Baseline Survey

1
Baseline Survey Feasibility Study on Micro
Pension

• A.Madhankumar, Programme Leader
• Center for Research, DHAN Foundation
• First International ART on Micro Pension
• December 2, 2014

2
Why baseline survey for micro pension?

• Poverty amongst the elderly is becoming a major
  issue
• Indigenous systems of social security like joint
  family system are fast disappearing
• Increasing life expectancy associated with
  declining productivity of the elderly belonging
  to low income group demand strong support
• Lack of products for the elderly from the low
  income group
• In unorganised sector there are no reliable data
  bases for evolving pension product for elderly.

3
Literature Review

• As on there are 76.6 million aged persons which
  will be increased to 198 million in 2030
• Around 90 of the elderly workforce are from the
  unorganised sector and almost 80 from the rural
  areas, with nearly 40 constituting the below
  poverty population, and 50 aged women.
• About 64 of elderly women are widowed

4
Literature Review

• The study by Rajasekar, et.al.(2005) mentioned
  earlier, revealed that old age was a major
  concern for the workers. According to the study,
  agricultural labourers and construction workers
  reported the fear of not being able to work
  during old age.
• Absence of adequate public healthcare facilities,
  and the increasing cost of private healthcare
  facilities for the aged can throw the household
  into a major crisis (Alam, 2006)

5
Objectives of Baseline Survey

• To study the progressive age composition in
  locations
• To ascertain the capacity to save for micro
  pension
• To assess the accessibility of existing social
  security schemes

6
Methodology

• Enumeration in the selected 20 locations - in all
  the primary groups
• 44, 562 households were interviewed
• Pre-tested household interview schedule
• Tamil Nadu, Andhrapradesh, Karnataka and the
  Union territory of Pondicherry are 13, 4, 2 and 1
  respectively.
• 13 People institutions were selected from rural
  context, followed by 4 from coastal and 3 in
  urban context.
• Similarly 14 People institutions were selected
  for Community banking programme which is the
  largest programme of DHAN in terms of reach,
  followed by 4 from Coastal livelihoods programme,
  one each from Tank fed Agriculture and Rain fed
  Farming Development Programmes.
• Household survey

7
Variables

• Progressive Age Composition
• Household Annual Savings
• Household Cumulative Savings
• Household Annual Income
• Value of Income Generating Assets
• Access to Existing Pension Schemes
• Access to Life Insurance

8
Findings
9
Median age
Sl. No. Locations State Programme Age (Years)
1 Mudhukulathur TN TANK 40
2 Sellur TN KCBP 40
3 Thirumangalam TN RFDT 39
4 Magadi KA KCBP 39
5 Mullai TN KCBP 39
6 Ponnammapettai TN KCBP 38
7 Thiruppathi AP KCBP 38
8 Sanarpatti TN KCBP 38
9 Kondalampatti TN KCBP 37
10 Athoor TN KCBP 37
11 Veerapandi TN KCBP 37
12 Sirpam TN CALL 37
13 Bannur KA KCBP 36
14 Sangamam TN CALL 36
15 Chittoor AP KCBP 35
16 Kuppam AP KCBP 35
17 Sigaram TN CALL 35
18 Pudhucherry PY CALL 35
19 Shanthinagar AP KCBP 34
20 Periyakulam TN KCBP 34
10
Progressive age composition
Locations 18-30 31-45 46-60 gt60 Total
Thirumangalam 22.9 44.0 28.7 4.4 100.0
Mudhukulathur 13.6 44.0 36.3 6.1 100.0
Chittoor 23.0 48.4 24.4 4.2 100.0
Magadi 18.5 48.7 29.2 3.6 100.0
Bannur 12.1 54.4 28.9 4.6 100.0
Ponnammapettai 16.5 50.7 28.5 4.3 100.0
Kondalampatti 19.9 50.8 26.1 3.3 100.0
Sellur 20.7 53.8 23.2 2.2 100.0
Athoor 22.2 49.7 24.7 3.4 100.0
Veerapandi 22.4 49.4 25.7 2.5 100.0
Kuppam 21.1 54.1 23.2 1.7 100.0
Thiruppathi 15.3 51.8 28.6 4.3 100.0
Sirpam 23.6 50.1 23.3 3.0 100.0
Shanthinagar 30.9 50.0 17.2 1.9 100.0
Sigaram 22.4 54.1 21.3 2.2 100.0
Sangamam 15.7 55.9 26.7 1.7 100.0
Mullai 15.9 52.5 28.5 3.0 100.0
Sanarpatti 22.9 52.9 22.7 1.5 100.0
Periyakulam 22.6 44.6 28.3 4.5 100.0
Pudhucherry 20.5 52.5 23.6 3.4 100.0
11
Inference

