Micro Pensions for Retirement Resilience

Ghana’s pension system allows for the informal sector to voluntarily save towards their pension, however there is a gap in the provision of financial services with about 85% of this sector not served by incumbent pension funds. The reasons include an irregular income, mostly self-employed, largely unorganised and challenging to reach. Consequently, they remain underserved and susceptible to old age poverty.

Our goal is to address these exclusion factors by developing innovative pension products that utilise USSD technology to provide secured accessibility even without internet connectivity and strategic collaborations that exposes large subscriber bases to pensions. 

Modernisation has undermined the historical role of families taking care of the elderly. PPT solutions ensure retirement income security for the vulnerable. We leverage technology by moving from high touch to digital to increase self-reliance for at least 5 million informal sector workers in 10 countries by 2027. 

Ghana has a sub-optimal social protection system; its inadequacy is due primarily to the weak information system that is unable to support the informal sector. COVID-19 has amplified these weaknesses, and the pension system needs to become more inclusive. A gap exists with the provision of financial services whereby 85%  of the population is not served by incumbent pension funds. Some of the drivers for this disparity include financial literacy, gender barriers and irregular income.

Private pension funds do not have appropriate business models to reach the underserved and do not provide adequate returns and access to make long term-saving attractive and provide the necessary resilience to avoid old-age poverty.

A key challenge in designing an informal sector pension scheme is reaching geographically dispersed populations.  Our business model is based on addressing the main factors for their exclusion by developing innovative, flexible, and digitally driven pension products. These include the use of USSD technology to improve accessibility even in no-internet areas, strategic collaborations that expose large subscriber bases to pensions and use of incentive system.

Our solution leverages on technology by transitioning from high touch to digital to increase self-reliance and financial security.

Our solution impacts workers across sectors in Ghana, but primarily, the informal sector. 

The industry consists of a wide range of micro, small and medium businesses, mostly made up of self-employed workers trying to earn a living from activities such as domestic work, trading or small-scale farming. Many of these workers do not join the informal economy by choice but to provide for their needs and that of their dependents. 

Considering the inequitable distribution of wealth and assets in Ghana coupled with the lack of inclusion, access, and usage of financial tools, we see an increase in the growth of the informal economy, given its low barriers to entry.

Our solution brings the informal economy into the financial inclusion fold, by affording previously excluded individuals’ access to an essential financial service like retirement planning and savings, and ultimately financial inclusion.

The breakdown of the family unit due to migration, coupled with the low educational level of the sector makes them vulnerable to old-age poverty.  Our solution uses basic technology to enable informal sector workers to save for their pension regardless of educational and financial literacy levels. 

Every contribution is credited partly to a retirement and a saving account to ensure that members can make a withdrawal to cater to their immediate needs while saving for their retirement. With an easy-to-use interface accessible from even analogue phones, members can save for their pension on all networks wherever they may be.

Considering the pension sphere in Ghana, PPT is the first to provide a digital financial inclusion solution with an interface that our members can access with low levels of literacy or numeracy. Using our USSD and Direct debit option, our members can save for their pension from all parts of the country, breaking distance barriers. Frequency and contribution amount are solely dependent on the member. Aside from contributing towards their retirement, a member can perform a host of tasks pertaining to their account, such as a request for a statement or initiating a withdrawal to attend to an urgent need.  

Our primary target group is financially underserved with needs, varying degrees of literacy and technological know-how. The other pensions trustees are heavily concentrated on the formal sector considering the ease of doing business with them; hence we currently have no direct competitors. Our solution in its initial stage undergoes research and tailored product design. 

Our product provides a multi-faceted solution where a member can conveniently save for their retirement without forfeiting today’s needs. Considering how family oriented the target group is, dependents, stated as beneficiaries to the scheme will receive 4x a member’s contribution plus interest when a member passes on, a unique life bonus feature embedded in our solution only in Ghana.

