Strategic Plan 2011 – 2015
Pension & Development Network January 2011
Steering Committee members: Jacques van der Horst, CSR Officer at Syntrus Achmea
Aaltje de Roos, Senior Policy Advisor at Ministry of Foreign Affairs
Rene Blijlevens, Senior Advisor at Association of Insurers
Guus Boender, Non-Executive director at Ortec Finance and professor Asset Liability Management Free University Amsterdam
Henk Hermsen, Head of Investment Strategy at SPF Beheer
Caroline van Dullemen, Director WorldGranny Jansje van Middendorp & Boudewijn Sterk, Programme Managers P&D Network The P&D Network office is part of and located at WorldGranny. Members of the Advisory Council are (alphabetic order): • Herman Bril, Managing director at Cardano • Else Marie van den Eerenbeemt, Family Psychologist • Fabian Fagel, Lecturer Operations & Process Management International Institute for Hospitality Management The Hague • Gerda Havertong, Actor • Maria Henneman, Media communication specialist, former chief-editor ‘Netwerk’ • Ilona Hofstra, Program producer and media trainer • Joanne Kellermann, Director ‘De Nederlandsche Bank’ • Prof. dr. Jan Kuné, Professor pension sciences at the University of Amsterdam • Prof. dr. Paul Schnabel, Director The Netherlands Institute for Social Research (‘Sociaal Cultureel Planbureau’ SCP) • Erik van Laar, vice chair of the ‘Centrum van Directeuren en Commissarissen’ (NCD) • Frans van Loon, former Director ING Emerging Markets, former Chair Foster Parents Plan International • Jenneke van Pijpen, former Vice chair ABVAKABO/FNV, Member Board ‘Pensioenfonds Zorg & Welzijn’ • Eegje Schoo, former Minister of Development Cooperation and Ambassador of India
INDEX
Executive summary............................................................................................. 3 1. Introduction ................................................................................................... 5 1.1 Short history of the P&D Network ................................................................ 6 2.1 Objective of the P&D Network ..................................................................... 9 2.2 Vision ..................................................................................................... 10 2.3 Mission & implementation ......................................................................... 10 2.4 Multi pillar pension system ........................................................................ 11 2.5 Third pillar: saving of the poor .................................................................. 12 3. Partner organisations P&D Network ............................................................. 14 3.1 Introduction ............................................................................................ 14 3.2 Vision country focus ................................................................................. 14 3.3 Criteria partner organisations .................................................................... 14 3.4 Assessment ............................................................................................ 15 3.5 Project groups ......................................................................................... 16 3.6 Long term support ................................................................................... 17 3.6.1 Framework development........................................................................ 17 3.6.2 Adoption .............................................................................................. 17 3.7 Short term support .................................................................................. 18 3.7.1 Consultants - database .......................................................................... 18 3.7.2 Training, workshop and presentations ..................................................... 18 3.8 Responsibility P&D Network and its local partners ........................................ 18 4. Members of the P&D Network ....................................................................... 19 4.1 Introduction ............................................................................................ 19 4.2 Members ................................................................................................ 19 4.3 P&D Network Management and office ......................................................... 20 4.4 Board WorldGranny ................................................................................. 20 4.5 Advisory Council ...................................................................................... 21 5. Activities ....................................................................................................... 22 5.1 Introduction ............................................................................................ 22 5.2 Activities related to Concept Development .................................................. 22 5.3 Implementing the Programme Development ............................................... 22 5.4 Activities to expand the Network Development ............................................ 23 5.5 Marketing ............................................................................................... 23 5.6 Competitors ............................................................................................ 23 6. Budget and financial sustainability ............................................................... 24 Annex 1. Organisation chart ............................................................................. 26 Annex 2. Procedure Statement ......................................................................... 27
Executive summary1 Today almost 1 in 10 people are over 60 years old. By 2050 the figure will be higher than 1 in 5. Currently 64% of older people live in less developed regions, by 2050 this figure will rise to 80%. In the 21 century a dramatic transformation in population age structures is witnessed: a process of global ageing as population growth rates decline through falling fertility rates and rising longevity. Sustainable and robust pension schemes are, in the view of the Pension & Development Network (P&D Network), the most suitable structural response to the consequences of global ageing, for they allow people to build an independent financial position. In order to develop this innovative solution to poverty, it is important that older people are socially and economically self-reliant, aware of their rights and have access to financial products. The extensive experience with creating pension provisions in the Netherlands is valuable support and inspiration in this process. By developing sustainable pension schemes the right conditions for older people are created, which allows them to live in a socially and economically self-reliant way. Ambitions and direction In order to develop and implement micro pension products worldwide, the P&D Network links pension funds, banks, policy makers and Non Governmental Organisations (NGOs) in the Netherlands to Micro Finance Institutes (MFIs), NGOs and banks in emerging economies. Through the exchange of knowledge and technical experience focusing on the development and implementation of old micro pension schemes, the Pension & Development Network realizes the development of long term saving and insurance products for old age. The P&D Network stands for effective and professional cooperation between its members and local partner organisations. Its mission is to provide support to enhance the capacity of MFIs in developing long term savings and insurance products for old age within the context of poverty reduction. Develop project organisation The P&D Network is a project organisation: in all its activities the P&D Network is closely linked with its partners from the Dutch financial sector. By taking a leading role in the management side of its poverty alleviation projects, the P&D Network office allows its partners to fully implement their financial expertise and realize their goals within the field of corporate social responsibility by running projects in emerging economies, ensuring large impact. Outreach & local partners With regards to its outreach, the philosophy of the P&D Network is that the realization of sustainable and effective microfinance solutions for poverty alleviation is in general benefitted by large scale. This is certainly the case when developing and implementing micro pension provisions.
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In this document, the term Pension & Development Network is used to refer to the ‘network of members’, both participating organisations in the Netherlands as well as local partner organisations in developing countries. In order to avoid confusion, we refer to the P&D Network office when speaking about the specific role and activities of the programme managers at the WorldGranny office.
