UTI Asset Management Company and Invest India Micro Pension Services on Wednesday announced plans to take the UTI retirement benefit pension fund, a government notified pension scheme, to members covered under the Basix group's programme for the poor.

Micro-pensions can play a key role in bridging India's pension coverage gap, UTI AMC's chairman and managing director U K Sinha told the media in Mumbai. "The new initiative would help offer retirement solutions to the working poor who have been excluded by formal pension and provident fund schemes," he said.

Under the plans, UTI and IIMPS, which is jointly promoted by Sewa Bank, UTI AMC and some individuals, have entered into a strategic partnership with Basix group, a leading institution engaged in the welfare of the poor, to offer the pension product to the members of the group.

Basix is a livelihood promotion institution that works with over 1.5 million poor, 90 per cent of whom are rural households and the rest urban slum dwellers. Basix works with over 100 NGOs and community-based microfinance institutions (MFIs) across the country.

Under this partnership, IIMPS will use its proprietary micro-pension model to deliver the benefits. In the current year, the plan targets about 700,000 working poor living in 10,000 villages spread over 12 states.

Most of them are women living in villages of Andhra Pradesh, Karnataka, Bihar, Orissa, Jharkhand, Maharashtra, Madhya Pradesh, Tamil Nadu, Rajasthan, Chhattisgarh, West Bengal, Delhi, Uttarakhand, Sikkim and Assam.

Sinha said that UTI Retirement Benefit Pension Fund is a balanced scheme with minimum of 60 per cent of the corpus invested in fixed income securities and the remaining 40 per cent in stock market. But it is the fund manager who takes a call about the quantum of investment in stock markets.

The micro-pension scheme would invest 23 per cent in equities and later it could be extended up to a maximum of 40 per cent. The remaining would be invested in government securities. It would have a zero entry load, and the expense would be incurred by the UTI AMC itself.

Presently, the corpus of the fund is about Rs600 crore, and 23 per cent of which invested in stocks.

IIMPS is jointly promoted by SEWA Bank, UTI AMC and leading pension and development sector experts to provide low-cost, secure and scalable mechanism to the working poor to save for their old age.