Creating a Pension to Fit the Needs of the Rural Poor
Pensions are, in a sense, a necessary by-product of a rich economy. But what will it take to sell the idea to the rural poor? Especially when their income (never particularly substantial) is seasonal, increasing at harvest time and with demand in the cities for construction-related labor. What are the inducements that can convince them to invest for a future forced upon them by the changing social structure?
Olivia S. Mitchell, a Wharton professor of business economics and public policy and executive director of the Pension Research Council, and Anita Mukherjee, a professor at the Wisconsin School of Business at the University of Wisconsin-Madison, set out to answer these questions in a research paper titled, “Assessing the Demand for Micropensions among India’s Poor.” They chose India as the subject country because it is an ideal setting to study the market for micropensions, or pension plans designed for low-income individuals; the country’s new pension system is designed to reach informal sector workers.
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