• WhatsApp is on its way to rolling out micro-pension products for the Indian masses
• In spite of a robust fintech ecosystem, no startup has attempted to cater to an underserved Indian market
• WhatsApp could be facing tough challenges as the low-income population lacks financial awareness and the habit of saving

When messaging giant WhatsApp announced its foray into micro-pension products in December 2020, it turned out to be a first-of-its-kind initiative in the Indian fintech space. This is surprising, given the massive depth and reach of the sector. India has 2,000+ fintech startups, and they collectively raised more than $2.1 Bn in 2020, the year of the pandemic, which resulted in an unprecedented slowdown.

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Moreover, the requirement is already here. From a young demographic in its late 20s in 2019, the Indian population will comprise 20% senior citizens by 2050. Add to that poor financial literacy and a not-so-inclusive annuity market, and the reality looks grim enough. So, what has kept Indian startups away when it comes to exploring the micro-pension space?

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Before we look at WhatsApp’s plans, a quick look at the pension market components will not be out of context here. Pension schemes are financial tools which provide old-age income security, all the more essential now due to long life expectancy and fast-shrinking intergenerational support. They generally offer monthly payments made on the superannuation after a person retires from his/her regular job. Organised pension plans in India are primarily led by the Employees Provident Fund Organisation (EPFO) and Seamen’s Provident Fund Organisation (SPFO), where a portion of an employee’s salary is structurally invested for post-retirement purposes.

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In contrast, micro-pension schemes are voluntary, individual plans focussed on the informal sector or low-income workers, and enable voluntary savings to be accumulated over a long period. These could also be hybrid products (a cross between pension and saving schemes), but do not have plan sponsors.

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