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Building a Sustainable and Effective Social Protection System in the Maldives

April 11, 2014


Roadshows have been setup across the islands so that people can learn more about their potential pension benefits. 

Maldives Pension Administration Office

Maldives has witnessed declining poverty and rising average incomes. However, many citizens are still vulnerable to falling into poverty. A stronger safety net and a more inclusive social security system is necessary to reduce the poverty rate further and make people more resilient to potential downturns.


Maldives has registered impressive improvements in human development as reflected by on-track reduction in infant mortality, maternal mortality, and education attainment. However, sustaining the progress will be a key challenge particularly due to the increasingly tight fiscal space. The population is still vulnerable to shocks such as from natural disaster, climate change, health risks, and joblessness due a reduction of fishing stock.

In particular, there were two major deficiencies with the previous pension provisions which were not only limited to government employees, but also not designed to provide a secure and adequate stream of pension income after a certain age. In the absence of any safety net for the elderly and the vast majority of workers not participating in a pension scheme of any kind, the old age group were likely poor and vulnerable. In addition to low coverage, the social protection programs were also fragmented and not optimally implemented due to capacity constraints. 

" Now we have the privilege of moving from state employment to private sector without forgoing the pensions. I have a strong feeling that todays’ youth will be much better off "

Madulu Mohamed Waheed

Retired Civil Servant


In response to these challenges, the government initiated a reform on its pension programs and stated to build capacity to strengthen the service delivery of social safety net programs. The World Bank through the International Development Agency (IDA) has been supporting the government’s effort through Maldives Pension and Social Protection Administration Project. The project is built upon the previous analytic work Social Protection in the Maldives: Options for Reforming Pensions and Safety Nets. The project is supporting the establishment contributory pension system as well as universal social pension program, the implementation of a targeting mechanism to rationalize the eligibility of social assistance programs, and the development of information systems to manage the health insurance scheme and all social protection programs.  

The project has provided technical assistance to implement for the Maldives Pension Act program to help organize and built institutional capacity of key agencies responsible for the sustainable development of the pension system. It has also supported a public awareness campaign to education the population on the role of pension. Through the additional financing, the project has also worked toward improvement in the administration of health insurance, disability, and targeted assistance, as well as helped the government to pay down its liability towards the accrued pension rights of the retired civil servants.


The project has helped establishing the Maldives Pension Administration Office (MPAO), which currently has 34 full time professional staff managed by the chief executive officer and the Governing Board, appointed by the President of Maldives.

Both the Maldives Retirement Pension Scheme and the Old Age Basic Pension are now fully operational, with over 83,000 active individual accounts being maintained under the former and 15,435 eligible beneficiaries receiving benefits under Old Age Basic Pension as of the end of Dec 2013. Both numbers exceed the project targets.

MPAO is also administrating the payment of other pension benefits for the government under a memorandum of understanding with the Ministry of Finance and Treasury. The government has decided to open the Maldives Retirement Pension Scheme to self-employed workers in 2014 and mandatory registration of and contribution from foreign workers from April 2014.

The project has conducted 347 targeted information sessions since project inception, with 21,777 people having attended. More than 100 TV and Radio talk shows have also communicated information on the pension systems. Other communication channels include radio talk shows, mn media briefing sessions, billboards, banners, event sponsorships, print media and web have been used to achieve the project objectives. MPAO has also conducted road shows and door-to-door visits.

The Human Resources/Payroll module of the public accounting system has been rolled out to 98 out of a total 118 agencies in Male’ and is expected to be rolled to all agencies across Male’ by the end of March 2014. Good progress has also been made for the other public accounting system modules.

In addition, Proxy-means tested targeting method of beneficiary selection is being piloted. The procurement process to develop the management information system is in progress.

Bank Group Contribution

The World Bank is financing the project with $15.8 million from IDA. The original project in 2009 saw countries first pension law and creation of contributory pension system and due to the impressive results achieved, the support was followed up with an additional $12 million in 2011. 


The project has three implementing agencies:

• The Maldives Pension Administration Office – coordinating all activities of the project and specifically overseeing the administration, public awareness campaign and pension payouts

• The Ministry of Finance and Treasury –in charge of the automated public financial management system

• The National Social Protection Agency is administering the health insurance, disability, and targeted assistance programs.

The World Bank is the only contributor in developing the social protection system in Maldives and therefore, the Bank has been playing a catalytic role in reforming social protection and developing systems in Maldives and all stakeholders have appreciated its role.

Moving Forward 

The Maldives Retirement Pension Scheme is a contributory pension scheme which was introduced with the new Pensions Act to reduce the unsustainable fiscal deficit. However, with the recent announcement of increase of old age pensions benefits and removal of health insurance coverage limits could potentially reverse the benefits to Maldives could pose challenges to financial sustainability. The selection of beneficiary methods and continuation of such efforts and removal of subsidies together with fully developed social protection system could provide benefits to Maldives government. Therefore, the next phase of IDA support could address the challenges with the context by implementing targeting methods and fully developing and implementing systems.

pension accounts are being maintained by the project.