Papua New Guineans working in the informal sector want a simple, convenient and low-cost pension product to help them save for their old age.
This is one of the findings of a feasibility study undertaken by the UN’s Pacific Financial Inclusion Programme (PFIP) to determine whether it was possible to develop a micro-pension product that allows self-employed or informal sector individuals to accumulate savings for their old age in a secure, affordable and well-regulated environment.
The study was carried out by Consultancy firm pinBox solutions in partnership with NASFUND, using their ecosystem of customers and stakeholders.
The findings were presented to government ministries and departments, commercial banks, microbanks, insurance providers, telecommunication companies, mobile network operators and exporter organizations on Monday in Port Moresby to seek their inputs on ways to improve coverage of micro-pension in Papua New Guinea (PNG).
The study revealed that formal pension coverage in PNG is limited to less than 15 percent of the PNG workforce.
Like in most of the Pacific Island countries, non-salaried workers are left out of the mandatory (employer-led) superannuation in PNG.
The study also found that those that did have a voluntarily pension account were only saving for short-term goals and not for old age.
With increasing life expectancy up from 49 years in 1975 to 60 years currently, weakening support from extended family and the community, most Papua New Guineans will need to accumulate enough lifetime savings to last for at least 20 years to sustain them in old age.
The low level of awareness of concepts such as retirement and old age poverty combined with the lack of knowledge on product features of the NASFUND’s Eda Supa – voluntary pension account, has led to low uptake and usage of pension by Papua New Guineans working in the informal sector.