We have seen a YoY growth of more than 100% with an increase in the informal sector from a savings.  Our assets under management (AUM) has also more than doubled in the past 2 years.

Using our Direct Debit and Auto Debit payment options, members can commit to an attainable savings goal. Depending on the payment option selected, our system sends prompts at a frequency pre-selected by the member. Members can also perform a host of functions from the suite-like interface contributing to their retirement, requesting for a statement, or directly connecting with a support representative.

Due to the voluntary nature of the scheme, some members forget to make a payment towards their pension, highlighting the importance of digitising the payments. The digital payment route offers convenience as members can save from wherever they are from their mobile wallet, efficiently reducing overall cost with enhanced speed of transaction with increased transparency resulting in a drastic reduction of risks from handling cash. 

Our solution also creates an avenue for women to take charge of their future other than depending solely on their partners for financial coverage during retirement. We have noticed a 34% rise in digital payments by women as compared to cash payments. Women now have control over their finances, increasing their security and maximising their economic opportunities.

About 90% of the workforce in Sub-Saharan Africa have no access to pension products and thus no social security. In Ghana, this number makes up about 85% of the workforce and are in the informal sector. PPT started operations in 2016 as the first trustee to specifically target that sector due to the challenges in dealing with them, and on the conviction that they should be able to save towards their pension; delivered in a sustainable model through technology. 

As the World Bank reported (2019 Extending Pension Coverage to the Informal Sector in Africa) "One of the challenges in designing an informal sector pension scheme is reaching geographically dispersed populations." Citing that new thinking is required for contribution collections.

With a potential market of about 10 million in Ghana and 480 million in Sub-Saharan Africa, the opportunity exists for the use of tech and mobile money as it lowers the cost of distribution to this mass market by moving from high touch to digital. 

The critical focus of our solution is to ensure uptake and sustainability. Consistent engagement and education on pensions, financial literacy, and business improvement tips through our call Centre, SMSs, and field agents in various local languages ensures that this underserved population (i) understands the product; (ii) sees value in the service; and (iii) realizes the benefit

Our solution is:

• Flexible – which means participants can save any amount at any time as well as withdraw of up to 50% of nominal contributions six months after the initial contribution.
• Accessible - registration is possible via your mobile phone (USSD) whether one has access to the internet or not.
• Convenient - payments are made through Mobile Money, direct debit, auto-debit or field agents.
• Secure - confirmation for every payment via text messages.
• Incentive Driven A life insurance bonus which ensures beneficiaries of a deceased client receives up to 4 times the client's previous year's contribution in addition to the total contributions made and interest accrued

PPT currently has 42,000 participants with an average savings of 280 GHS and AUM of 3.7 million.

Social Security Act of 1965 is the first social protection program implemented in Ghana. It provides the basis for Pensions in Ghana. It is on this foundation that our company operates. Our solution seeks to provide income security for retirement, primarily for the workers in the informal sector. This sector is the primary beneficiary of social protection and service delivery systems in Ghana and the West African Region.

In Ghana, family structures support the men as the family heads and as such are primarily mandated to decide what happens to the family’s finances and avenues these funds can be invested in.  Our solution mainly integrates the women, and the youth as their exclusion will increase the risk of them sliding into lifelong poverty with all its negative aspects.

Since the demographics in West Africa are strikingly similar if not the same, we believe our solution can be replicated in other West African countries. The simplicity of our solution’s interphase makes it user-friendly irrespective of the user’s level of literacy and numeracy. Processes are initiated with simple numerical input. The scheme also allows the adjustment of payment sums to cater for inflation over time. 

Our solution runs on a clean, uncomplicated presentation worded in a simple, easy to use interphase devoid of unnecessary features. The design of the interphase though simple is both easy on and pleasing to the eye. Once a preferred option is selected, system response is received in a few seconds. 

Our solution can also be seamlessly accessed from any low-end mobile phone without internet. Most importantly, users can contact us at no cost to them.