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Through cooperation with local partner organisations, NGOs and MFIs, or branch organisations, such as ICMIF or CGAP, the P&D Network aims at reaching large groups of micro pension participants. Planning In the coming 5 years (2011 – 2016), the P&D Network aims to accelerate its activities in the field of: 1. Concept Development knowledge management & (pension) product development 2. Programme Development – research, feasibility study, monitoring impact, implementing (pension) programmes 3. Network Development – education and training of microfinance clients interested to save for their old age pension, implementing partner organisations, donors, academic institutions, government bodies and financial institutions. Output & activities The main objective of the P&D Network in the coming five years is to provide a total of one million people (primarily young and/or female members of MFIs), living in emerging economies, with the opportunity to participate in a (micro) pension provision, through the local partner organisations of the P&D Network. Through training and education, organized by the local partner organisations of the P&D Network, another one million people will be made aware of the possibilities of (micro) pension provisions. Monitoring & evaluation In order to guarantee the feasibility and sustainability of the micro pension schemes, the execution of feasibility assessments & impact studies, in collaboration with academic partners, forms an indispensible part of the P&D Network’s activities.
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1. Introduction Today almost 1 in 10 people are over 60 years old. By 2050 the figure will be higher than 1 in 5. Currently 64% of older people live in less developed regions, by 2050 this figure will rise to 80%2. In the 21 century a dramatic transformation in population age structures is witnessed: a process of global ageing as population growth rates decline through falling fertility rates and rising longevity. Urbanization, globalization, improved hygiene and healthcare, but also the HIV/aids epidemic and violent conflicts, are bringing about the changes in the global fertility rate and demographic balance. As a consequence of these developments, the extended family system, the traditional source of social security in emerging economies, is disintegrating. Global ageing is not a transitory wave, like the baby boom that many affluent countries experienced in the 1950s, or the baby bust that they experienced in the 1930s. Instead, it is a fundamental demographic shift with no parallel in the history of humanity3. Ultimately, this ‘global ageing’ will have an impact on economic performance, social relations and political stability. Longevity is a very serious risk for people below the poverty line. Interesting enough, there is a complex relation between poverty and longevity. Programmes that reduce elderly mortality – in particular health programmes - may actually increase the relative poverty levels of the oldest generation. We describe these phenomena as the paradox of development. The consequences of rapid demographic transitions that threaten the traditional social protection – i.e. an informal intra family pay-as-you-go system - are felt most by poor households. And since women live longer and have often less access to capital, their need for sound pension schemes is more articulated. As the Western world experienced after World War II, almost all developing countries are nowadays struggling with the development of a comprehensive pension strategy addressing ageing issues. So far 72 countries have either a means-tested or universal social pensions – 46 of them in low or middle income countries. However, the pension benefit is often small, and the access to these provisions is limited. The second pillar, pension as deferred earnings in a formal labor situation, is hardly relevant in emerging economies, since the vast majority of the poor are working in the informal sector. Therefore, there is a strong need for individual savings programmes, i.e. the development of the third pillar pension provision. With the growth of micro finance - the professionalization of Micro Finance Institutes (MFIs) and the increasing financial literacy of its members - the concept of savings and insurance has become more popular. Introducing micro pensions, as a more complex form of savings- and insurance product, will be the next step in micro finance product development, and the answer to a basic financial need. Focus will especially be on the younger generation, as they have the time to save enough corpus to get a reasonable pension at retirement. 2
http://www.helpage.org/Researchandpolicy/Stateoftheworldsolderpeople/Globalstatistics Richard Jackson, Neil Howe, Rebecca Strauss, Keisuke Nakashima, The Greying of the Great Powers, Demography and Geopolitics in the 21st Century, Centre for Strategic and International Studies, http://www.csis.org/component/option,com_csis_pubs/task,view/id,4453 3
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By introducing pension systems, children can be relieved from the burden of providing (financially) for their parents, and resources become available for the parents to invest in their children’s education. That pivot is a prerequisite for development and has happened in most OECD countries in the past century. This shift of social economic capital should be reinforced by investing donor funds to set up robust third pillar pension schemes, so that being dependant upon ones children for old age provision is no longer an indispensible option. 1.1 Short history of the P&D Network After an initial exploratory meeting in 2007, Cordaid and WorldGranny decided to organize the conference 'Cash & Care' in Amsterdam, on December 6, 2007. This conference focused on income and care for older people in developing countries. One of the most interesting subjects was the topic ‘micro-pensions’. Chair of Self Employed Women Association (SEWA) Bank, Ms. Renana Jhabvala, gave an inspiring presentation about the micro pension programme of the SEWA Bank in India. Due to the vast interest of participants from the financial, private, insurance, government and NGO sector in the Netherlands in gaining more knowledge on this innovative microfinance product, WorldGranny initiated the Pension & Development Network in the beginning of 2008. In preparation for the Cash & Care conference, Ramesh Aranuchalam of the Microfinance Consulting Group (MCG) conducted a research on the different micro pension initiatives in India. The various organisations in India that had (planned to) set up a micro pension product were interested to share their experiences and knowledge on micro pension products. On May 7, 2008, MCG organized a conference in Chennai, India, titled 'Micro Pensions in India'. Seven members from six of the participating organisations in the P&D Network - Syntrus Achmea, Dutch Central Bank, Cardano, FMO, SPF Beheer and WorldGranny - attended this conference, in order to get in touch with organisations in India that already had established a micro pension scheme/provision, or were interested in implementing a micro pension scheme. The goal of the P&D Network was to identify in which way Dutch organisations could contribute to support the development of pension systems in India. Several contacts were made and alliances were formed. In 2008, the P&D Network started a cooperation with the DHAN Foundation in India in order to initiate a micro pension product. This became the first micro pension project of the P&D Network. In 2008 the P&D Network organized a conference in the Dutch Royal Tropical Institute in Amsterdam on risk management and long term saving products. The activities of the P&D Network and the interest of Dutch organisations to participate in the P&D Network grew. In late 2008 the P&D Network decided to install a steering committee and different working groups, focusing on; • Projects (DHAN Foundation, Shepherd and Nepal) • Communication (website, brochure) • Training development (in cooperation with the Dutch pension education centre ‘Stichting Pensioen Opleidingen’ (SPO). In 2009, the P&D Network was approached by several organisations requesting to provide support in the development of micro pension provisions. Besides this, several
