SINPF – Voluntary Micropension Research & Pilot

SINPF logo

Country: Solomon Islands

Partner: Solomon Islands National Provident Fund

Date: September 2015 – June 2018

Grant: USD 176,820

Target: 200-500 clients

Current reach: 332


Need:

The 2012 Solomon Islands Financial Competency Survey highlighted the very pervasive reliance by low income households on family or community support during retirement. Most respondents in households who were currently working did not consider that the forms of retirement provision available to the household would be able to meet all household expenses when they were no longer working. While there is a prevalence of strong community support, increases in urbanization and changes in social structures erode these support mechanisms over time.

Similar to Fiji, the Solomon Islands National Provident Fund (SINPF) is the only fund available to collect compulsory contributions from employees and their employers to save for workers’ retirement. As at 30 June 2015, total membership stood at around 55,000 active accounts, of which only 460 are active voluntary members. According to the Solomon Islands census (2009), the total number of economically active workers is 169,107, indicating a strong scope to explore extending an appropriate voluntary micropension scheme.

Solution

PFIP is working with SINPF to research, explore and pilot improved voluntary micropension products targeted at economically active Solomon Islanders without pension schemes. The aim is to create appropriate, affordable and flexible micropension product offerings which better meet the needs of the target group to provide adequate funds for their retirement.

Methodology

In the first phase of the grant, PFIP supported SINPF to undertake field research to determine the needs of the target group with regard to saving for retirement. The research evaluated the demand for pensions, informing the design of product features and benefits, communication strategies and the overall operational framework of the pension scheme.

The research uncovered a widespread awareness of not being properly prepared for later life, with the majority focus group participants prepared to participate in a micropension scheme. The research found that over 70% of respondents expected to receive financial support from their families in old age, with only about 12% stating they would survive off their own savings.

In the second phase, a detailed validation and piloting framework for prototyping the voluntary pension product concept will be conducted. This will involve rapid prototyping to test client response to mobile payment interfaces (such as mobile apps) and other methods for making SINPF contributions, marketing messages and mediums and awareness raising around the need to save for old age.

As the study was done in parallel in Fiji, PFIP will adopt a uniform approach during the validation phase to establish a clear evidence-base for interest in old age pensions by the informal sector, financial viability as well as build a business case for both the National Provident Funds in the region.

About SINPF

The Solomon Islands National Provident Fund (SINPF) is the country’s largest financial institution established in the year 1976 under the SINPF Act, 1973. It is also the sole provider of superannuation benefits to the public in the Solomon Islands. Under the Act, SINPF is mandated to collect compulsory contributions from employees and their employers to save for workers’ retirement. The SINPF Act also provides for voluntary contributions from members who are not part of a formal employee-employer relationship to be accumulated as savings, with a view to providing such member’s superannuation benefits. Being the sole social security benefit provider in the Solomon Islands, SINPF has an important role in mobilizing people’s savings, building their assets through prudent investment management of the fund and providing good returns to members, thereby contributing to their financial well- being.

Website: http://www.sinpf.org.sb/