The Maldives government has announced a significant policy change, discontinuing the pension allowances for new retirees who are subject to 'double pensions'. This decision, set to take effect in January 2025, was communicated by the Ministry of Finance in a circular sent to all government agencies last week.

Under the new policy, retirees who qualify for double pensions will no longer receive additional retirement allowances from specific government agencies. Instead, they will receive only the basic retirement pension. The move is part of the government's broader effort to reduce state expenditure, particularly in light of rising pension costs.

Double pensions refer to a situation where retirees receive extra retirement allowances in addition to their official pension. This practice has been most prevalent among members of the Maldives Police Service and the Maldives National Defense Force (MNDF), which have some of the highest allocations for double pensions.

A white paper issued by the Finance Ministry highlights that the retirement age for personnel in these security and law enforcement agencies is significantly lower than that in other government sectors. On average, retirees in the Police and Customs services retire at 50.47 years, while those in the MNDF retire at an average age of 46.16 years. By contrast, the average retirement age across other government bodies is 61.63 years.

The paper suggests that the early retirement age is linked to the higher pension allowances provided to these groups through exclusive retirement schemes, which are designed to account for the physical demands of their roles.

The policy change follows recommendations from international financial institutions, including the World Bank, which has previously warned that the Maldives' pension system is unsustainable. In July, the World Bank urged the government to cease the double pension system to mitigate the risk of further economic strain.

As part of ongoing austerity measures, the government is also focusing on other reforms aimed at reducing costs. The state projects these measures will save MVR 6.6 billion in the upcoming year, as outlined in the national budget. Other planned changes include adjusting allowances for individuals aged 65 and above based on income levels and reforming the medical welfare scheme for the Police and MNDF.