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technical missions to a local partner organisation in India have been conducted in order to provide support in product and pension model development. In September 2009, the P&D Network was offered the opportunity to organize a seminar on governance and micro pensions, hosted by the Dutch Central Bank. This conference was opened by H.R.H. Princess Máxima of the Netherlands, United Nations Secretary General’s Special Advocate on Inclusive Finance. In November 2009, the P&D Network’s steering committee decided to hold a strategic evaluation, which led to a new strategic policy for 2010. In 2010 the P&D Network organized a New Years event at the Dutch Association of Insurers in The Hague. In May the network organized Product Innovation in Intergenerational perspective at the Tilburg University. The network members gave presentations at conferences abroad and new project were initiated. During the period 2008 – 2010, the P&D Network has been financed by the Ministry of Foreign Affairs (Direction for Sustainable Economic Development (DDE)) and by contributions of the member organisations of the P&D Network. 1.2 Track record The recent years the P&D Network has started to cooperate with several organisation in emerging economies to provide advice about (developing) micro pension products. Some projects are already accomplished. Projects
Projects long term support
Local organisation
Country
Duration
DHAN Foundation
India
RIMANSI
Philippines, Vietnam, Cambodia Mongolia
July 2008 (signing MoU) – now November 2010 (signing MoU) – now
XacBank REDCAMIF
Projects short term support
Diyalo Foundation and
June 2010 (organisation visit) – now October 2010 (meeting coordinator)– now
Nicaragua, Honduras, Guatemala Nepal
Shepherd
India
Chrystal
Georgia
PAWDEP
Kenia
August 2008 (meeting coordinator) - June 2009 (report) November 2009 (1st organisation visit) – August 2010 (report) September 2010 (organisation visit) – November 2010 (report) September 2010 (organisation visit) – now
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Number of potential participants in the pension product (2016) 25,000 600,000
100,000 200,000
In order to share information regarding micro pensions and the P&D Network, starting from 2007, the network organised a yearly conference for members and relations of the network in the Netherlands. Besides this, the P&D Network gave presentations at international conferences abroad, to inform microfinance institutions about the existence and services of the P&D Network. Conferences and member events Organised conferences in the Netherlands
Year 2007
Name Cash & Care; Income and care for older people in developing countries
City The Hague
2008
Amsterdam
2009
Risk management and long term saving products Governance and micro pensions New years member event Product Innovation in Intergenerational perspective Micro Finance Centre conference
2009 2010
World Entrepreneurship Forum 2009 4th Asian Conference on Micro-insurance
2010 2010 2010
Microfinance World Conference World Entrepreneurship Forum 2010 2nd RIMANSI Regional Stakeholders forum
Lyon, France Ho Chi Minh City, Vietnam Washington, USA Lyon, France Manila, Philippines
2009 2010 2010 Presentations at International conferences
Amsterdam The Hague Tilburg Belgrade, Serbia
1.3 Strategic plan The plan lying before you presents the strategic choices of the P&D Network for the period 2011 - 2015. During the second half of 2010, the P&D Network aims to accelerate its activities. Having experienced the unmet need of the clients of microfinance institutions worldwide, as well as the need for knowledge and experience on developing and implementing micro pension provisions of microfinance organisations themselves, the P&D Network believes that together with the solid and robust knowledge base of its partners from the Dutch financial sector the goals and ambitions of the P&D Network can be realized.
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2. Objective, vision and mission 2.1 Objective of the P&D Network The main objective of the P&D Network is to contribute to prevention and alleviation of the impact of income poverty amongst older people by realizing sustainable income formats for large groups of informal sector workers, and thus reducing the vulnerability of older people’s households. The P&D Network links pension funds, banks, policy makers and NGOs in the Netherlands to MFIs, NGOs and banks in emerging economies. By conjoining the solid and robust knowledge base of the Dutch pension branch to the growing world of micro finance, the P&D Network provides social consultancy for the development and implementation of micro pension solutions. Through the exchange of knowledge and by fully implementing financial expertise, the P&D Network creates solid innovations in the area of old age retirement, linked to the local financial infrastructure, culture, opportunities and needs. Financial experts from the P&D Network contribute to the development of pension schemes for people working in the informal sector in emerging economies. Through the development of long term savings and insurance products for old age, the member organisations of the P&D Network realize their goals within the field of social corporate responsibility, and are able to share the lessons learned. Goals of the P&D Network for the period of 2011 -2015: 1. The main objective of the P&D Network in the coming five years is to provide a total of one million people (primarily young and/or female members of MFIs), living in emerging economies, the opportunity to participate in a (micro) pension provision through the local partner organisations of the P&D Network4. 2. Through financial training and education, organized by the above mentioned local partner organisations of the P&D Network, another one million people will be made aware of the possibilities of (micro) pension and long term savings provisions. 3. In order to achieve this objective, the P&D Network will realize a number of 15 long term and short term 25 new cooperations with partner organisations in emerging economies. In order to realize the goals set-up for the period of 2011 – 2015, the P&D Network would require, during this period: •
In order to finance the execution of the different projects, and the personnel needed for this execution, a steady growth in finance opportunities is needed (elaborated in Annex 4, ‘5 years Budget P&D Network’).
4 The number of potential micro pension provision participants is set-out per local partner organisation in 1.2 ‘Track record’.
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•
A growth in projects entails a growth in responsibilities. An analysis of the competences needed for this growth should determine if, and how many, new staff should be hired.
•
A growth in projects requires a growth in project team members. More organisations / volunteers from the Dutch financial sector would need to join the P&D Network.
•
A growth in projects requires a new division of tasks and responsibilities within the P&D Network.
2.2 Vision Sustainable and robust pension schemes are, in the view of the Pension & Development Network, the only structural response to the consequences of global ageing, for they allow people to build an independent financial position. In order to develop this innovative solution, it is important that people are socially and economically self-reliant, aware of their rights and have access to financial products. The extensive experience with creating pension provisions in the Netherlands is valuable support and inspiration in this process. By developing sustainable pension schemes the right conditions for ageing people are created, which allows them to live in a socially and economically self-reliant way. MFIs are crucial actors to improve the access of poor and informal sector workers to financial services such as micro pensions, long term saving and insurance products for old age, and as such crucial in reducing future old age poverty. By conjoining the solid and robust knowledge base of the Dutch pension branch to the growing world of micro finance and MFIs, the P&D Network provides social consultancy for the development and implementation of micro pension solutions. Initially, the members of the P&D Network provide the technical assistance MFIs need for setting up (micro) pension products. The P&D Network office functions as the broker between member organisations in the Netherlands and partner organisations in the transition countries (see 4.3 for the description of the specific tasks of the P&D Network office). The P&D Network provides MFIs with the framework needed for the development and implementation of the micro pension product. 2.3 Mission & implementation The Pension & Development Network stands for effective and professional cooperation between member organisations in the Netherlands and local partner organisations in transition countries. Its mission is to provide coherent and demand-driven support to enhance the capacity of MFIs in developing long term saving and insurance products for old age within the context of poverty reduction.
