Worldwide populations are aging: the current amount of people over 60 years and older is roughly 2 billion[1]. By 2025, this amount will have almost doubled to 3.8 billion. Estimates predict that in 2050, 80% of this group of people over 60 years will be living in low-income countries. Even at present times, one out of five extremely poor people (living on less than $1 a day) is aged over 60[2].

 

 

The worldwide ageing population will prove to be a tremendous burden on the economic development of the poor. On a global scale, the group of people over 80 years old has the fastest growing rate. The greater part of this growth takes place in low-income countries; countries that usually do not offer old-age provisions for their elderly. Most extreme poverty is found amongst the young and the elderly. While the young still posses labour power, the elderly do not. Since the aging workforce in developing countries for the most part consists out of self-employed and laborers in the informal sector, to who pensions and other old age security provisions are unavailable, a regular income for the elderly will be a luxury.

 

Given the expected exponential increase in the elderly population and the poor’s willingness and ability to save for old age, it becomes clear that there is a strong need to provide lifelong financial security for the self-employed poor individuals living in low-income countries. It is time for the microfinance sector to build efficient and effective vehicles to help the informal sector save for old age. This is where micro pensions are needed!