Monthly allowance for newly retired staff to end from Jan 2025

The government has announced that the monthly allowance for newly retired employees will be discontinued starting January.

This decision was communicated through a letter signed by finance minister and Pay Commission Chairman Moosa Zameer, addressed to relevant agencies.

The letter clarified that allowances for employees retiring by the end of December 2024 will remain unchanged.

However, from January onward, employees retiring will not receive the monthly allowance. The letter did not specify the policy on lump sum payment currently given to retiring employees.

Additionally, the monthly basic pension of MVR 5,000 for individuals over 65 will no longer be available to high-income earners starting next April. The government has indicated that pensions will be provided based on income levels to ensure affordability.

The Ministry of Finance projects an increase in state pension spending due to rising life expectancy. Pension expenditures currently represent less than 1% of GDP but are expected to exceed this threshold over the next decade. By 2055, pension spending is projected to reach 2.8% of GDP, equivalent to approximately MVR 8 billion.

The ministry also announced plans to propose legislative changes to address the issue of double pensions, though specific details about the criteria for determining low-income versus high-income earners have not been disclosed.