Double pension must end, breaches principles: Robert

Senior Economist at the World Bank, Robert Palacios, stated yesterday that pension schemes for the Maldives National Defence Force (MNDF), police, judiciary, and other independent agencies should be temporarily halted to ensure the financial sustainability of the country’s pension system.

Speaking at the Maldives Finance Forum organized by the Pension Administrations Office in Kurumba Maldives, Robert said that the current pension system in the Maldives is not operating in a sustainable manner.

Robert, who played a key role in introducing the pension scheme in the Maldives, stressed the need to accelerate measures to strengthen the system.

Currently, 13 agencies in the Maldives offer double pensions, with the largest amounts allocated to the MNDF and police.

Robert suggested that eliminating double pensions and discontinuing pensions for the well-off population could reduce the financial burden on the system.

“The richest 10 or 20 percent of the population could be eliminated from the pension scheme,” he said.

The universal retirement pension scheme was introduced in 2009. Prior to this, the Maldives operated pension schemes solely as a state expenditure without employee contributions.

Robert's presentation highlighted the priorities in formulating the pension system in the Maldives and challenges in maintaining its sustainability.

"The basics of the pension system, which was formulated in 2009, have now been breached. The first significant change came a few years later with the introduction of elderly allowances, set at twice the amount of the basic pension," he said.

"This has been the biggest obstacle to sustaining the entire system."

Robert noted that additional double pension schemes have since been added, further burdening the system. He added that without addressing these issues, the entire pension system cannot be sustained.