The Maldivian government has proposed changes to its pension system in the 2025 budget, which will see the basic pension of MVR 5,000 per month restricted to those with lower incomes. The adjustment, set to take effect from April 2025, is aimed at ensuring the sustainability of pension funds amidst rising life expectancy and increasing expenditure.
Currently, Maldivians over the age of 65 are entitled to a basic pension, regardless of their financial status. However, under the proposed revisions, this entitlement will no longer extend to high-income individuals. The move reflects the government’s focus on prioritising support for those with fewer resources, though details on the specific income threshold for eligibility have yet to be disclosed.
The Ministry of Finance has highlighted that these changes are necessary as the country faces growing pension costs. State spending on pensions, which currently accounts for just under 1 per cent of GDP, is projected to increase steadily in the coming years. According to the ministry’s forecasts, this share is expected to surpass 1 per cent over the next decade and could reach 2.8 per cent of GDP—equivalent to approximately USD 8 billion—by 2055.
In addition to the income-based adjustments, the government plans to propose legislative changes to address the issue of retirees receiving multiple pensions. The goal is to streamline the system and promote a fairer distribution of benefits. By eliminating dual pension benefits, the government hopes to enhance the efficiency and equity of the pension framework.
These proposed measures underscore the need for sustainable pension reforms as the Maldives navigates the challenges of an ageing population. The policy changes are set to be closely watched, as they may have significant implications for the financial planning of future retirees.