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In order to implement its mission, the P&D Network will accelerate its activities in the following three fundaments: 1. Concept Development knowledge management & (pension) product development 2. Programme Development – research, feasibility & monitoring impact & implementing (pension) programmes 3. Network Development – education and training of microfinance clients interested to save for their old age pension, implementing partner organisations, donors, academic institutions, government bodies and financial institutions. The P&D Network office is responsible for the acceleration of the three fundaments. On a day to day basis, the P&D Network office assists partner organisation in carrying out the micro pension programme in an effective and efficient way. The office also attracts donor organisations and links them to partner organisations, and it links financial institutions in the Netherlands to partner organisations in order to achieve sustainable relationships that build complete micro pension product. 2.4 Multi pillar pension system In terms of offering support in the development of pension schemes and income provision for older people in developing countries, the World Bank (2005) concludes that financial security for the old would be better served if governments developed a multi pillar pension system for old age security. A multi pillar pension system should consist of some combination of five basic elements (Holzman, Hinz, 2005)5: 0. A non-contributory or basic pillar to deal more explicitly with the poverty objective and provides a minimal level of protection. 1. A contributory system that is linked to varying degrees to earnings and seeks to replace some portion of income; a mandated, unfunded, and publicly managed defined benefit system. 2. A mandatory system that is essentially an individual savings account; a mandated, funded, and privately managed defined contribution scheme. 3. Voluntary retirement savings that can take many forms (individual, employer sponsored, defined benefit, defined contribution). 4. A nonfinancial pillar to include the broader contact of social policy, such as informal intra family or intergenerational sources, access to health care and housing. Family support continues to play an important role in all societies. However, due to demographic transitions, people more and more depend on nonfamily sources of income in their old age. Besides informal sources, the zero and first pillar are most important for the lifetime poor. The lifetime poor, but especially the informal sector workers, also benefit from voluntary occupational or personal pension plans (third pillar). Only formal sector workers benefit from mandated public pension plans and mandated occupational or personal pension plans (Holzman, Hintz, 2005).
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Robert Holzmann and Richard Hinz, WorldBank, Old Age Income Support in the 21st Century, An International Perspective on Pension Systems and Reform, 2005
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Zero pillar pensions, or ‘social pensions’ are generally defined as state provided noncontributory regular cash transfers to older citizens, given at a specific age. Social pensions reduce poverty of older people and their dependents and increase people’s status, security and access to services (HelpAge International, 2006). Regular social pensions that are delivered by the state contribute to improved relations between citizen and state. This is extremely important for social cohesion and economic growth. As a partner of HelpAge International, WorldGranny is involved in the development of social pension systems in development countries. Older people today who have never been able to save for their old age are the most helped by a solid social pensions. Social pensions are generally defined as state provided non-contributory regular cash transfers to older citizens, given at specific ages at different countries. Social pensions reduce poverty of older people and their dependents and increase people’s status, security and access to services (HelpAge International, 2006)6. Regular social pensions that are delivered by the state contribute to improved relations between citizens and the state, which forms an important factor for social cohesion and economic growth, and ultimately for governance.7 This the Dutch can relate to, having experienced the introduction of the Dutch social pension scheme (AOW) about halve a century ago. Each of these pension pillars is characterized by its own particular type of risk, whether it is a political risk (zero pillar), a monetary risk or a fiscal risk. A system that incorporates all pillars is, due to risk diversification, more sustainable, effective and efficient. However, in many developing countries the third pillar isn’t accessible for poor people working in the informal sector, although in many countries a huge proportion of the labor force is working in the informal sector. For these people there are hardly any formal arrangements that allow them to save for their old age. 2.5 Third pillar: saving of the poor In the development economics literature, a debate is advancing on savings behavior of the poor (see e.g. Bhaduri, 1973, Basu, 1997, Deaton, 1992, Morduch, 2009, and Karlan 2010). This debate has an impact on the options for establishing micro-pensions. Several authors, for instance, argue that the demand for long-term low-frequency saving, and hence implicitly formal longevity insurance is low, since households in developing countries are still multigenerational units and since retirement periods tend to be short due to lower mortality rates of the poor (Armendariz de Aghion & Morduch, 2005). Other researchers (Dowla & Baru 2006, Banerjee & Duflo 2009)8 show that the poor can save. And moreover, feasibility studies show that poor people are very interested in participating in pension schemes. However, if they start participating in pension schemes and saving options on long-term basis, they cannot bear the risks of the unpredictable capital market. Consequently, some form of Defined Benefit or a cap (guarantee) should be maintained (Ivanova, 2010). 6
Why social pensions are needed now, HelpAge International, 2006. K. Hagen, The Old Age Pension in Lesotho, an examination of the Institutional Impact, WorldGranny 2007 8 Abhijit V. Banerjee, Esther Duflo, The Economic Lives of the Poor, Journal of Econonomic Perspective, 2009, Massachusetts Institute of Technology, Cambridge, Massachusetts. 7
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Many government, microfinance and private sector organisations and NGOs are now thinking of ways to co-operate in order to reform the contemporary pension systems and include poor people in voluntary savings. Therefore, the developments in the area of social protection and contacts with partner organisations of WorldGranny and HelpAge International are significant to the P&D Network. To support older people in developing countries in getting access to their social pension, if available, the partner organisations of HelpAge International are essential in lobbying and negotiating with local and national government organisations. The second and third pillar are, independent of government involvement, initiated to provide a pension scheme for individuals. The Pension & Development Network can support the development and implementation of third pillar pension systems, based on local needs and demands. Cooperation with local organisations in developing for example databases, infrastructure, supervision, software, etc. is crucial. Finally, it is important that systems are designed for people who do not have time to build a full pension (age 40 years and older) so that they can be helped by a supplement to their retirement savings. This will also be a trust building factor, promoting the scheme to new and younger members. In the absence of a social pension, the Pension & Development Network can, through partner organisations of HelpAge International and World Granny, contribute to the lobby for the development of social pension systems in collaboration with local government organisations. In addition, the P&D Network could contribute to the pension of present older people by raising (international) funds.
