Monthly allowances to new retirees to be cut

The government has decided to discontinue pension allowances to new retirees subject to 'double pensions'.

The Ministry of Finance made this in a circulation to all government agencies last week, which stated that under the policy to become effective in January 2025, new retirees subject to 'double pensions' will not receive their allowances, but will receive the basic retirement pensions.

The ministry stated the decision was taken to reduce government expenditure.

Double pensions occur when retirees receive an additional retirement allowance on top of the official pension money, which is provided from some government agencies.

With state expenditure on pensions hiking, the highest double pensions allocations are made to both Maldives Police Service and Maldives National Defense Force (MNDF).

A white paper issued by the Finance Ministry highlights the retirement age of Police, MNDF, and Maldives Customs Service is lower than other government agencies. The average age of retirement in Police and Customs is 50.47, while the average retirement age of MNDF is 46.16.

However, the retirement age on average in other government bodies is 61.63.

The white paper further notes the lower retirement age for the security and law enforcement services is owed due to the higher allowances to retirees through their exclusive retirement schemes. The paper also linked physical health to the early retirement age of these agencies as well.

International financial institutions have been urging Maldives government to discontinue additional retirement allowances besides the official pension.

In last July, the World Bank stated the pension system in the Maldives is not sustainable, and urged to cease double pension to reduce further risks to the country's economy.

The government has taken significant steps this year to cut its costs, with additional steps planned for the upcoming year. The state also projects these austerity measures will save MVR 6.6 billion for the government, which was specified in the budget for next year.

Key changes of the current administration include allowances extended to those aged 65 years and above, be given only to individuals with lower income and reforming the medical welfare scheme of Police and MNDF.