Pension Reform: “Targeting the Wealthiest Would Have Been Even More Unpopular”

Sanjay Matadeen, economist, openly shares his views on the controversial pension reform, emphasizing the need for a balanced approach that targets the wealthiest. He clarifies that he does not support a Robin Hood-style policy, but believes reforms should focus on the most affluent.

The decision to raise the retirement age from 60 to 65 creates a gray area, especially for those who will neither receive a pension nor find employment or support through an intermediate system.

Matadeen explained that allowing people aged 60-65 to earn both salary and pension was increasing the tax burden significantly.

He added that demographic aging and persistent deficits in the General Social Contribution (CSG) make reform unavoidable—it’s a macroeconomic necessity, not just a political choice.

This urgency has been worsened by the dismantling of the National Pensions Fund (NPF), which was contributory, and its replacement by the CSG, which is facing chronic deficits.

A rationalization of the system was necessary to restore financial balance to social accounts.

He warned that there is a real risk of hidden social problems, with growing inequalities across different societal groups.

What are the main challenges?

Matadeen highlighted that workers in physically demanding jobs—such as masons, factory workers, and manual laborers—may find it difficult to work until age 65.

Women who stay at home also relied on their pensions as a financial relief starting at age 60.

Interestingly, self-employed workers have more flexibility, choosing their retirement age, and many continue working well past 65.

He argued that raising the pension age to 65 should only happen if the government simultaneously improves access to healthcare and social safety nets to protect people’s purchasing power.

Support measures are essential to help those who may struggle with the change.

Could there be consensus on delaying this measure, especially since it was implemented without prior consultation or support systems?

Many believe it’s crucial to ensure people can access their pensions when due, even if it means temporarily maintaining certain social assistance programs.

Targeting wealthier households was considered as an alternative to raising the retirement age to 65, but it would have been even more unpopular.

Under this approach, only low-income families would continue to receive the Basic Retirement Pension (BRP), while wealthier individuals would forgo it.

A balanced solution might combine moderate targeting of high earners to limit budget impact, while maintaining the retirement age of 60 for physically demanding jobs—through a dedicated fund.

Additionally, investing in public services like healthcare and transportation could help enable older workers to stay employed longer.

The gap between social classes, especially between workers and managers, is stark. How can this inequality be addressed?

Many suggest that instead of simply delaying the BRP eligibility to age 65, the focus should be on support measures.

Vulnerable workers need assistance, but they also should contribute fairly. For example, manual workers such as masons, electricians, plumbers, and helpers earn between Rs 1,500 and Rs 2,000 per day.

With an average daily wage of Rs 1,500 over six days a week, this amounts to about Rs 36,000 a month—tax-exempt under the new Rs 500,000 annual threshold.

Rather than passive policies, the government could establish contributory pension funds tailored to specific trades—such as a Fishermen’s Fund, Small Farmers’ Fund, or even a Mason’s Fund.

These would allow voluntary contributions, enabling workers to retire early at 60.

The planned revival of the National Pensions Fund (NPF) and the gradual phase-out of the CSG present an opportunity for reform.

This could also be the ideal moment to introduce a Craftsmen’s Chamber to support workers, professionalize trades, elevate their status, and give them a stronger voice to advocate for their rights.

Additional targeted measures could include a social solidarity allowance for stay-at-home women starting at age 60 and transitional social aid for those unable to continue working.

The solutions exist; what remains is to implement them fairly and practically.

Many experts agree that raising the BRP age was necessary, as the current ratio of 1.5 taxpayers per pensioner is unsustainable. What are your views?

The situation had become unsustainable. Mauritius was heading toward a social protection system crisis.

Social spending now totals around Rs 65 billion annually—more than the combined budgets of the health and education sectors.

This puts enormous pressure on government resources and results in significant opportunity costs.

Bold reforms are essential to help Mauritius achieve its goal of becoming an inclusive, high-income economy.

This is just the first step. The population now expects policymakers to act vigilantly and work concretely to improve daily life.

This includes optimizing public services—education, health, transport, and other key sectors—to increase efficiency and accessibility.

Leaders must also set an example in managing public finances responsibly, applying good governance and accountability principles.

It’s crucial that the upcoming audit report does not undermine the sacrifices made by citizens, as this could erode trust in the reform process.

Source: Defi Media