A proposal to make contributions to the pension scheme voluntary has been rejected by the Parliament’s Social Committee.
The current Pension Act stipulates that it is obligatory to participate in the pension scheme, however a revision of the act has been proposed by Fares-Maathoda MP, Ibrahim Mutthalib.
Mutthalib’s revision states that the pension scheme should be made voluntary and the current pension wage of 7 percent should be reduced to 3.5 percent of salaries.
After assessment and discussion, it was decided by the Committee that the Pension Act does not require the proposed revision.
The Attorney General’s Office, Pension Administration Office, Maldives National Chamber of Commerce and Industries, Maldives Association of Construction Industry, and Maldives Association of Tourism Industry, were all involved in the discussion on how the current pension scheme would be affected, should the revision be approved.
The committee’s decision on the revision has been sent to Parliament.
The Maldives is set to receive US$12m in World Bank funding in a bid to bolster its national pension scheme, according to regional news reports.
Haveeru, citing a report in the Colombo-based Daily Financial Times paper, said that the funding was unveiled last week by Diarietou Gaye, World Bank Country Director for Sri Lanka and the Maldives.
According to Gaye, the provision of the funding was approved on Thursday (June 2, 2011) as a means to supply additional finance to ensure national social protection measures were available to poorer sections of Maldivian society.
The report stated that funding was expected to be distributed over a four year period from August this year by the World Bank’s own lending body – the International Development Association (IDA).
The World Bank funding is reported to be part of a restructuring programme of the Maldives Pension and Social Protection Administration (PSPA), which has already been the subject of parliamentary amendments earlier this year relating to expatriate payments.
An amendment proposed by minority opposition People’s Alliance (PA) MP Ahmed Nazim to the Pension Act of 2009 allowing MPs to opt out of the retirement pension scheme is intended to “destroy the economy”, opposition Dhivehi Rayyithunge Party (DRP) MP Abdullah Abdul Raheem claimed at parliament yesterday.
“At a juncture when the country is facing an economic tsunami and we’re trying to save ourselves [from it] this amendment has been proposed here today, by those in the Public Accounts Committee who know very well what the economy is, with the intention of destroying the economy,” said Abdul Raheem (pg 83).
Raheem added that MPs’ participation was needed to ensure the success of the fledgling pension system.
Deputy Speaker Nazim’s amendment, backed by most MPs of the ruling and opposition parties, would also allow the President, Vice-President and Justices of the Supreme Court to opt out of the retirement pension scheme.
Concluding the debate, Nazim, who also chairs the Public Accounts Committee (PAC), revealed that 34,000 government employees had already joined the pension scheme while an additional 25,000 private sector employees had submitted applications.
Nazim argued that exempting 86 persons would not affect the success of the scheme. The amendment will be put to a vote at the next sitting on Monday.