Government to Eliminate Double Pension Allowances for New Retirees in 2025

The Maldives Ministry of Finance has announced a crucial reform in the nation’s pension system, eliminating the provision of double pension allowances for new retirees starting next year. The change comes in response to growing concerns about the financial sustainability of the current pension structure, particularly the practice of offering supplementary retirement benefits alongside official pensions. This adjustment is expected to reduce government expenditure and address long-standing fiscal issues.

Double pensions, which are provided by certain government agencies, such as the Maldives Police Service, Maldives National Defence Force (MNDF), and Maldives Customs Service, have been a significant burden on the nation's public finances. These agencies, with lower retirement ages compared to other government departments, have been receiving additional retirement allowances, further straining the system.

The decision to implement these reforms is also a response to pressure from international financial institutions, including the World Bank, which has criticized the current pension framework as unsustainable. These institutions have warned that continuing the double pension system could create long-term financial instability.

As part of broader cost-cutting measures, the Maldives government anticipates savings of MVR 6.6 billion in the 2025 national budget. The Ministry of Finance has already implemented various initiatives to reduce expenditure in the current year, and these pension reforms are expected to contribute significantly to achieving fiscal sustainability.