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3. Partner organisations P&D Network 3.1 Introduction The P&D Network strives to build bridges between financial and pension experts in the Netherlands, and micro finance organisations in emerging economies, who are interested in developing long term savings and micro pension products. There exists both an international market of partner organisations in emerging economies, and a national market in the Netherlands consisting of organisations that are interested in joining the P&D Network. Both markets need a specific approach in recruitment and binding in order to allow the P&D Network to function. The P&D Network offers local organisations: • Easy access to pension related knowledge, by organizing workshops and trainings; • Support with the development and implementation of micro pension provisions, by providing technical assistance; • Opportunities for cooperation with parties in the Netherlands. The P&D Network requires in return: • The sharing of knowledge and expertise: to update the P&D Network on the partner organisation’s country specific developments regarding savings and (micro)pension schemes and facilities; • To demonstrate that the partner organisation’s need for knowledge of pension systems benefits its own innovation and development. Parties approaching the P&D Network for assistance should not do so out of financial gain or pure commercial reasons; • The ability to take responsibility for projects. 3.2 Vision country focus The partner organisation’s homeland financial infrastructure plays a major role in the decision on cooperation between the P&D Network and the specific partner organisation. The partner organisation’s homeland should: • preferably have set-up a social pension scheme. A (working) social pension scheme implies a developed financial infrastructure exists and a guarantee for the distribution of income to older people; • actively regulates and supervises the execution of existing pension schemes, through a separate authority. 3.3 Criteria partner organisations The P&D Network makes a distinction between offering long term support and short term support. Options for support of the P&D Network are: 1. Long term support: Micro pension framework development 2. Long term support: Adoption of micro pension provision/project (including fundraising) 3. Short term support: In-house consultant assignments 4. Short term support: Workshop/training
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To determine if potential partner organisations are eligible for support, the P&D Network has established specific criteria to which these organisations should adhere to. These criteria are that an organisation should have: • at least 100,000 clients, • a banking license, or is able to collaborate with other organisation(s) to collect savings and investment funds, • sufficient ICT and software capacity, • adequate skilled staff (a minimum of 1 fte to direct the micro pension project), • the ability to conduct a baseline survey and feasibility study (using the standardized questionnaires of the P&D Network) and to analyze the results (in collaboration with the P&D Network), • a stable financial position, • the potential and expertise to develop a new financial product, • the capacity to handle the administration and distribution of a micro pension product, • the possibility to "upscale" the micro pension product after the initial pilot phase. MFIs that do not match these criteria will be eligible for support from the P&D Network in short questions, training or workshop or questions regarding specific knowledge. However, these organisations are not eligible for long term support. 3.4 Assessment When the P&D Network office receives a project request, the first step is to analyze the project application and together more information about the organisation, country opportunities, regulations and existing pension schemes. A questionnaire is send to the potential partner organisation to check if the organisation is eligible for long term support. After the first initial phase of information gathering, including a due diligence research, the project request is submitted to the Steering Committee. The Steering Committee decides if a project plan will be designed, if and in what stadium a project group will be formed. The Steering Committee decides if: A. an exploration of the problem is required. If so, the P&D Network office sends an explanatory mission to review the potential partner organisation and eventually design a project plan. B. the application is complete and the project plan is feasible. The P&D Network office then forms a project group and selects the project group leader. The project group leader commits to the project plan with which he/she indicates to be responsible for that project, including the project budget related to P&D Network supporting activities and costs of technical missions.
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3.5 Project groups Any request for assistance received by the P&D Network is treated according to the nature of the request. Short questions, questions regarding the knowledge centre and requests for workshops or trainings are answered immediately. Questions regarding long-term support are first analyzed by the Programme Manager of the P&D Network, and shared with the Steering Committee. It is important for the Steering Committee to have a clear view on the topics that organisations in emerging economies requests assistance from the P&D Network for. When the Steering Committee decides that the request viable for assistance, a project group is set up.
Box 1. RIMANSI RIMANSI is a network organisation of MBAs in the Philippines, Vietnam, Indonesia and Cambodia. Together with the P&D Network, RIMANSI will develop a micro pension product for their MBA partner organisations. Leo den Hartog, consultant pension solutions, Robert Lensink, professor at the University of Groningen and Iwan Schafthuizen, working for ORTEC Finance, will form the Project Group RIMANSI and will support the development of the micro pension product. RIMANSI will start with a market research and will draw a business plan. The P&D Network will support RIMANSI in doing research and giving advice ininvestments, product design, etc.
Each project group is led by a project group leader and staffed with the programme manager of the P&D Network office and members of the P&D Network, according to the expertise that is needed to successfully execute the specific request. The project group leader guards the progress & time line of the project and informs the Steering Committee. After a project is finished, the project group is dismantled. The project group is responsible for the adequate support to the local partner organisation. The project group leader should: • Understand the process of designing and implementing a micro pension provision and be able to coordinate this process; • Have sufficient time to delve deeper into the backgrounds of the partner organisations and the existing pension schemes in the country, and together with team members implement the project plan; • Be capable of guiding the process, informing the Steering Committee about the progress and seek cooperation and support from the P&D Network office where necessary. Together with the programme manager of the P&D Network office, the project group is formed with P&D Network members. Tasks of the project group include: • Preparation and execution of technical missions; • Providing training to the local partner organisation; • Act as P&D Network ambassadors to other organisations; • Preparation of the project plan in collaboration with partner organisations; • Contribution to the development of the pension product and model, and the monitoring and evaluation of this product; • Inform the Steering Committee about progress on specific projects. Vacancies for project group leaders and project members regarding new projects will be communicated in the newsletter of the P&D Network and on the P&D Network website.
