Unlocking pension fund savings for COVID-19 relief

June 1, 2020

By Sunil C. Sharma, PHB Development

As of the end of May 2020, there are still no cases of COVID-19 in the Pacific nation of Solomon Islands. Yet, public health measures introduced by the government to protect the population had an economic impact that would threaten the social security of thousands of Solomon Islanders. Providing tools for people’s long term safety is one of the mandates of the Solomon Islands National Provident Fund (SINPF). As a part of this mandate they established a pension scheme, called youSave, in 2017 designed to help informal workers to voluntarily save money into a superannuation fund to cope with future economic shocks. This project was achieved with the support of the Pacific Financial Inclusion Programme (PFIP).

In October 2019, SINPF added a new way of saving anywhere, anytime, named youSave LoMobile. Members can make payments into their youSave pension accounts, check their balance and make deposits using mobile airtime top-up credit. The system uses USSD and SMS technology. PFIP provided technical support during the development of youSave LoMobile, with technical assistance from PHB Development. When the COVID-19 crisis happened they realized they could leverage this infrastructure to provide relief to members of the formal sector, who were experiencing a loss of jobs and income.

On 25th March 2020, the government of Solomon Islands announced several emergency measures to mitigate the adverse economic effects of COVID-19 in the country. One such action identified the region covering Honiara, the capital city, and its surrounding areas as an emergency zone. Many non-essential and temporary workers found themselves without work and were repatriated to provinces. The National Provident Fund rules were amended to allow the laid-off workers to dip into their superannuation funds to cover their living expenses during this time. The initial estimate suggested more than 20,000 SINPF members would need fast access to funds during the emergency measures.

This meant that SINPF needed to find a solution and scale it fast. They had to find a way to process applications, verify the status of the members, and organize the release of the funds within a few days. Some 65% of the recipients were unbanked; this meant securing adequate cash and organizing the logistics of cash payments while adhering to social distancing were added difficulties. As Sanjay Shah of PHB Development emphasized, “the problem in this situation wasn’t technology, it was the logistics of reaching the ‘last mile’”.

SINPF approached PFIP with a request to help them find a way to overcome these challenges. Through PFIP, the team was able to draw on UNCDF’s experience designing cash transfer systems after the Nepal earthquake in 2015 to map out a technical and operational solution in only 48 hours. A key learning from previous experience was to use existing tools at hand. The team quickly identified that the recently launched airtime savings system could be put to use. A rapid prototype was conceived and put into action with help from bmobile and Telekom, the MNO partners for this project.

A slew of processes to receive applications from the affected members, verify their identity and eligibility and calculate the payout sums were designed in tandem – all geared towards making the payout as organized as possible. Recipients were advised via SMS of a time and location to pick up their payments if they were unbanked, or notified when deposits had been made into their bank accounts if banked. The payout locations were strictly managed according to social distancing guidelines.

By May 14, 2020, a month after the project launched, 12,869 SINPF members from the formal sector had received payouts amounting SBD$63 million from three cashout locations and through bank transfers. Many of those payments were processed in less than 30 seconds per transaction.

Michael Wate, CEO of the SINPF suggested during a recent webinar held by PFIP that other organizations seeking to replicate the project’s success should keep it simple on the customer-facing frontend while developing rigorous processes at the backend. By leveraging existing digital solutions, working with engaged partners, and concentrating on the logistical challenges rather than the technology SINPF were able to help many of their members quickly in a time of dire need.

To watch the recent webinar on this topic please click here.