• The range is of 34 years to 40 years.
• Though it is productive they are in transition
  towards the next life cycle stage.
• Further studies are required to assess the
  appropriate progressive age mix.

12
Household Annual Savings
Sl. No. Locations State Programme Context Annual Savings (INR)
1 Thirumangalam (RFDT) TN RFDT Rural 1500
2 Mudhukulathur (Tank) TN TANK Rural 4000
3 Thiruppathi AP KCBP Urban 2000
4 Chittoor AP KCBP Rural 1500
5 Kuppam AP KCBP Rural 6000
6 Shanthi Nagar AP KCBP Urban 1100
7 Magadi KA KCBP Rural 1500
8 Bannur KA KCBP Rural 1200
9 Sellur TN KCBP Urban 1800
10 Sanarpatti TN KCBP Rural 2000
11 Mullai TN KCBP Rural 1800
12 Sirpam TN CALL Coastal 1200
13 Sangamam TN CALL Coastal 1200
14 Sigaram TN CALL Coastal 1200
15 PPM TN KCBP Urban 1500
16 Athoor TN KCBP Rural 1500
17 Kondalampatti TN KCBP Urban 1500
18 Veerapandi TN KCBP Rural 1500
19 Periyakulam TN KCBP Rural 1100
20 Pudhucherry PY CALL Coastal 1200
13
Household Cumulative Savings
Sl. No. Locations State Programme Context Cumulative Savings
1 Thirumangalam (RFDT) TN RFDT Rural 5000
2 Mudhukulathur (Tank) TN TANK Rural 10000
3 Thiruppathi AP KCBP Urban 17600
4 Chittoor AP KCBP Rural 6948
5 Kuppam AP KCBP Rural 50000
6 Shanthi Nagar AP KCBP Urban 2100
7 Magadi KA KCBP Rural 5000
8 Bannur KA KCBP Rural 4028
9 Sellur TN KCBP Urban 6500
10 Sanarpatti TN KCBP Rural 7000
11 Mullai TN KCBP Rural 8200
12 Sirpam TN CALL Coastal 2000
13 Sangamam TN CALL Coastal 4150
14 Sigaram TN CALL Coastal 3400
15 PPM TN KCBP Urban 3878
16 Athoor TN KCBP Rural 4077
17 Kondalampatti TN KCBP Urban 4014
18 Veerapandi TN KCBP Rural 4050
19 Periyakulam TN KCBP Rural 5000
20 Pudhucherry PY CALL Coastal 4200
14
Inference

• On an average Rs. 100/- is observed as savings
  per month
• Liquidable savings is of the tune Rs. 7000/- only
• Given this capacity to save, the economic
  viability of the product is to be studied
• There is an immense need to understand the saving
  potential of the households

15
Household Annual Income
Sl. No. Locations State Programme Context Annual Income
1 Thirumangalam (RFDT) TN RFDT Rural 53000
2 Mudhukulathur (Tank) TN TANK Rural 30000
3 Thiruppathi AP KCBP Urban 72000
4 Chittoor AP KCBP Rural 42000
5 Kuppam AP KCBP Rural 50400
6 Shanthi Nagar AP KCBP Urban 36000
7 Magadi KA KCBP Rural 36000
8 Bannur KA KCBP Rural 24000
9 Sellur TN KCBP Urban 60000
10 Sanarpatti TN KCBP Rural 36000
11 Mullai TN KCBP Rural 30000
12 Sirpam TN CALL Coastal 24000
13 Sangamam TN CALL Coastal 36000
14 Sigaram TN CALL Coastal 26000
15 PPM TN KCBP Urban 60000
16 Athoor TN KCBP Rural 48000
17 Kondalampatti TN KCBP Urban 50000
18 Veerapandi TN KCBP Rural 36000
19 Periyakulam TN KCBP Rural 33000
20 Pudhucherry PY CALL Coastal 30000
16
Inference

