The government has proposed an amendment to the Pension Act to allow individuals diagnosed with a terminal illness and not expected to live for more than one year to withdraw their pension savings in a lump sum.

The bill was submitted to Parliament by Milandhoo MP Hussain Mufeed Abdul Qadir on behalf of the government. Under the current law, pension savings can generally only be withdrawn upon reaching the age of 65. However, the proposed amendment would permit early withdrawal in cases of terminal illness.

According to the bill, a “state of terminal illness” is defined as a condition in which a specialist doctor determines that, despite adequate medical care, the individual is unlikely to survive beyond 12 months.

In such cases, the individual would be allowed to withdraw part or all of the funds in their retirement pension account, either in a single payment or in multiple instalments.

In addition to provisions for terminally ill pensioners, the bill proposes several other amendments to the Pension Act. These include allowing pension savings to be used as collateral to pay the down payment for purchasing a house, as well as for the construction or repair of a home.

Under the current Pension Act, pension funds can only be used as collateral for down payments on completed housing flats sold to the public.