We understand that the people most likely to benefit from social protection programs and delivery systems in Ghana, and by extension within the West African Region are people with very little to no formal education. The solution is designed to appeal to the sect and encourage payments towards their retirement. 

To complement our fintech solution, we also utilise graphical means of communication like thorough illustrative designs detailing steps to sign on to the product and how to use the solution to attain one’s retirement goals. Posters of the process and contact details are distributed to members to enable to them follow the procedure or contact us when faced with a challenge.

The solution provides Open APIs to allow integration with the vendor's system or any other system compliant with open standards. The solution can be integrated with little or no effort from the customer's end once the basic requirements needed are received at the vendor's end. Also, Reading and writing data files are easy hence improving data exchange and interchange.

All file types and data are protected against applications becoming obsolete thus a/the new application will either be able to use it or easily convert the data. We also allow multiple additions to the pre-existing system without difficulty making it easy to port information/applications across platforms.

Ghana offers limited access to 3G networks in the main cities such as Accra, Cape Coast and Kumasi, many people in remote parts of the country cannot access the internet seamlessly due to poor connectivity. The level of internet connectivity within an area is also highly dependent on one’s preferred service provider. In designing our solution, we ensured that all these barriers to remotely contributing towards one’s pension were taken into consideration. 

Our solution can be accessed from a low-end mobile phone without internet access. Irrespective of where a member is in the country, a contribution can be made towards their retirement. 

The literacy and numeracy level of users were also analysed in building the solution. The system requires basic information that is easily comprehensible. Members have access to a dedicated customer engagement unit to aid them with whatever challenges they face or provide any clarity they may require in a local language. 

Our solution uses a simple USSD interface that is easy to use and readily provides the required feedback. 

To sign on to our auto-debit payment option, a member: 

1. dials *789*111#; 
2. Selects option 5 to Set up Auto Debit; 
3. Keys in membership number; Select amount to pay; 
4. Indicates the preferred frequency of payment (daily, weekly, monthly); 
5. Enters PIN to confirm the transaction. 

A member will receive a text message to confirm the success of the process. We also use voice messaging options to reach members who may be blind or have low literacy levels.

In September 2016, we received our license to operate as a trustee and most importantly, as the first pension focused firm to specifically target the informal sector. We formally launched our operations in December 2016 and actively started bringing on board participants. 

As of June 19th, 2020, our solution has provided pension access to 42,950 individuals. Participants from underserved constituencies such as farmer groups, community-based organizations, market women and low-income earners form about 53.63% of this number. 33.74% of these numbers are active participants. 

In the next year, we hope to increase our membership to 60,000 with the active participation of 30% with 25% of them enrolled on our Auto Debit payment option which we envisage as the most practical way to scale up the business.

At this stage, we will have achieved our objective to ensure people do not end up in old-age poverty and would have adequately provided a sustainable solution to the effects of modernisation on mostly the informal sector by empowering them to be financially secured during retirement.

People’s Pension Trust’s impact is measured at the individual and economic level. At the former level, it affords the participant financial security and ensures dependents of participant have no need to financially support him/her. We believe this will, among others contribute significantly to the financial inclusion agenda for the underserved in the society.  

Economically, the growth in pension savings will lead to deeper capital markets, and therefore is thought to have a positive effect on economic growth. Ultimately, local investments like infrastructure, housing projects will benefit Ghanaian people.

The key challenges are to transcend from high touch to high tech. Ninety percent of contributions will be received digitally (via mobile money or bank account) maintaining trust amongst our customers and potential customers, especially in the wake of a recent banking sector clean-up which has affected trust levels in the financial system. We aim to provide financial security to our target audience by leveraging on technology and moving from high touch to digital. 

The introduction of tablets and fingerprint systems for sales agents, transactions through mobile (USSD), etc. have proven successful and will form the basis for the projected growth.