• Higher annual income pattern is observed in urban
  locations ( Rs. 60,000/-)
• In rural and coastal locations the average annual
  income is around Rs. 30,000/-
• However, irrespective of context the annual
  savings stands to be close to Rs. 100/-

17
Income Generating Assets
Sl. No. Locations State Programme Context Income Generating Assets
1 Thirumangalam (RFDT) TN RFDT Rural 60000
2 Mudhukulathur (Tank) TN TANK Rural 50000
3 Thiruppathi AP KCBP Urban 110000
4 Chittoor AP KCBP Urban 159066
5 Kuppam AP KCBP Rural 175000
6 Shanthi Nagar AP KCBP Urban 173440
7 Magadi KA KCBP Rural 166700
8 Bannur KA KCBP Rural 180000
9 Sellur TN KCBP Urban 130403
10 Sanarpatti TN KCBP Rural 147619
11 Mullai TN KCBP Rural 147691
12 Sirpam TN CALL Coastal 178770
13 Sangamam TN CALL Coastal 164733
14 Sigaram TN CALL Coastal 175905
15 Ponnammapettai TN KCBP Urban 127859
16 Athoor TN KCBP Rural 109944
17 Kondalampatti TN KCBP Urban 113210
18 Veerapandi TN KCBP Rural 116999
19 Periyakulam TN KCBP Rural 115793
20 Pudhucherry PY CALL Coastal 171309
18
Inference

• Asset value in rural areas is higher than the
  urban and coastal areas
• Ownership of land and livestock assets as major
  source of livelihoods could be the reason for
  this

19
Access to Existing Pension Schemes
Sl. No. Locations State Programme Context Yes No Total
1 Thirumangalam TN RFDT Rural 4.3 95.7 100.0
2 Mudhukulathur TN TANK Rural 28.8 71.2 100.0
3 Chittoor AP KCBP Urban 6.1 93.9 100.0
4 Magadi KA KCBP Rural 15.3 84.7 100.0
5 Bannur KA KCBP Rural 7.2 92.8 100.0
6 Ponnammapettai TN KCBP Urban 3.6 96.4 100.0
7 Kondalampatti TN KCBP Rural 3.6 96.4 100.0
8 Sellur TN KCBP Rural 6.1 93.9 100.0
9 Athoor TN KCBP Urban 4.2 95.8 100.0
10 Veerapandi TN KCBP Rural 4.4 95.6 100.0
11 Kuppam TN KCBP Rural 6.1 93.9 100.0
12 Thiruppathi AP CALL Coastal 6.7 93.3 100.0
13 Sirpam TN CALL Coastal 2.3 97.7 100.0
14 Shanthinagar AP KCBP Coastal 2.0 98.0 100.0
15 Sigaram TN KCBP Urban 0.5 99.5 100.0
16 Sangamam TN KCBP Rural 0.0 100.0 100.0
17 Mullai TN KCBP Urban 2.5 97.5 100.0
18 Sanarpatti TN KCBP Rural 3.6 96.4 100.0
19 Periyakulam TN KCBP Rural 6.7 93.3 100.0
20 Pudhucherry PY CALL Coastal 6.1 93.9 100.0
20
Inference

• Despite existence of national and state level
  pension schemes the level of entitlement for the
  elderly is very low

