IPEC pushes for financial inclusion for the informal sector

The Insurance and Pensions Commission (IPEC) has developed a draft micro-pensions framework as part of efforts to push for financial inclusion and products for the informal sector.

This is also expected to grow the pensions industry.

In line with this, IPEC is now scouting for comments and industry’s review before finalising the framework and its implementation.

IPEC Commissioner, Dr Grace Muradzikwa, said the guideline has been developed as part of the Insurance and Pensions Commission’s strategies of promoting development and sustainability.

“This is also in line with driving the financial inclusion agenda through complementing Government efforts in pursuant of the National Financial Inclusion Strategy and contributing towards attainment of the United Nations Sustainable Development Goal Number 1 of eradicating poverty in all forms.

“The Guideline is, therefore, part of the Commission’s pension reforms aimed at expanding pension coverage to the self-employed, informal sector and low income earners, in order to address issues of old age poverty,” she said.

A Micro-pension/provident fund is a voluntary fund with both savings and retirement benefit entitlements that support small, irregular and sustainable savings by individuals to provide them with a regular stream of pension annuities or lump sum in old age.

The member contributes personally to obtain benefits based on a defined contribution in the form of pensions or otherwise, payable on death, retirement or any other occurrence, which entitles a member to start receiving benefits under the rules of the particular fund.

According to the draft framework, the Micro-Pension/Provident fund will be voluntary and Defined Contribution in nature.

The administration options for micro-pension/ provident funds shall include voluntary funds established and administered by Fund Administrators, Life Companies or such other persons as may be approved by the Commission and voluntary organizations as may be approved by the Commission.-ebusinessweekly