NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Mary is a beneficiary of the Micro Pension Foundation’s Gift-a-Pension initiative. Every month, Strasser gives her Rs 500 extra cash as part of her salary that she deposits in her pension account via one of the 2.5 lakh designated outlets. The Micro Pension Foundation has tie-ups with companies such as Eko, ItzCash and PayWorld, and when Mary deposits the money at one of these outlets, it gets credited instantly, with an SMS confirmation. “Old-age care is a challenge facing India. Gift-a-Pension is an excellent initiative to make a pension product accessible to lowincome Indians,” says Strasser.

Gift-a-Pension is a first of sorts in the world, where a low-cost financial product has been created for the poor. It is also relevant in a country where over 90% of some 487 million workers are in the unorganised sector. Moreover, India has over 100 million who are over 60, and not even a tenth of them have access to a pension product.

At a time when the government is laying a thrust on financial inclusion, Gift-a-Pension demonstrates an efficient mechanism to deliver a financial product to India’s poor. “It is a great initiative. No financial product today in India addresses this segment. High transaction costs for low-value products are a big deterrent. Micro Pension Foundation has done something that was difficult to do,” says YSP Thorat, a former chairman of National Bank for Agriculture and Rural Development and a board member of Micro Pension Foundation.