscribers have to deposit at least 50 Takas (US$ 0,73) per month for an uninterrupted term of 5 or 10 years. The scheme thus contrasts with conventional pension products, as its maturity date is not tied to a specified retirement age. Participants may commit to save any other multiple of 50 Takas. The bank crosssubsidizes pension returns from its other earnings in order to offer high fixed interest rates on the product. In 2006, they amounted to 10% a year for the 5-year term and to 12% a year for the 10-year term. If a saver fails to deposit the committed installments regularly, its account is closed and interests are paid at a lower rate.

At maturity, the saver can either take the accumulated fund as a cash lump sum or leave it on deposit with the bank and draw monthly interest payments. Despite its appellation, the GPS is not used predominantly as a way of saving for old age. Marriage and education of the children are the most frequent illustrations of what might be done with the accumulated savings of the GPS, well ahead of provision for old age. Further, a GPS is required to obtain a loan of a certain value.

For more information on the Grameen Pension Savings, visit www.grameen.com.