Our ambitions to scale reach includes increasing the customer base in Ghana to 150,000 people by 2025; unlocking long term savings of EUR 60 million in asset under management in Ghana; IT licensing and partnerships to increase self-reliance and financial security of some 4 million informal sector workers in 10 countries by 2027.

Covid-19 has adversely affected our business as it has disrupted our ability to reach out to members and prospects in-person. This has resulted in low savings and caused high default rates despite the digital options that have been made available. We anticipate a spill over into the next year because of the cash-first nature of the Ghanaian economy; affecting growth targets.

In the next five years, the cash-first nature of the economy will remain a barrier. Our ambition is to scale up by increasing uptake of digital; however, this growth is also partially determined by growth in mobile money subscriptions.

Fraud/Embezzlement-This act poses a great reputational risk by breaking trust and having a negative impact on the business. This is because most transactions are currently in cash, increasing the risk of fraud, human error, and higher costs per transaction.

Technology: - Inadequate processes, weak data integrity and audit processes and a lack of periodic review and monitoring of data is also inimical to the business.

Economic situation: This has a direct effect on participants and the organisation, as was evident in the 2019 financial sector clean-up, which affected significantly trust in financial services.

Funding: The revenue structure of Ghana’s pension system which gives trustees a percentage of the assets under management (AUM); between 1.33% and 1.49%, depending on the product, coupled with the capital intensive nature of the business model in the first few years until break-even point means 

Covid-19 Pandemic: We already have begun to deliver products, services, support and education remotely using mainly voice messaging and calls in the various local languages and embarked on an aggressive campaign to migrate our existing cash customers onto our digital platforms. Our messaging has been fashioned around the devastating impact of not having a financial cushion to incentivise savings. We have again reduced our withdrawal turnaround time from 72 hours to between 24 to 36 hours to ensure clients have money readily.

Cash-First Economy:  Addressing this challenge is primarily determined by growth in mobile subscriptions. In 2018, we partnered with Vodafone Ghana to launch a mobile-enabled pension product which provides pension access to their over 2 million subscribers. Following the significant success of that partnership, we are currently about 90% set to go-live with a similar product with the 2nd largest mobile operator to increase pension access. 

Fraud/Embezzlement: We have in place robust processes such as SMS notification after payment, periodic field audits, a quarterly statement that adequately address this and keep the trust, which is the most vital factor between our clients and us. 

Technology:  there is always also a periodic review of audit processes and rigorous monitoring of data. 

Economic situation/stability: there is constant monitoring of this, so adjustments are made accordingly.

Funding: Scaling up in terms of financing and finding the right partners for the scaling up from a financial and technical skills perspective.

People’s Pension Trust has 26 permanent staff, 3 of the staff working in the Regional offices namely Sunyani, Takoradi and Tamale and 2 are manning our manning our district offices in Suhum and Fanteakwa offices in the Eastern Region. 

We have 28 Contract Staff who are Sales Agents, 8 of them are working in the regional offices and the rest are working in the Head Office. We also have 3 national service personnel undertaking their 1-year mandatory service.

SAQIB NAZIR (CEO)

Saqib Nazir is a technology entrepreneur at the forefront of Fintech in Africa. Saqib is CEO of Emergent Technology, Africa – a payment platform that is making payments smarter, easier, and faster. He has rolled out various innovative products aimed at making technology locally relevant and using it to solve everyday problems.  He is currently the acting CEO of People’s Pension Trust Ghana.

KOFI EBA-MIEZAH POLLEY (CHIEF BUSINESS OFFICER)

Kofi Eba-Miezah Polley, has over a decade of diversified experience in varied Social Security Administration positions at Social Security and National Insurance Trust (SSNIT) and five years’ experience in the financial industry. He was also the General Manager at Universal Pension Master Trust where he built a focused mind-set specifically among staff.