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3.6 Long term support 3.6.1 Framework development The project group consists of the project group leader, the programme manager from the P&D Network office and one or more members of the organisations participating in the P&D Network. The project group guides the execution of the baseline survey and feasibility study and supports the local organisation in developing the micro pension product and pension model. After this phase the micro pension framework is completed and the support of the P&D Network is finalized (For the complete procedure statement and action plan we refer to Annex 2).
Box 2. REDCAMIF Central America The Central American Network of Microfinance, REDCAMIF, is geared towards promoting the industry of microfinance and its impact in the economic and social development of the Central American region. Based on studies and analysis a project pilot is planned of micro pensions in three countries. This project pilot will be executed trough 10 Micro Finance Institutions associated to the national networks, in Guatemala, Honduras and Nicaragua. The plan of micro pensions that sets out is a “hybrid plan�, that consists of a basic plan (defined benefit life of 1% of the income by every year on watch) and an additional plan (defined contribution of 2% of the income destined to an individual account). The micro pension project is financed by the Inter American Development Bank and implemented by REDCAMIF with the Technical assistance of the P&D Network. As a first step recommendations have been given on the IT-requirements for the administration of the micro pension programme.
3.6.2 Adoption When the micro pension framework becomes a solid construction, meaning that the first phases of the feasibility study are finalized and a preliminary pension model is developed, it could be more efficient to continue the project in a different way: the project could be adopted by one of the member organisations of the P&D Network. Box 3. DHAN Foundation in India One of the first projects of the P&D Network, the micro pension pilot of the DHAN Foundation in India, is adopted by one of the member organisations of the P&D Network. The micro pension project with the DHAN Foundation started in 2009, when the P&D Network and the DHAN Foundation together signed a Memorandum of Understanding and formed a Joint Working Group and a project group. The project group, consisting of members of the P&D Network, offered support in conducting a baseline survey and a feasibility study, negotiating with the fund manager and the development of a micro pension product, model and project plan. The project group still consists of experts from different organisations, however, one of the member organisations of the P&D Network took over the project management responsibilities in May 2010. In order to keep an active link to the P&D Network, the programme manager of the P&D Network office is one of the members of the project group.
The P&D Network aims to assists organisations in creating a framework or structure for a micro pension scheme. The P&D Network basically offers support until a sustainable and self providing business model is created. The next phase of the implementation of the micro pension provision, the actual investment of pension funds, is not necessarily a part of the ambitions of the P&D Network and can be executed. However, it is feasible that within the next five years a P&D Network investment fund is created, from which the up
scaling of micro pension programmes can be funded. As the P&D Network is responsible for the building of the framework for micro pension provisions, in order to draw conclusions from the results of a project and implement these lessons in future projects, an intensive communication between the P&D Network
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office and the organisation adopting a specific project needs to be guaranteed. The results of the project will be communicated to the P&D Network members. 3.7 Short term support 3.7.1 Consultants - database In 2010 the database of the Box 4. Shepherd in India P&D Network consisted of The NGO SHEPHERD in India implemented a micro pension product in 2006. Its micro pension provision currently has around 5,100 more than 100 financial participants enrolled in it. The scheme is voluntary at the experts (mostly Dutch) who individual member level, and works on Defined Contribution (DC) are willing and able to use principles. As the organisation has some problems with the micro their knowledge and expertise pension product, a consultant of the P&D Network advised the organisation how to make the micro pension product financially to benefit partner sustainable. organisations in emerging economies. The P&D Network employs several consultants – including international consultants - to guide partner organisations in emerging economies and to give short term support related to financial products. 3.7.2 Training, workshop and presentations The P&D Network developed a (one week-) training in which organisations are educated about different pension schemes, product development, conditions and challenges of developing and implementing micro pension schemes. Workshops and presentations are given to local partner organisations, regional network organisations or at conferences, in order to inform about pension schemes, micro pensions and the P&D Network. 3.8 Responsibility P&D Network and its local partners The P&D Network is responsible for the development of a robust, reliable and sustainable micro pension product/model frame and structure. The P&D Network supports in research and development of the product, but is not responsible for the sustainability of the micro pension product in long term. As the network provides technical advice, knowledge and experience of pension schemes, the local partner organisation holds the final responsibility for the product and its implementation.
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4. Members of the P&D Network 4.1 Introduction Companies and organisations in the Netherlands concerned with various aspects of pension facilities, such as administration and distribution, actuarial knowledge, governance and control, taxation, etc, share their knowledge and expertise within the framework of the P&D Network. The Dutch organisations that are or will be member of the P&D Network are all organisations involved in pension issues and solutions. Through the Steering Committee members, the advisory council, relations and database volunteers of the P&D Network, new members will join the Pension & Development Network. The network consist of Dutch pension funds, pension providers, insurers, consultants, government institutions, asset managers, representatives of employers and employees, banks, regulators, interest groups etc. The Pension & Development Network is a network organisation. The organisations -as mentioned above- are the members of the P&D Network (please see Annex 1. Organisational Chart and paragraph 4.2). The P&D Network offers member organisations in the Netherlands: • To load their company brand with a positive Corporate Social Responsibility image in the Netherlands and in international gremia; • The development of Human Resources and talent & high potential management through participation in micro pension projects; • Networking opportunities within branch organisations in the Netherlands and with international organisations; • The possibility to initiate partnerships with organisations in emerging economies; • Logo display at the website of the P&D Network (www.pensiondevelopment.org) The P&D Network requires of organisations in the Netherlands: • To adhere to the mission, vision and objectives of Pension & Development Network; • Sharing of knowledge and expertise, and the willingness and ability to link their expertise in the field of pensions to the growing need for institutionalized old age prevention in emerging economies; • To provide time and resources to the development of projects of the P&D Network; • The ability to take responsibility for the projects of the P&D Network; • Receptiveness towards knowledge originating from emerging economies, in order to learn from innovation and development. 4.2 Members All participating Dutch (financial) organisations are members of the P&D Network. The members will be engaged in setting the overall strategic direction of the P&D Network, by consultation and member satisfaction surveys or otherwise.
