Balancing sustainability and social welfare: The controversial 2025 ‘pension age’ reform in Mauritius

At a glance

• The government of Mauritius has amended the National Pensions Act 1976 through Section 39 of the Finance Act 2025 to address rising national debt and ensure the long-term sustainability of the Basic Retirement Pension (BRP).
• The reform introduces a new definition of 'pension age,' gradually increasing the eligibility age for the BRP from 60 to 65 years over a ten-year period, starting from September 2026.
• The Income Tax Act has been amended to provide income support to individuals aged 60 or above who are not yet eligible for the BRP, with specific criteria for eligibility.
• The reform has faced significant public backlash, with critics arguing that it is undemocratic and disproportionate, leading to petitions in the Supreme Court challenging its constitutionality.
• The Supreme Court's decision will be crucial in determining the future of this economic reform and may set a precedent for major social welfare changes in Mauritius. 

For several years, Mauritius has stood at a fiscal crossroads, with rising national debt placing the economy in an increasingly vulnerable position. In response to this economic strain, the newly elected government has introduced a bold reform to the National Pensions Act 1976 via Section 39 of the Finance Act 2025, which came into force on the 8 August 2025. For the government, this amendment is a necessary step toward restoring fiscal discipline, safeguarding future generations, and ensuring the long-term sustainability of the BRP which it has deemed 'unsustainable' in its former structure.

The newly brought amendment is mainly driven by demographic realities: a rapid aging population and a shrinking base of young taxpayers. This change to the eligibility criteria for the BRP has, as described by the Prime Minister, been phased over a period “out of compassion.” Far from being a mere budgetary adjustment, the reform has been framed as a strategic measure aimed at promoting intergenerational equity and ensuring the long-term viability of the country’s social support system. 

Section 39 of the Finance Act 2025, therefore, introduces a new definition of 'pension age.' Eligibility for the BRP is no longer fixed at 60 years of age but will be gradually adjusted over a ten-year period, culminating in an entitlement to the BRP at the age of 65 years effective from September 2034. In essence, 'pension age' now refers to the specific month and year in which an individual becomes eligible for the BRP. This transitional approach is designed to give individuals and employers adequate time to adapt their retirement planning strategies:

In addition to the above transitional approach, the Income Tax Act was accordingly amended to introduce Part XIIG entitled 'Income Support to persons not eligible for the Basic Retirement Pension (BRP)'. 

According to Part XIIG of the Income Tax Act, a monthly income of MUR10,000 including an additional sum of MUR10,000 in December will be paid to an 'eligible citizen' or 'non-citizen' (Eligible Persons). 

Among other criteria, Eligible Persons are those who are aged 60 or above but have not yet reached the defined pension age, and whose monthly income does not exceed MUR10,000 if single, or MUR20,000 jointly with their spouse.

An 'eligible citizen' refers to a Mauritian citizen who has resided in Mauritius for an aggregate period of at least 12 years since attaining the age of 18 while an 'eligible non-citizen' refers to a person who has resided in Mauritius for more than 15 years since reaching the age of 40, including at least three consecutive years immediately preceding the month for which Income Support is being claimed.

Individuals are not eligible for income support if they are already receiving a basic retirement, widow’s or invalid’s pension. Ineligibility also extends to those who do not meet the required residency criteria. Additionally, individuals are excluded if they are inmates of charitable institutions under Section 10 of the Act, are serving a prison sentence or are in legal custody, are hospitalised at the government’s expense for more than three months or are absent from Mauritius for more than six months in any 12-month period, except in cases of approved medical treatment.

The above marks a transformative step in Mauritius’ social welfare policy by gradually raising the pension age whilst simultaneously introducing a targeted income support scheme for the most vulnerable ones. 

The government’s bold initiative has, however, triggered significant public backlash, with several individuals petitioning the Supreme Court to challenge the constitutionality of the newly introduced definition of  'pension age' and its broader implications. Critics argue that the legislation is undemocratic and disproportionate, pointing to a lack of public consultation prior to its ‘rushed’ implementation. The measure is seen by some as lacking sufficient justification for such a drastic shift in social policy. 

The Supreme Court’s decision on the matter will be pivotal in determining the future of this economic reform and may set a precedent for how major social welfare changes are enacted in Mauritius.