- Pension contributions are invested under the Maldives Pension Act to protect savings and generate returns.
- Investing shields savings from inflation, with the fund averaging over five percent annual returns credited to members' accounts.
- The Pension Office manages risk through diversification across assets and sectors while maintaining sufficient liquidity for prompt payments.
Your Pension Savings Are Invested
The Maldives Retirement Pension Scheme (MRPS) is an important part of the country’s retirement system, helping people build financial security for life after work.
The monthly contributions made by employees and employers are not simply kept in a savings account. Under the Maldives Pension Act, one of the key responsibilities of the Maldives Pension Administration Office is to invest these contributions in a range of suitable assets.
The purpose of investing these funds is to protect the value of members’ retirement savings while generating investment returns that help those savings grow over time.
Why Are Pension Savings Invested?
Investing pension savings provides several important benefits.
Most importantly, it helps protect members’ savings from inflation, which is the gradual increase in the cost of goods and services over time. Inflation reduces what money can buy, so simply leaving money untouched can reduce its value. By earning investment returns, pension savings have the opportunity to grow and maintain their purchasing power over the long term.
Over the years, the Pension Fund has delivered an average annual return of more than five percent, which is generally higher than the interest typically earned on a standard bank savings account.
All investment income earned by the Pension Fund is credited directly to members’ Retirement Savings Accounts (RSA), increasing their retirement savings. Members can view both their account balance and investment earnings at any time through the Pension Office’s mobile application.
Where Can Pension Funds Be Invested?
The Maldives Pension Act specifies the types of assets in which pension funds may be invested.
Under Section 16(d) of the Act, pension funds may be invested in:
- Bank deposits and monetary funds offered by banks licensed by the Maldives Monetary Authority (MMA).
- Securities issued by the Government of Maldives.
- Securities issued by companies listed on a licensed stock exchange in the Maldives.
- Mutual funds and investment funds approved in the Maldives.
Overseas investment assets are also provided for under Section 16(e) of the Act.
How Does the Pension Office Manage Investment Risk?
When investing pension funds, the Pension Office’s highest priority is protecting members’ retirement savings while earning appropriate long-term returns.
One of the key principles used to achieve this is diversification.
Diversification means not putting all the money into one type of investment. Instead, pension funds are invested across different asset classes and sectors. This helps to:
- Reduce the impact of changes in the market.
- Manage investment risk more effectively.
- Support stable, long-term growth.
The Pension Office also maintains sufficient liquidity, referring to cash or assets that can quickly be converted into cash, to ensure pension benefits can be paid promptly whenever members become eligible.
What Is the Long-Term Goal?
The ultimate goal of investing pension savings is to help members have a reliable and sustainable source of income throughout retirement.
One of the Pension Office’s long-term objectives is to help members build retirement benefits that replace approximately 50 percent of the income they earned during their working lives.
To achieve this, every investment decision aims to balance four key priorities:
- Protecting members’ savings.
- Generating sustainable long-term investment returns.
- Diversifying investments to reduce risk.
- Maintaining sufficient liquidity to pay pension benefits when needed.
By carefully balancing these priorities, the Pension Office works to protect today’s pension contributions while helping them grow into a dependable source of income for members in retirement.
