The government has made significant announcements regarding changes to pension allowances and benefits, affecting newly retired employees and pensioners. A letter from Finance Minister and Pay Commission Chairman Moosa Zameer, addressed to relevant agencies, has outlined these changes, which will take effect in the coming years.

According to the letter, employees who retire by the end of December 2024 will continue to receive the existing monthly allowance, while those retiring from January onwards will no longer be eligible. The letter does not specify whether lump sum payments currently provided to retiring employees will be affected by these changes.

Additionally, the monthly basic pension of MVR 5,000 currently provided to individuals over 65 will be discontinued for high-income earners starting in April 2025. The government has stated that pensions will be provided based on income levels, although the specifics on how high-income and low-income earners will be defined have not yet been disclosed.

The Ministry of Finance has expressed concerns about rising pension expenditures driven by increased life expectancy. Currently, pensions account for less than 1% of GDP, but this figure is projected to exceed this threshold in the next decade, reaching 2.8% of GDP—or approximately MVR 8 billion—by 2055.

The ministry has also announced plans to propose legislative changes to address the issue of double pensions, although specifics have not been provided. These changes come amidst growing discussions on how to manage the financial challenges associated with an ageing population and the long-term sustainability of the pension system.