Micro-Pensions in India: Issues and Challenges

21 Pages Posted: 4 Apr 2011

See all articles by Savita Shankar

Savita Shankar

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Mukul G. Asher

National University of Singapore - Lee Kuan Yew School of Public Policy

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Abstract

This article aims to fill a gap in the social security literature on India by examining the role of micro-pensions. The analysis suggests that because of the heterogeneity of the target population, micro-pension products with microfinance institutions (MFIs) as the main, but not only sponsors should be voluntary and portable and permit experimentation in their design and in the delivery of services. Accordingly, decentralized micro-pension schemes that operate within an appropriate regulatory framework and according to sound governance practices are deemed more fitting for the Indian context than centralized schemes with limited flexibility. The article discusses two case studies of recently-initiated micro-pension schemes in India, which reveal the need for rigorous analytical research on the micro-pension sector, particularly concerning the structuring of pay-out options and innovative delivery mechanisms. The article concludes that micro-pensions have the potential to be one of the most useful components in India's multi-tiered social security system, and should be encouraged.

Keywords: pension scheme, method of financing, collection of contributions, payment of benefits, India

Suggested Citation

Shankar, Savita and Asher, Mukul G., Micro-Pensions in India: Issues and Challenges. International Social Security Review, Vol. 64, No. 2, pp. 1-21, 2011, Available at SSRN: https://ssrn.com/abstract=1801029 or http://dx.doi.org/10.1111/j.1468-246X.2011.01390.x

Savita Shankar

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

Singapore 117591
Singapore

HOME PAGE: http://www.spp.nus.edu.sg/PhD_Savita_Shankar.aspx

Mukul G. Asher

National University of Singapore - Lee Kuan Yew School of Public Policy ( email )

Singapore 117591
Singapore
(65) 6778 1020 (Fax)

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