Pension money should not be kept for heirs: Mufeed

Milandhoo MP and PNC member Hassan Mufeed Abdul Gadhir has said the law should be amended so that money in pension accounts is not kept for distribution to heirs after a person’s death, but instead used meaningfully during their lifetime.

Speaking in Parliament today while introducing a bill to amend the Pension Act on behalf of the government, Mufeed said pension savings should be invested and utilized by those who wish to make proper use of the funds, noting that this would benefit many people.

“It is my sincere hope that by the time this bill reaches the committee stage, it will be designed in a way that pension money is not treated as something to be distributed after death, but can be properly used while a person is alive,” he said.

The proposed amendment would allow individuals suffering from terminal illnesses to withdraw their pension savings in full, even if they have not reached the retirement age of 65.

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

The bill allows such individuals to withdraw part or all of their pension savings, either in a lump sum or in multiple instalments.

In addition to these changes, Mufeed’s bill proposes allowing pension funds to be used as collateral for housing related purposes, including paying down payments for house purchases as well as the construction and repair of homes.

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