How pension fund contributions grow through investment and diversification

The Maldives Retirement Pension Scheme is connected to everyone in the job market in Maldives. It is one of the most important financial foundations for future security. The monthly contribution of the employee and the employer to the scheme is not just savings.

Instead, the most important responsibility entrusted to the Pension Office under the Pensions Act is to retain the value of the money and increase it by investing it in various types of assets that will benefit the members.

Members receive many benefits from investing their contributions to the pension scheme. Most importantly, it increases retirement savings by keeping the value of money (purchasing power) from declining due to inflation or rising commodity prices.

According to statistics from previous years, pension investments have yielded an average annual return of more than five percent. This is a large amount compared to the profits of banks' savings accounts. All investment profits are distributed directly among the members. This money is deposited into each member's retirement savings account.

Members can easily view the details of the benefits added to the account at any time through the mobile application of the Pension Office.

Article 16 of the Pensions Act describes the assets in which pension funds can be invested in Maldives. These include bank deposits and monetary funds issued by banks licensed by the Monetary Authority of Maldives (MMA), securities issued by a relevant ministry of the Government of Maldives, securities issued by trading entities listed on a licensed stock exchange in Maldives and mutual funds licensed in Maldives investment funds.

In addition, the Pension Act also defines the assets that can be invested in foreign markets.

The Pension Office gives top priority to ensuring the safety of assets and providing adequate returns. One of the most important methods to achieve this goal is to syndicate or "diversify" investments.

Diversifying investments means investing money in different industries and different asset classes instead of relying on just one type of investment. This allocation of investments across different sectors helps to manage risk by mitigating potential losses from market fluctuations.

This is essential for long-term sustainable profitability. In addition, it is important for the Pension Office to invest the pension funds so that the funds required for the payment of the pension can be obtained without difficulty.

The main goal of all these efforts is to ensure members have an adequate income to provide for their living expenses in retirement. The main goal set by the Pension Office is to ensure that the pension benefit received at the time of retirement is equivalent to at least half or 50 per cent of the income the person was earning during the period of work.

Ensuring the safety of investments while maintaining adequate liquidity is one of the primary responsibilities of the Pension Office. It is a sustainable effort to brighten the lives of tomorrow with the help of savings today.