ALPHONSE YAO ABOTSI (FINANCE MANAGER)

Alphonse Yao Abotsi is a qualified professional accountant (ACCA), an investment analyst (GSE) and a consultant with over ten years’ experience. As a consultant with Iako Consult, he engaged himself in internal and external audits, Accountancy, and taxation for private and governmental institutions.

YAA ASAMOAH-BOATENG (COMMUNICATIONS MANAGER)

Yaa Asamoah-Boateng is the Communications Manager of People’s Pension Trust. She has over six years combined experience in Journalism and Public Relations. Prior to joining Peoples Pension Trust, she was the Client Relations Manager, for El-D Consult, a Public Relations Agency where she designed and executed successful PR campaigns for a variety of clients.

With the collective experiences of the management team they are uniquely positioned to deliver the solution to the problem.

We are efficiently managed by the National Pension Regulatory Authority, the government agency in charge of pensions in Ghana. As a regulatory partner, they are mandated by law to standardise and monitor the operation of the 3-Tier Pension Scheme and ensure the effective administration of pensions in the country.

We partner Standard Chartered Bank, a bank in good standing in Ghana as the custodian bank. Funds are transferred on receipt to Databank Ghana Limited, the oldest and most reputable fund manager in Ghana for investment. This partnership ensures transparency between partners and allows for effective checks and monitoring to prevent the loss of member funds.

We also partner with Star Micro Insurance to provide members with a life insurance coverage. A member is eligible to benefit from this feature just by signing up to the product. The insurance package provides stated beneficiaries of a deceased member 4x the member’s previous year’s contribution.

As we work mainly with the informal sector, we have set up a personal pension scheme for informal sector workers, in collaboration with the Union of Informal Workers Association (UNIWA), the body for all informal sector unions.

We are affiliated to 2 major telcos in Ghana, Airtel -Tigo and Vodafone Ghana to provide pension for their subscribers. Subscribers can pay for their pension via the telco’s mobile money platforms. We are linked to AVAYA To enable our members engagement via phone. These collaborations are geared towards scaling up digital payments for the target group.

Our key target group is workers with little or no formal education. This group is usually neglected from financial inclusion programs due to the nature of their income, their literacy and numeracy levels amongst others. Many of these workers do not have bank accounts, access to loans or other forms of financing. 

Our product, a personal pension scheme provides financial security in retirement with a withdrawal window to allow members withdraw funds to attend to an urgent need. The product runs on a 50:50 model, where every contribution is credited to a savings account and a retirement account. Withdrawals can be made from the savings account 6 months after a member’s initial contribution.

A lump sum is paid to members on retirement, a member can purchase annuity to ensure a steady flow of income. Members of the scheme get financial coverage now and, in the future, when they retire. A life insurance package is also embedded in the scheme as financial cushioning for the beneficiaries of a deceased member.

The target group is  made up of farmers, traders, taxi drivers etc. sourced from periodic on-ground educational campaigns on pension held in the markets and lorry stations across the country. We work through unions to reach organized groups like farmers and workers associations.  

Our product fills the financial literacy gap between formal sector workers and workers in the informal sector providing financial security for workers in the future and giving them access to address their financial challenges. 

PPT charges a fee on assets under management (AUM). As the assets (savings + interest – withdrawals/pay-outs) grow over time, PPT’s revenue increases. PPT projects to break-even in 2026. AUM is unlikely to trend downwards post-break-even, and long-term profitability is projected.

Until 2026, PPT is funded through a combination of equity-like investments, grants, and TA. Our financiers include AHL Venture Partners, FSDA, the Dutch Ministry of Foreign Affairs, CGAP, Sorenson Impact Foundation. 

The management team has invested significantly as well. We are engaging with partners (including pension funds and governments) to fund our AUM (i.e. investing $10 million into our fund) to provide PPT with an alternative, innovative financial solution to increase revenues while providing financial and impact benefits to the investors.

