Starting next year, new retirees will no longer receive retirement allowances in addition to their standard pensions. 

The Maldives Ministry of Finance has announced significant changes to the nation’s pension system in an effort to reduce government expenditure. The move, detailed in a circular sent to all government departments last week, aims to address the issue of “double pensions,” a practice that has contributed significantly to the strain on public finances.

Double pensions involve supplementary retirement allowances provided by certain government agencies alongside official pension payments. The Maldives Police Service and the Maldives National Defence Force (MNDF) are among the largest recipients of these additional benefits. The Ministry of Finance noted that these two agencies, along with the Maldives Customs Service, have lower retirement ages compared to other government departments. This disparity has resulted in higher costs associated with their exclusive retirement schemes.

The decision to reform the pension system comes amid pressure from international financial institutions, including the World Bank, which has criticised the current framework as unsustainable. Reports from these institutions have emphasised the financial risks posed by double pensions, urging the Maldives to implement immediate reforms to ensure the long term viability of its pension system.

This latest policy is part of a set of cost cutting measures introduced by the government to tackle budgetary challenges. The Finance Ministry has already implemented initiatives to reduce expenditure this year and plans to expand these efforts in 2025. Projections suggest that these combined measures, including the pension reforms, could save the government MVR 6.6 billion in next year’s budget.

As the Maldives government pushes ahead with these reforms, the long term outcomes will be closely watched both domestically and internationally, reflecting the nation’s commitment to achieving greater financial sustainability.