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Micropensions: Filling the Protection Gap for the Low-Income and the Informal Sector

RFPI Asia at the 11th Asia Conference on Pensions & Retirement Planning
Shanghai, China. September 9-10, 2015.

Dr. Antonis Malagardis at the 11th Asia Conference on Pensions & Retirement Planning.

As the world’s societies age, governments and businesses are trying to look ahead and anticipate the needs of tomorrow’s growing elderly populations. In emerging Asia, two tendencies come together to exert particular pressure on government pension systems, market retirement solutions and the traditional, informal and family-based support structures alike: The rapid economic development is transforming retirement attitudes while a massive age wave is due to engulf Asia, driving up the old-age dependency incidence dramatically. The 11th Asia Conference on Pensions & Retirement Planning organized by the Asia Insurance Review (AIR) in Shangai was therefore set in the context of a growing protection and savings gap in pensions and retirement planning and health funding for the old. The conference brought light to the available actions to the private and public sector to meet this gap, since the development of a sustainable and successful pension system is a key to long-term economic growth and sustainable public finances.

Dr. Antonis Malagardis of RFPI Asia brought the topic of the old-age needs of the low-income and informal sector workers to the agenda. Having subsequently gained access to a number of financial services in the past years such as savings, credit and various insurance products, informal workers do not have access to the pension markets or formalized retirement schemes. This inadequacy of the current financial system represents a serious shortfall in the provision of old-age related risk management for the informal and low-income sector. Against this background, RFPI Asia envisions the promotion of appropriate regulations relative to micropensions that would encourage pre-need companies and its intermediaries to design simple and affordable products for the low income and informal sectors across its partner countries. Intensifying the financial education regarding old age risks and pensions is an integral part of this vision. These objectives will require a multi-sectoral cooperation of government agencies, the private sector and development agencies.

Developing the currently untapped field of micropensions for the informal and low-income sector can benefit from a set of commonalities with the past microfinance developments that are likely to generate synergies in the process, notably with regards to market characteristics and distribution channels.

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