Developing micropensions in India

23-Mar-2010    This paper provides general recommendations regarding the features suitable for a micropension plan and analyzes case studies of two micropension plans launched recently in India (UTI Micropension scheme and Rajasthan Vishwakarma Unorganized Sector Workers Contributory Pension Scheme).

According to the authors, a micropension plan is typically designed as a defined contribution plan providing for small value, frequent contributions which are collected at a place convenient to the member. The paper analyzes the possibility of using microfinance institutions (MFIs) as a channel for organizing micropensions and the role of regulations in this sector similar to the governance of the microfinance sector. The authors conclude that with appropriate regulation and more robust risk sharing arrangements, there is potential for micropensions to play a useful role as an integral component of India’s social security system. 


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