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Membership of the P&D Network implies commitment to the objective, vision, and mission, and confirmation with the governance and organisational structure of the P&D Network, as well as the P&D Network strategic plan 2011 – 2015. Other criteria for participation are a (worldwide) network of pension and financial organisations and willingness to contribute to the network financially. The P&D Network members engagement includes: • Long term strategic plan and budget in cooperation with the P&D Network office; • Year plan and budget; • Representing the members of the P&D Network and communicating the activities of the P&D Network to the own organisation. 4.3 P&D Network Management and office The WorldGranny Board is responsible for appointing and termination of the management of the P&D Network (formally called ‘Steering Committee’). The management of the P&D Network is responsible for day-to-day management of the P&D Network office and supervision of the projects and the activities that take place within the projects. The role of the P&D Network office is that of a knowledge provider and service broker. In everyday practice, the P&D Network office facilitates coordination, communication and cooperation between (potential) partner organisations and member organisations. The functions of the P&D Network office are: • Implementing the P&D Network policy and the strategic plan; • Informing and advising the Steering Committee; • Acting as an entry point for bringing together questions and answers • (independent broker); • Organizing activities (an annual seminar or conference and one • network meeting); • Communicating project results to the members of the P&D Network; • Providing a digital newsletter four times a year; • Developing the P&D Network website, including a knowledge centre and • an online community; • Managing the P&D Network database, broadcasting profiles and criteria; • Short and long term project monitoring; • Organizing conferences; • Organizing training/workshop/presentations. For the period 2011 – 2015, a total occupation of 3 fte (part time director, two program managers, part time assistant and one trainee) is foreseen in 2011 and, 5 fte by 2015 (director, three program managers, assistant and one trainee) is foreseen. 4.4 Board WorldGranny The P&D Network office is part of and located at WorldGranny. WorldGranny focuses on working with and for older people in emerging economies, in order to improve the quality of their lives and that of their relatives. In consultation with local organisations
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WorldGranny aims to find intergenerational solutions for longevity insurance of older people in Africa, Latin America and Asia, by supporting projects for the elderly and their communities in the areas of income, care, health and rights. WorldGranny has a CBF-Seal of approval (CBF-Keur), issued by the Central Bureau on Fundraising (CBF). WorldGranny is partner of HelpAge International, an international network of 70 organisations in 50 different countries. WorldGranny has given the UN consultative status with the Economic and Social Council of the Unites Nations, since June 2010. The Board of WorldGranny is responsible for the activities of WorldGranny and the P&D Network. The network is represented by one of the members in the Steering Committee. At the moment Prof. Guus Boender, non-Execcutive Director at Ortec Finance, is the representative of the network on behalf of the Board of WorldGranny. 4.5 Advisory Council Members of the Advisory Council of WorldGranny are mentioned at page 1. The director of the Dutch Central Bank Joanne Kellermann is special advisor to WorldGranny as far as it concerns the Pension & Development Network. In the coming 5 years the Advisory Council could be extended with national expats, lawyers and (inter)national experts.
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5. Activities 5.1 Introduction Between 2011 -2015 the Pension & Development Network will accelerate its activities based on the three strategic pillars: Concept development, Programme development & Network development. In 2015 the P&D Network will consist of: 1. An International Knowledge Centre on Micro Pensions (knowledge component) 2. A Technical Support Facility for Micro Pensions (financial component) The Technical Support Facility for Micro Pensions can be seen as a form of Development Finance, a public private partnership in which risks are taken that market partners are not (yet) willing to take. 5.2 Activities related to Concept Development The P&D Network aims to become an internationally recognized knowledge centre on micro pensions. Therefore, the P&D Network will: • • • • • •
Organize 1 seminar and 1 network event per year in order to deepen and broaden the concept, programme and network; Execute feasibility assessments & impact studies with each project that the P&D Network implements; Perform as speaker at 2 international conferences on micro finance per year; Organize 3 exposures to (inter)national media on a yearly basis; Perform its activities in cooperation with international organisations like ILO, World Bank, UNDP, EU, etc; Where possible, co-operate with relevant academic disciplines and universities when executing projects.
5.3 Implementing the Programme Development The main objective of the P&D Network in the coming five years is to provide a total of one million people (primarily young and/or female members of MFI’s), living in transition countries, the opportunity to participate in a (micro) pension provision through the local partner organisations of the P&D Network9. Through financial training and education, organized by the above mentioned local partner organisations of the P&D Network, another one million people will be made aware of the possibilities of (micro) pension and long term savings provisions.
9 The number of potential micro pension provision participants is set-out per local partner organisation in 2.1 ‘Track record’.
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To achieve this objective, the P&D Network intends to develop and implement micro pension products in cooperation with 40 different local partner organisations worldwide, over a period of five years time (2011 – 2015). These co-operations should result into: • 15 long term partnerships; providing assistance along the whole project trajectory. • 25 short term partnerships; only providing assistance in specific phases of the project trajectory. 5.4 Activities to expand the Network Development The P&D Network will increase its global network of partners to: • the Netherlands: from 7 partners to 50 partners in five years; • abroad: from 8 to 40 projects with local partners in five years. The global network on micro pensions consists of both traditional financial institutions, as well as MFIs, governments and international network organisations, which are interested in technical knowledge and experience regarding the development of micro pension schemes. 5.5 Marketing Through the website of the Pension & Development Network (www.pensiondevelopment.org), P&D Network Community (www.pensiondevelopmentcommunity.org), the newsletter of the P&D Network, events and meetings, the activities of the Pension & Development Network will be communicated to the members of the network, relations and people who are interested in the network. 5.6 Competitors The Pension & Development Network is a pioneer in the field of micro pensions. However, in the field of microfinance and micro insurance more national and international network organisations10 are formed, and it is likely that these organisations (will) involve micro pensions in their activities. As the Pension & Development Network is the only network organisation worldwide exclusively focusing on micro pensions, the P&D Network tries to be leading in gathering and spreading knowledge and expertise regarding developing and implementing micro pension products.
10 Microfinance Gateway, INAFI, Microfinance Network, Microfinance Centre , ICMIF, Micro Insurance Network, The Micro insurance Centre, MIAN, Group CSR Department Achmea, etc.
