Micropensions: Old Age Security for the Poor?

How can microfinance be expanded to include approaches to the problems facing poor and very poor people in developing countries when they become too old to support themselves? Microfinance clients have long been signalling their demand for such services by doing their best to use current microfinance products, such as microcredit, in ways that create assets that can help protect them in old age. However, “micropensions” will not, at least at first, look like miniature versions of developed-country private pensions, because most would-be clients are not formally employed and do not “retire.” The most promising platform for developing suitable products can be found in medium term “commitment savings” plans for the poor that are now growing in popularity and scale in a number of countries. This chapter describes the challenges that face the microfinance industry as it strives to scale up these financial instruments and to make them ever more appropriate for their users and potential users.