Pandemic accelerated the digitization of pension savings procedures: IDB

The Covid-19 pandemic accelerated the process of digitizing procedures that a worker enrolled in any retirement savings system could do. However, this digital change that was forced by circumstance is the conclusion reached in the ninth edition of the “Global Pensions Program”, prepared by the Inter-American Development Bank (IDB).

“How to ensure that the procedures are carried out well? What was done was to bring the face-to-face to online (…) In this transformation, it is necessary to think about what is the requirement that the beneficiaries need. In other words, digitize what citizens need ”, commented Alejandro Barros, international consultant on Public Policies for Digital Development, and academic at the University of Chile.

In the case of Mexico, the National Commission of the Retirement Savings System (Consar) implemented partial withdrawals for unemployment and marriage through the Afore Móvil application as a consequence of the measures to combat coronavirus infections since previously the saver He had to go to the Afores office in person to complete the procedure.

Similarly, in Mexico a worker can change afore via “Traspaso Móvil” (belonging to Afore Móvil) and thus reduce paperwork, time and even costs.

However, to access these rights, the worker must have their Electronic Identification File (biometric data). Given which, of the more than 70 million accounts registered in the Retirement Savings System (SAR), 27 million (approximately) have their digital file.

Meanwhile, in 2020 there were more than 5.6 million downloads of the Afore Móvil application, according to information from Consar.

The Chilean professor said that in most Latin American and Caribbean countries, if an interested party processes their pension application it is very complicated, since they ask for many documents, which makes it a very bureaucratic procedure.

“(The States) are full of regulations regarding pension systems that look good on paper, but when they are implemented they are not the best way,” he said in the panel “The digitization of pensions: how do the pension systems with technology? ”.

Regulatory frameworks can lead to solutions

In parallel, Gautam Bhardwaj, co-founder and director of pinBox Solutions (a fintech that is dedicated to the digital inclusion of micropensions in Asia, Africa and Latin America and the Caribbean), commented that the existing regulatory frameworks are not necessarily bad.

“I feel that the aspect of the regulatory framework should not be an obstacle, I think it (even) can lead to a better one,” commented Bhardwaj.

In this sense, he explained that in some countries to open an account a tax identification is necessary, such as the RFC, but labor informality is a problem in low- and middle-income countries (such as Mexico).

“This excludes people who want to have savings for their pension. So many of the pension systems have been designed with people in the formal sector of the economy in mind. We omit to think of informal people who would be interested in saving, ”he commented.

Given this, he explained that in an African country a micro-pension system for informal workers was inaugurated and in less than two years 25% of these workers opened a retirement account.

Similarly, Nigeria and Uganda have just launched the project. Kenya plans to apply the same program. For its part, India has a national program for informal workers and saves for their micro-pensions.

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