Pension expense expected to reach an ‘unsustainable’ level by 2030

Pension payments currently cost around MVR 100 million per month, with the figure expected to rise to “unsustainable” levels by 2030, says Sujatha Haleem, the CEO of Maldives Pension Administration Office.

The Parliament’s Public Accounts Committee, which is conducting an inquiry into double pension, met with officials from the Pension Office and the Civil Service Commission on Monday.

At the meeting, Sujatha said that the different schemes introduced outside of the pension scheme has created a highly discriminatory system. But she also opinioned that putting a sudden stop to a benefit that a group of individuals are currently getting wouldn’t be the best approach either.

 She stressed the need to reach a comprise.

“We need to decide how to do this and decide a date to stop this. This is crucial,” she said.

Sujatha said that the population of people above the age of 65 is expected to increase by seven percent in 2030, which will increase the pension expenses and increase the financial burden on the state to unsustainable levels.

“As the aging population increases, the state expense on pensions will become unsustainable,” she said.

Speaking at the meeting, CSC’s president Mohamed Nasih said the civil service makes for the highest number of employees of the state, with some 35,000 employees.

He said the commission has facilitated mandatory retirement allowance to 5,336 civil servants since 2008; 1,612 civil servants who were retired upon reaching 55 years of age, and 3,626 who were retired upon reaching 65 years of age.

“By 65 years, individuals also receive [pension] based on the contribution under the contributory scheme which is run under the Pension Act. They are also eligible for [allowance for] retirement from civil service. I believe this is what some people interpret as double pension,” he said.

Nasih said that some people work in other institutions after retiring from the civil service.

He said that this requires a legal solution.

“I believe the purpose of retirement is to stop working. I’m not saying they can’t [work] in the private sector. But we don’t believe it makes sense for someone who receives a retirement benefit from any state institution to come and work in a state job,” he said.

Officials from the Pension Office told the committee that pension payments currently cost around MVR 100 million per month – which is expected to rise by seven percent in 2030 to an unsustainable level.

The issue of double pension payments was raised in the committee last week by Deputy Speaker Ahmed Nazim. He said that the state has spent over MVR 2.96 billion on pensions over the last 13 years, and proposed a parliamentary inquiry to resolve the issue of double pension.