Piloting micropension in Vanuatu
Funded by the Governments of Australia and New Zealand and with technical support from the Pacific Financial Inclusion Programme (PFIP), a feasibility study was conducted in October 2018 to determine whether self-employed ni-Vanuatu can and are willing to contribute to a voluntary pension scheme.
Following positive responses, a small pilot project was launched in January 2019 using a similar model PFIP deployed in Solomon Islands. A dedicated team was set up by VNPF to create awareness on the trial product. Every day they travel around Efate Island visiting communities like Etil to sign up new voluntary members and to collect their contributions.
So far over 350 ni-Vanuatu around select centres in Efate Island have opened voluntary accounts; these include smallholder farmers, fishers, casual workers, market vendors, taxi and bus drivers and other informal sector workers. Interestingly, most of the accounts have been opened by women.
While the onboarding process for the pilot is very much a manual and labour-intensive exercise, VNPF has been able to prove that there is a clear demand for a micro pension product. When given access to financial services tailored to their needs, the ni-Vanuatu have shown to be recurring eager savers.
However, to effectively scale and market the new voluntary pension product, changes will need to be made to the VNPF platforms to improve the customer experience and reduce the operational costs to make it a financially sustainable product. Furthermore, the governing legislation of VNPF will need to be amended, as currently it does not recognize the informal sector. For that reason, the VNPF board has written a policy paper suggesting changes to be made to the VNPF Act to allow for the recognition of the informal sector. These amendments will be tabled in parliament later this year.
When all sectors of the economy are included in the financial system, most notably the informal sector, which makes up about 80 percent of the working population in Vanuatu, it creates a foundation for inclusive economic growth that in turn supports Vanuatu to achieve the Sustainable Development Goals (SDGs).
PFIP is jointly administered by the United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) and receives funding from the Governments of Australia, New Zealand and the European Union.