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Mumbai, April 29 UTI Asset Management Company on Wednesday announced a tie-up with a livelihood promotion institution to take the UTI Retirement Benefit Fund to a targeted 7,00,000 working poor.

UTI AMC is doing this in partnership with its own joint venture, Invest India Micro Pension Services, and with BASIX, which works with over 100 NGOs and community-based micro-finance institutions in the country, according to a joint statement by these entities.

Invest India Micro Pension Services is a partnership of UTI AMC, NGO SEWA and a handful of other individuals who are experts in the pension and development sector. It has created a proprietary micro-pension model to enable low-income workers in India access regulated retirement and insurance products in a low transaction cost environment.

The savings of low-income earners will be collected via this mechanism, and channelled into UTI Retirement Benefit Fund, a Government of India-notified pension scheme managed by UTI.

Mr U.K. Sinha, Chairman and Managing Director of UTI AMC, said at a news conference that Retirement Benefit Fund, which has assets under management of between Rs 500 crore and Rs 600 crore, has given an annualised return of 11.09 per cent since inception. Only Rs 3-4 crore of these assets consist of micro-pension contributions.

According to the fund’s mandate, a minimum 60 per cent of the assets must be invested in debt and up to 40 per cent in equity. Currently, the fund has invested 23 per cent of its assets in equity.

German development bank KfW has extended a financial grant to IIMPS for scaling up the transaction model from IIMPS. The grant will also be used to promote financial literacy among the poor.

IIMPS has enabled over 1,00,000 working poor to save through this method, said the statement.

According to a survey cited in the joint statement, 61 million workers of the 143 million workers earning less than Rs 36,000 a year are interested in saving for their old age and can afford a pension saving of Rs 3,300 a year. This itself can produce aggregate annual pension savings of Rs 20,000 crore.

More Stories on : Asset Management Companies | Pension Plans

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