INDIA - A new scheme catering for workers in India's unorganised sector is looking for micro-finance loan providers to help members make their first contributions.
The Swabalamban Pension Plan, which was launched last week to help workers from unorganised sectors save for retirement, is now approaching micro-finance companies to offer small loans to members.
Rani Nayer, executive director of the Pension Fund Regulatory and Development Authority, said: "Unless these people have some form of income they cannot save for a pension. If micro-financial companies can offer micro-credit, this will provide a disposable income for these workers which they can use for a pension."
Under the Swabalamban scheme, India's central government will match the contribution of INR1,000 ($23) per year to each new pension account opened in the year 2010/11 and for the following three years. Separately, the state governments of Haryana and Karnataka are contributing a further INR1,000 annually to encourage workers in those regions to save.
Swabalamban has already agreed contracts with Life Insurance Cooperation of India, Bandhan Microfinance, Financial Inclusion Network Organisation, the Society of Eradication for Rural Poverty and the Welfare Board for Construction and other workers.
The challenge is not only to get more companies on the Swabalamban bandwagon but to get workers saving for their pension, said Nayer. The scheme is looking for both profit and non-profit organisations that will add the pension plan to their basket of services.
Nayer said: "Only 15% of Indian people are covered in some form of pension scheme, covering mostly those from organised or government sectors. We are trying to reach small investors and create a culture of saving for pension which is not there. To reach these people and convince them is a big challenge."
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