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6. Budget and financial sustainability The P&D Network should be able to sustain itself financially. Participating organisations in the P&D Network are expected to contribute financially (proportionally) to the P&D Network, as well as providing knowledge and expertise (proportionally). In order to be able to participate in the P&D Network, potential (Dutch) member organisations are requested to sponsor the P&D Network with a (basic) contribution. Participating organisations can then provide (financial) knowledge and expertise to a specific project (short term) or to a project group (long term). This ensures commitment of a participating organisation to the P&D Network and its objectives. See next page for 5 years budget.
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Budget P&D Network 2011 Income Government the Netherlands and abroad¹ International and national NGOs (incl. UN)² Private Foundations³ Members P&D Network⁴ In-kind contributions members P&D Network⁵
2012
150.000 100.000 100.000 60.000 250.000
200.000 150.000 200.000 80.000 350.000
2013
2014
2015
250.000 300.000 300.000 100.000 450.000
300.000 400.000 400.000 120.000 600.000
500.000 500.000 500.000 140.000 800.000
1.400.000
1.820.000
2.440.000
TOTAL CONTRIBUTIONS
660.000
980.000
Expenditures Programmes Contribution start product local partner org. Investment improving models Implement M&E framework Trainingen Impact studies In-kind expenses members P&D Network Travelling costs Support P&D Network office Total Programmes
100.000 50.000 2.000 4.000 10.000 90.000 27.000 37.000 320.000
170.000 100.000 5.000 7.000 12.000 120.000 42.000 45.000 501.000
330.000 150.000 10.000 15.000 20.000 150.000 55.000 52.000 782.000
440.000 200.000 15.000 30.000 30.000 200.000 68.000 60.000 1.043.000
630.000 250.000 20.000 50.000 50.000 270.000 90.000 68.000 1.428.000
Network Acquisition local partner organisations Acquisitie members P&D Network Optimalisation effectivity P&D Office Website, PR & Communication Annual conference In-kind expenses members P&D Network Support P&D Network office Total Network
15.000 7.000 8.000 5.000 5.000 90.000 37.000 167.000
25.000 10.000 12.000 7.000 5.000 120.000 45.000 224.000
30.000 12.000 15.000 9.000 7.000 150.000 52.000 275.000
35.000 15.000 17.000 12.000 7.000 200.000 60.000 346.000
40.000 20.000 22.000 15.000 10.000 265.000 68.000 440.000
Concept Expand and deepen identity P&D Network Present at international confereces Impact Asessment tools improvement In-kind expenses members P&D Network Support P&D Network office Total Concept
30.000 12.000 23.000 70.000 38.000 173.000
40.000 20.000 40.000 110.000 45.000 255.000
50.000 30.000 60.000 150.000 53.000 343.000
60.000 40.000 72.000 200.000 59.000 431.000
70.000 50.000 120.000 265.000 67.000 572.000
TOTAL COSTS
660.000
980.000
1.820.000
2.440.000
1.400.000
¹ Governments: The Netherlands Ministry of Foreign Affairs participated in the P&D Network from the start. From 2009 till 2012 the Ministry has supported the network with an annual amount of on average € 100.000,-. For 2011 and 2012 again an amount of € 100.000,- will be contributed. Furthermore the German GTZ has been interested in the subject of ageing & development and has been sponsoring HelpAge Germany substantially these last years. Since the P&D Network has been the sole actor in micro pensions, it is to be expected that the P&D Network can find financial support from GTZ, DFID, Danish Aid and maybe Norwegian Development Aid (NORAD). ² NGOs: In 2010 WorldGranny has been given the UN-advisory status. Therefore it has access to UN facilities. There has been cooperation with the ILO in 2010. The WorldBank and IMF are visited in 2010. International NGOs like Oxfam Novib and Action Aid International are involved in the development of microfinance and micro insurance programmes. ³ Private Foundations: Several capital funds such as Eureko Achmea Foundation, Liberty and SchumacherKramer Foundation have been contributing to WorldGranny’s programmes between 2007 – 2010. ⁴ Members: Until 2010 members of the P&D Network contributed € 40.000,- on average. It is expected to increase membership contribution in the coming five years by requesting a membership fee of € 5000,minimum and the ambition of including 10 participants annually (50 participants in 5 years time). ⁵ In-kind: The in kind sponsoring of the members of the P&D Network has been substantial from the very beginning. In-kind Contributions are an amount of time and expenses that members of the P&D Network contribute to the P&D Network, especially costs for advising local partner organisations in developing and implementing micro pension products. This includes time spent working on the P&D Network programmes, network or concept. The members do not contribute actual funds.
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Annex 1. Organisation chart
Membe rs
Board WorldGranny
Management Steering Com mittee
Office P& D Network
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Annex 2. Procedure Statement 1. Project request enters WorldGranny Pension & Development office, programme manager P&D Network. 2. Programme Manager analyses project request and proposes to Steering Committee of P&D Network. 3. Programme Manager gathers information to questions raised in the Steering Committee meeting and searches project group leader and technical expert(s) for project group. 4. Programme Manager conducts together with local organisation and project group a project plan. 5. Programme Manager searches technical assistance to form a project group; in the database of the P&D Network and in the (contacts of) the Steering Committee the experts to expand the project group will be searched.
1.New project request
Singular/ Short request
2.Analysis project request -P&D Network office, programme manager -
Training / workshop Link with University Knowledge sharing website
3. Propose to Steering Committee Long term project A. Information gathering programme manager
4. Draw up project group - programme manager & project group leaderB. project plan design and MoU together with local organisation
Database specialist
5. Expanding project group with technical expertise -Database members P&D NetworkC. Baseline survey & feasibility study D. Product en pension model dev. E. Monitoring F. Evaluation
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Action Plan partner organisations The Pension & Development Network supports organisations in developing micro pension schemes for poor people, working in the informal sector. The P&D Network and the partner organisations jointly develop the micro pension product according to these different phases: A. Information gathering (1 month) Skype/email/telephone/visit B. Project plan design (2 months) Field visit P&D Network, if necessary Signing of Memorandum of Understanding (MoU) Establish Joint Working Group C. Baseline survey and Feasibility study (6 months) D. Product and pension model development (3 months) Technical mission P&D Network Product development Product launch Training staff in execution pension product E. Monitoring (1 year) F. Evaluation pilot (after 3 years) Joint Working Group self assesment Fine tuning pension product Exit moments (as mentioned in MoU) After baseline survey and feasibility study After 3 years evaluation of pilot After 5 years
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