The World Bank has stated that Maldives' pension system needs major reform to ensure financial stability.

The 362-page 'Rethinking Social Protection in South Asia', prepared and published by the bank on the status of the social security system in south Asia, raised concerns about the growing elderly population in the country.

According to the paper, The Maldives will have the highest population of elderly people in South Asia, with 32 percent of the population amounting to the elderly by 2050.

The paper highlighted that the pension system needs to be transformed into a more efficient and sustainable system, as 90 percent of social security funds are spent on pension.

The report also highlighted some of the challenges in the current system of pensions in the country. As such, the report noted that 30 percent of the pensioners getting old-age allowances are civil servants who retire from government service.

According to the World Bank, the state's budgetary spending on the pension system will reach 5 percent of GDP over the next 40 years, and as the elderly grow, the state's spending on providing incentives to the elderly will also increase.

As such, the World Bank proposed two major reforms to the pension system in its report. This includes earmarking a portion of pension money for job seekers, making it possible for differently-abled persons to withdraw pension money, making it possible for people with disabilities to use pension money for down payments payable for purchase of houses, sponsored by the state, conducting a life-insurance programme based on the amount deposited in the pension fund, and MVR 5,000 as pension to senior citizens.

It has also been proposed to link the amount of pension to the consumer price index.

The country's pension system is a multi-pillar pension system introduced in 2009 under the Pension Act, which consists of two main pension schemes: the Maldives Retirement Pension Scheme and the Basic Pension Scheme for the Elderly.