21
Access to Life Insurance
Sl. No. Locations State Programme Context Yes No Total
1 Thirumangalam TN RFDT Rural 28.4 71.6 100.0
2 Mudhukulathur TN TANK Rural 18.4 81.6 100.0
3 Chittoor AP KCBP Urban 53.5 46.5 100.0
4 Magadi KA KCBP Rural 31.6 68.4 100.0
5 Bannur KA KCBP Rural 21.3 78.7 100.0
6 Ponnammapettai TN KCBP Urban 84.0 16.0 100.0
7 Kondalampatti TN KCBP Rural 74.3 25.7 100.0
8 Sellur TN KCBP Rural 81.4 18.6 100.0
9 Athoor TN KCBP Urban 76.3 23.7 100.0
10 Veerapandi TN KCBP Rural 94.0 6.0 100.0
11 Kuppam TN KCBP Rural 79.1 20.9 100.0
12 Thiruppathi AP CALL Coastal 85.3 14.7 100.0
13 Sirpam TN CALL Coastal 44.4 55.6 100.0
14 Shanthinagar AP KCBP Coastal 24.7 75.3 100.0
15 Sigaram TN KCBP Urban 94.2 5.8 100.0
16 Sangamam TN KCBP Rural 71.8 28.2 100.0
17 Mullai TN KCBP Urban 91.1 8.9 100.0
18 Sanarpatti TN KCBP Rural 90.5 9.5 100.0
19 Periyakulam TN KCBP Rural 94.3 5.7 100.0
20 Pudhucherry PY CALL Coastal 95.0 5.0 100.0
22
Inference

• Access to social security in particular for life
  insurance is high
• There is a good experience of paying premiums for
  social security
• In general access to life insurance cover is
  higher in KCBP and CALL programmes

23
Leads

• There exists practice of paying premium for Life
  Insurance (Rs. 100/-) equal to capacity to save.
  
• Explore the mechanism to probe existing mechanism
  or potential
• Progressive age mix Vs capacity to save Vs
  economic viability of pension schemes
• Enhancing entitlement

24
Feasibility Study
25
Objectives

• Understanding issues / vulnerabilities of old-age
  people from the poor households
• Ascertaining willingness of the members of SHGs
  and farmers associations to avail micro-pension
  products
• Exploring expectations of the members on
  micro-pension product features in relation to the
  needs.

26
Selection of sample locations

• 10 out of 20 locations need to be short listed
  for feasibility study
• A composite scoring with the following conditions
  was adopted to rank the locations
• Variable Statistics
  Weight
• - Progressive Age Composition Median
  1.5
• - Household Annual Savings Median 1.0
• - Household Cumulative Savings Median
  1.0
• - Household Annual Income Median
  0.5
• - Value of Income Generating Assets Median
  0.5
• - Access to Existing Pension Schemes Median
  2.0
• - Access to Life Insurance Median
  1.0
• To ensure representation from programmes, states
  and contexts following conditions were applied
  during short listing

27
Allotment of locations
Sl. No. State Programme Context Region
1 TN 6 KCBP 7 Rural 6 Maximum 2 locations per region
2 AP 2 Tank 1 Urban 3 Maximum 2 locations per region
3 KA 1 Rainfed 1 Coastal 1 Maximum 2 locations per region
4 UTP 1 CALL 1 Maximum 2 locations per region
10 10 10 Maximum 2 locations per region
28
Selected locations
Sl. No. Locations State Programme Context Region
1 Thirumangalam Tamil Nadu Rainfed Rural Madurai
2 Mudhukulathur Tamil Nadu Tank Rural Ramnad
3 Pudhucherry Pondicherry CALL Coastal Cuddalore
4 Sanarpatti Tamil Nadu KCBP Rural Dindigul
5 Sellur Tamil Nadu KCBP Urban Madurai
6 Ponnammapettai Tamil Nadu KCBP Urban Salem
7 Mullai Tamil Nadu KCBP Rural Salem
8 Thirupathi Andhra Pradesh KCBP Urban Chittoor
9 Kuppam Andhra Pradesh KCBP Rural Chittoor
10 Magadi Karnataka KCBP Rural Bangalore
29
Sample households
Stratum Sample size per location Total sample size
gt60 years 8 80
51-60 years 8 80
41-50 years 8 80
31-40 years 8 80
lt30 years 8 80
Total 40 400
30
Findings of Feasibility Study
31
1. Vulnerability of the elderlya. Age and
marital status
Marital status gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Married 48.75 70.00 73.75 80.00 90.00
Widow 50.00 27.50 25.00 18.75 2.50
Unmarried 1.25 1.25 - - 3.75
Divorced - - - 1.25 -
Deserted - 1.25 1.25 - 3.75
Average age 63.36 54.58 45.65 35.59 26.85
32
Inference

• Among the members in 41 to 50 years, at least 1in
  four families the members become either widow or
  destitute.
• This ratio increases to one in every two
  households as their age increases.
• This increases the financial burden and risks
  faced by women especially in their older age.

