1. Micro Pension S.Gayathri, Program Leader, DHAN Foundation First International Advanced Reflective education and Training on Micro Pension December 2, 2014

2. Salient Features Eligibility : Members of Kalanjiam/ Vayalagam and spouse Age limit : 18 to 54 Years Pension Age : 55 Years Type of scheme: Group scheme The micro pension product is a defined contribution product. Accumulation of each member’s contributions (contribution and the return on investment) until the age of 54 would be utilized to provide a pension from the age of 55. For premature deaths before (54 years), the accumulations standing to the credit of the member will be returned to the nominee of the deceased. For premature exits (other than death) after a period of five years of joining but before 54 years, the exiting member can either allow her fund to accrue interest and take pension from 55 years or take back the entire accumulation amount instead of pension.

3. Salient Features The contributions will earn an interest every quarter. The quarterly interest rate is announced by the end of previous quarter by LIC. Starting from the fifth policy year, in addition to the quarterly interest rate, LIC may also declare a non zero-positive Residual Addition (RA) on the policy accounts of members at the end of each policy year. An accumulation statement is prepared and issued to the federation mutual at the end of every financial year, showing the balances available to the credit of each member and the interest additions for each member.

4. Salient Features At the vesting age, members would choose either of the type of pension benefit: Life pension – Pension till the death of the member or Life pension with Return of Corpus (ROC)- Pension to the member until the death of the member. After death, her pension accumulation would be given back to her nominee. The first option would give more monthly pension than the second one to the member. The member has to fill a claim form mentioning any of the above two options for getting pension and send the form to LIC. Pension will be directly credited by LIC only through ECS/NEFT to the bank account of the members.

5. Operational steps Before joining the scheme Pension literacy is given on a continuous basis Literacy is done through special trainings, during regular SHG meetings and through individual counseling Federation mutuals is the entity involved in the governance of micro pension Federation management team and leaders are given trainers’ training Mostly members who are in active age, who have intensive participation in the other financial services such as savings, credit and insurance are prioritised

6. Operational steps While joining the scheme The cluster associate should fill in the information about the member in the prescribed form and collect the premium for the first month and submit it to the federation. Federation should fill in the prescribed policy document meant for the scheme. Federation should enter the member data from all Kalanjiams in the prescribed Excel form provided by LIC and then send the following to to LIC, P&GS, Madurai. Premium collected from members in the form of demand draft Member data – Soft and hard copy Duly filled Policy proposal for micro pension scheme Federation should send a copy of member data to People Mutuals. Federation would receive a policy certificate from LIC which should be properly filed.

7. Operational steps During the contribution period: Every month the premium collected from members should reach the federation office along with their respective member information. Federation would send the premium and the member data as mentioned above. At the time of pension age: At the time of attaining 55 years, the members would receive a claim form for purchasing the pension policy. The original claim form should be submitted to LIC, a photo copy to be kept in federation mutuals and a photo copy to be sent to People Mutuals.

8. Opportunities & Challenges Opportunities/ needs – Primarily savings oriented community – Family size is becoming smaller – Migration to urban areas – Increased burden on the governments Challenges – Long term gestation period – Uncertainty about value for money in future – Governments not investing in literacy among young communities to participate in the process of ensuring income security to elderly

9. THANK YOU