In 2019 revenues for PPT, which was our management fee was USD 6,406.41 and in the first quarter of 2020 PPT had revenues of USD 3, 892.03

PPT has raised grants, TA facilities, project funding, and (convertible) debt with a wide range of governmental institutions, impact investors, NGOs, and private individuals. For detailed information on investment amounts and parties, please contact Peoples Pensions Holdings (Marijn.bergsma@peoplespensionholding.com)

PPT is seeking financial and strategic partners providing patient impact capital to support our mission and objectives. We expect to raise at least 12 - 18 months of runway by the end of 2020 and currently have soft commitment for around half of the amount needed.

We are raising 550k USD at least the first half of 2021. Towards the middle of next year, we would expect to raise 1 million USD, tranche over 2021 and 2022.

With a goal to making pensions accessible to about 500,000 informal Ghanaian workers by 2022 and over 4 million people in 8 to 10 countries by 2027, it is imperative to stay ahead of trends both locally and globally. Winning the prize presents us with that important opportunity to ensure that the underserved in the society do not end up in old-age poverty.

Pension Administration system: We will be able to build a robust IT infrastructure and that delivers real value to our members in terms of user interactivity, strong back-end services, ensure data integrity, provides quick turnaround time on requests, provides profound data insights that informs intervention design and development amongst others.

The ability to collaborate and contribute financially to marketing and promotion activities with various strategic partners means wider coverage and accessibility of the pension product even to the remotest parts of the country. 

The opportunity to also build mutually beneficial relationships and be part of a network spanning different continents will ensure the introduction of viable ideas and perspectives to grow the business. Scaling the business will also be well within reach with every pitch made to a potential investor.

These underserved, marginalised populations can be sustainably financially included through the efforts that PPT is passionately pursuing through this initiative. Winning this prize will help us meet our intended objectives and more importantly will be catalytic in demonstrating that sustainable business models can be implemented to reach this often-ignored part of society through innovative solutions.

Solution technology

Innovative applications that will improve communication and engagement with members as well as internal processes such as transaction processing, risk management and compliance.

Product/service distribution

Product delivery to enable us to reach a more diverse audience remotely in a cost effective manner.

Funding and revenue model

Funding is our biggest challenge as a pension entity. We generate revenue from a fee structure that will take years to break even. We will appreciate partnerships that will open us to potential investors. Our revenue model is predetermined by regulatory framework provided and supervised by the National Pension Regulatory Authority.

Marketing, media, and exposure

From our marketing campaign over the years, we have noticed that the informal sector is moved greatly by what they see and hear on the media. We hope to not only increase brand visibility but provide financial education on bridging the financial literacy gap between sectors. 

PPT leverages partnerships to increase outreach into the informal sector through distribution agreements as is evident in our partnership with Vodafone Ghana, AirtelTigo, UNIWA of TUC (the biggest trade union organization in Ghana), ASSI among others.  As a strategy that has proven successful overtime, we expect to initiate and, in some cases, firm up discussions with some of the under listed organizations.

Financial Institutions/Banks:  We are in talks with GCB, the largest commercial bank in Ghana to introduce the scheme to their over XXX members through digital platforms such as their mobile money service as well as through their branch networks and agents. Through joint marketing and promotion of the product, we expect wide-reaching exposure and accessibility of the product. Banks like Access Bank and SG-SSB Ghana’s subsidiary, YUP are also partners we are working with.

Savings and Loan Companies:  Access to loan facilities for our members means they can expand their businesses whilst still saving for their pension. The withdrawal component of their pension savings can be used as collateral for the loan facilities ensuring that they repay the loans whilst building up their funds.

App and Technology Developers: To using technology as a means to scale up, these partnerships will enable us develop simple applications that will enable us educate members on pensions, savings, business growth, etc through video stories, voice messaging, games etc.

Funding agencies: Access to grants and patient capital will also enable us use rewards, incentives, top-ups, matchups, and other nudge techniques to encourage savings.