Kurumba, Maldives – Senior Economist at the World Bank, Robert Palacios, has recommended a temporary halt to pension schemes for the Maldives National Defence Force (MNDF), police, judiciary, and other independent agencies 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, Palacios highlighted the unsustainable nature of the current pension system.
Palacios, instrumental in introducing the pension scheme in the Maldives, emphasized the need for urgent reforms. Currently, 13 agencies, including the MNDF and police, offer double pensions, straining the system. He suggested eliminating double pensions and discontinuing pensions for the wealthiest 10-20% of the population to ease the financial burden.
“The richest 10 or 20 percent of the population could be eliminated from the pension scheme,” Palacios stated.
The universal retirement pension scheme, introduced in 2009, initially functioned without employee contributions. However, changes such as the introduction of elderly allowances and additional double pension schemes have significantly strained the system.
Palacios noted, “The basics of the pension system, formulated in 2009, have now been breached. The first significant change came with the introduction of elderly allowances, set at twice the amount of the basic pension. This has been the biggest obstacle to sustaining the entire system.”
He warned that without addressing these issues, the sustainability of the entire pension system is at risk. Palacios’ recommendations aim to prioritize and reform the pension system to maintain its viability.
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