Minster of Finance and Treasury Ahmed Munawar stated on Tuesday that unfunded schemes, which are run under laws outside of the Maldives Retirement Pension Scheme, are unsustainable.
Presenting the state budget estimated for the following year at the parliament, Munawar stated that a survey conducted by the National Pay Commission revealed that expenditure under these unfunded pension schemes exceeds the GDP of the country. The unfunded pension schemes are run under legislations outside of the Retirement Pension Scheme.
The minister, whilst looking at the changes in population demographics, highlighted that the smallest of estimations reveal that pension expenditures that currently stand at MVR 200 million would increase to MVR 3.8 billion by the year 2058.
"...this is an average increase of 9 percent. Since this is a higher increment than the growth of the National GDP, financing these schemes in the future is not sustainable." said the minister, adding that this is an issue the government must soon tackle.
The budget summary stated that these schemes have benefits set out for administrative employees upon their retirement and benefits that are given out on a monthly basis until the date of their death.
The report added that this is an expenditure that is financed directly from the state budget and that it is very challenging to sustain the expenditure.
The total government expenditure from these schemes cost the state budget MVR 189 million last year. At this rate, it is estimated that by 2059, MVR 3.5 billion from the state budget will be expended on the retirement schemes.