ACH solution improves payments for Honduran pension fund

Injupemp streamlines check operations, improving efficiency and control and reducing fraud

The challenge

Injupemp (Instituto de Jubilaciones y Pensiones de Empleados Publicos) is the Honduran pension institute for public employees. It is the single largest pension fund in Honduras with over 60,000 affiliates. In addition to paying public sector pensions, Injupemp also offers credit to retirees at special rates. The processes associated with loan disbursement were manual and time-consuming with executives required to sign each check. Disbursement was inconvenient for beneficiaries who incurred expenses traveling to Injupemp's headquarters in the Honduran capital, Tegucigalpa, to receive disbursement checks and then often had a lengthy wait for check signing. Injupemp wanted to disburse loans more effectively and quickly to improve both its efficiency and its service to retirees.

The solution

Over the past five years, across two government administrations, Citi has deepened its relationship with Injupemp and has worked to win support for improvements to the disbursement process from administration, audit, quality, legal, technology and other departments. Citi proposed that Injupemp use CitiDirect Online Banking to make its disbursements and worked with Injupemp to develop an interface with its existing internal accounting system to ensure payments go through the required control, compliance and credit processes before being given final approval. Payments are routed via Honduras's ACH to beneficiaries' accounts at any ACH-connected bank and beneficiaries are automatically notified of payments.

The result

Citi's solution has enabled Injupemp to streamline its manual check operations and eliminated check signing. As a result, efficiency has been improved, control enhanced and fraud reduced. Loan disbursement is no longer an inconvenient and unpleasant experience for beneficiaries. The solution has enabled Injupemp to launch a new product called 'Credito Ya', which delivers loan approval and disbursements within a single day – an accomplishment that Injupemp has publicized in the local media.

The adoption of ACH payments by a public sector entity is a landmark development in Honduras where most payments are by cash and check. As such, Citi's solution has improved trust in electronic payments platforms, hugely increased ACH volumes – Injupemp makes 4,500 ACH payments a month – and helped to change the payments landscape in the country.