Pension Reform in Maldives
The introduction of the Pension Act in 2009 established a multi-tier pension system in Maldives by establishing the Basic Pension (BP) Scheme and the Maldives Retirement Pension Scheme (MRPS) which is a Defined Contribution (DC) pension scheme.
Prior to the Pension Act, the Maldives had a Defined Benefit (DB) pension scheme where employees became eligible for pension based on their service duration and its coverage was limited to only government employees.
The current Pension Act stipulates the retirement age of 65 years for the first time for all working Maldivians.
Basic Pension Scheme
Basic Pension aims to target poverty alleviation among the elderly by providing a minimum level of pension and is funded from the government revenue. The Basic Pension stands at MVR 5000 as of today and all Maldivian citizens who are turning the age of 65 are eligible to receive Basic Pension. The Basic Pension is funded through government budget appropriations.
Maldives Retirement Pension Scheme
Maldives Retirement Pension Scheme is a contributory Pension Scheme introduced under the Pension Act of Maldives. Both Employees and Employers contribute a minimum of 7% (total 14%) of the participating employee’s basic salary towards the pension. Participation in the scheme is mandatory for all employed Maldivian citizens and voluntary for foreigners. Employees from both public and private sector are covered under the scheme.
MRPS pension at retirement may vary depending on the member contributions, service duration and investment returns.