33
1. Vulnerability of the elderlyb. Status of
employment and individuals income
Status gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Employment status () Employed 50.00 57.50 78.75 76.25 56.25
Employment status () Unemployed 50.00 42.50 21.25 23.75 43.75
Income Amount in Rs. 489.25 732.50 1238.75 1260.63 764.75

• At least 50 of members are in employment in all
  the age group including gt60 years.
• The employment status is very high (77 on an
  average) during their productive age of 31- 50
  years and it reduces drastically to 57 when they
  enter the age of 51 and continue to remain almost
  same in the older population too.
• The corresponding income earned is Rs. 1200 among
  31-50 years which reduces to Rs.732 in 51-60
  years and to Rs. 489 in more than 60 years group.

34
1. Vulnerability of the elderlyc. Dependence for
own financial needs
Source gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Own 27.50 32.50 40.00 38.75 37.50
Spouse 26.25 37.50 50.00 58.75 58.75
Other family members 35.00 23.75 6.25 1.25 3.75
Friends, relatives and other external sources 10.25 6.25 3.75 1.25 -
Total 99 100 100 100 399
35
Inference

• Most of the aged persons depend on their spouse,
  other family members or relatives for fulfilling
  their financial needs.
• The dependency increases with age. Among the 51
  to 60 years, the dependency is 67.5 which
  increases to 72.5 in gt60 years

36
1. Vulnerability of the elderlyd. Health Status
Health Status gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Normal 15.00 46.25 61.25 75.00 71.25
Have problems but manageable 36.25 32.50 32.50 23.75 22.50
Have problems and dont do works 37.50 15.00 2.50 - -
Have severe problems but still do works 11.25 6.25 3.75 1.25 6.25
Total 100 100 100 1.25 6.25
37
Inference

• The health issues starts even in the age of 51-60
  years and increases in gt60 years group.
• Only 15 of the old (gt60) felt themselves normal
  without much health problems.
• Among the remaining 85 who are suffering from
  any one of the ailments, 11.25 of them have to
  do some job in order to earn for their life
  despite their illness.

38
1. Vulnerability of the elderlye . Support from
other family members
Opinion about support from family members gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Excellent 47.50 58.75 65.00 71.25 68.75
Satisfactory 18.75 28.75 26.25 23.75 28.75
Not satisfied feel lonely 28.75 11.25 6.25 5.00 2.50
Cant say 5.00 1.25 2.5 - -
Total 100 100 100 300 600
39
2. Need for Micro Pension
Particulars gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Money required per month (Rs.) 1,095 1,011 692 799 749
Money available for spending (Rs.) 473 605 555 706 660
Unmet amount (Rs.) 621 406 136 92 88
40
3. Willingness to pay for Micro pension
Opinion gt60 years 51-60 years 41-50 years 31-40 years lt30 years
Yes, I need 93.75 91.25 90.00 90.00 91.25
No, I dont need 1.25 3.75 10.00 7.50 8.75
I cant say 5.00 5.00 - 2.50 -
41
Summary of findings from feasibility study

• The need for micro-pension is perceived in all
  the strata of age.
• Dependency on others for fulfilling their
  personal financial needs is higher from 51 years
  onwards.
• The pension vesting age was spelt out as 55 years
  and the vulnerabilities of old age are observed
  from the age of 51
• The gap in fulfilling their own financial needs
  and the pension benefit expected seems to be not
  matching. This shows that the members lack of
  awareness of their needs and planning for
  fulfilling the needs.

42
Summary of findings from feasibility study

• There is a general hesitation to use savings in
  the SHG/ Farmers association towards premium for
  micro-pension especially among younger people (up
  to 50 years). This is also attributed to the fact
  of lack of awareness about pension among the
  members. However, it is a welcome feature that
  about 50 percent of members are prepared to
  contribute a lump sum amount from their
  accumulated savings for their pension corpus.
• This situation calls for providing large scale
  literacy initiatives on pension.

43
Thank You!