[Blog] The ladder

Promised at Rs 21,500 during the campaign, the universal old-age pension was effectively dismantled in the June 19 budget through a means test, only to be “frozen” 72 hours later before being scrapped. In this sharp analysis, Miguel Ramano, Barrister-at-Law, argues that the fiscal crisis is a political choice, and the pension reform is less an economic necessity than a profound moral concession.

Iam a barrister. I mention this not to impress you, but because it is relevant. It is relevant because I am a barrister whose grandfather sold vegetables and whose grandmother raised seven children without once appearing in a GDP figure, and because the people who are currently dismantling the pension those two people were promised are, to a remarkable degree, people whose own grandparents sold vegetables and raised children in small houses – and who appear to have absolutely no memory of it whatsoever.

This is the Mauritian professional class in full flight. We climbed the ladder. We pulled it up. We are now explaining, with charts, why the ladder was unsustainable. The ladder was built rung by rung – a greengrocer’s stall, a grandmother’s kitchen, seven children’s school fees. They are now telling us the ladder was structurally unsound. From the top.

My grandfather had a stall, a scale, and a reputation for not adjusting the price after the customer had already reached into their pocket. He paid his taxes. He turned sixty. He received his pension. No form. No Commission. No actuary deciding whether he qualified. The republic owed it to him and paid it, which is – as it turns out – not always how republics behave and should therefore be noted with some appreciation.

My grandmother raised seven children who became business owners and lawyers, who produced grandchildren who became lawyers, accountants, HR managers, teachers, consultants, artists and business owners. She never appeared in the formal economy. She would not have impressed the Commission of Experts. She would, under the means test as designed, have had to fill in a form proving she was poor enough to deserve what she had been promised.

They are both gone now. They got what they were promised, and I am grateful – grateful that they did not live to watch the people their grandchildren became explain on television why the promise was fiscally unsustainable.

From meeting to mandate

In October 2024, two months before the election, the Prime Minister stood in Curepipe and told a crowd: “Ou pansion li pou lao Rs 21,000, Rs 21,500 kitfwa.” Kitfwa. Perhaps. A small word carrying enormous weight – the full weight, as it turned out, of everything he was about to do. This was not an off-the-cuff remark. The Alliance du Changement manifesto, published and signed before the election, guaranteed that the old age pension “will be gradually increased to reach a minimum of Rs 21,500 during our mandate.” Not restructured. Not means-tested. Not renamed the SAP. Increased. To Rs 21,500.

Nine months later, in parliament, he called the pension “a broken and bankrupt system no longer fit for purpose.” He invoked his father, who built the welfare state, in the course of explaining why the welfare state needed to be restructured. He described himself as the doctor administering difficult medicine.

He did not mention that in 2006, his own then Finance Minister drew up the roadmap to raise the pension age gradually to sixty-five, that a law was passed in 2008, and that it was Ramgoolam himself who chose not to apply it – because it was unpopular – leaving the BRP at sixty while the retirement age moved to sixty-five, thereby creating the very anomaly he was now, with great courage apparently, correcting.

He also did not mention that the deficit he was now heroically fixing was not caused by the pension. It was caused by emergency pandemic spending, a Mauritius Investment Corporation that disbursed Rs 56.8 billion of central bank reserves to struggling companies, and an Rs 25 billion investment in Airport Holdings – Air Mauritius’s parent – based on a valuation that Ramgoolam himself would later allege in parliament had been inflated by Rs 41 billion in artificial goodwill, a claim now the subject of a KPMG forensic audit. The pension did not create the crisis. It is being used to close it.

Scoop.mu called this intellectual dishonesty. I am a barrister. I would call it the closing argument of a man who knows the jury has already left the building. And yet the business press applauded. The government described the reform as “a courageous, but unpopular measure.” Legal publications called it “bold.” Business media called it “necessary.”

The word “courageous” does a great deal of work in this republic. It is the word the comfortable use when someone else is paying the price. Cutting the pension of the greengrocer’s granddaughter is courageous. Raising the corporate tax rate – unchanged for twenty years while the pension became unaffordable – would apparently be something else entirely. Reckless, perhaps. Anti-competitive. A threat to the business environment. Courage, in Mauritian public discourse, has a peculiar habit of flowing in only one direction: downward.

The experts in the room

And yet we are lectured by technicians. The political point man for the reform is Dhaneshwar Damry, Junior Minister of Finance, who chairs the High Level Steering Committee overseeing its implementation from the Prime Minister’s Office. The technical design sits with the Commission. The political cover sits with Damry. The accountability sits with nobody.

But let us not pretend this is a Labour problem, or a Ramgoolam problem, or a problem that will be solved by the next election. The MSM inflated the pension for votes and refused to fund it. Labour promised Rs 21,500 and delivered a means test. The MMM sat in coalition and called it reasonable. The political class in Mauritius – irrespective of colour, coalition, or campaign slogan – has operated for fifty years as a single unified interest dressed in competing costumes. They bid up the pension when they needed votes. They cut it when they needed fiscal space. They staffed the Commission with their own world. They are the doctor, the patient, and the pharmacist. The only people not in the room are the ones the system was built to serve.

The greengrocer voted. The grandmother of seven voted. Their grandchildren vote. None of them have ever been in the room where the decision was made.

The Commission of Experts was convened to design the new system. It was chaired by an actuary who also chairs an insurance company, holds shares in another, and was appointed to the board of a major bank the month before the budget. His wife manages communications at the Prime Minister’s Office. Other members included a director of MCB, the CEO of Eagle Insurance, and a chairman of one of the island’s largest sugar estate groups. Not a greengrocer. Not a grandmother of seven. Not one person whose retirement depended on what they were about to recommend. Orwell wrote: “All animals are equal, but some animals are more equal than others.” He was writing about a farm. He could have waited.

The 72-hour thaw

The Prime Minister told parliament that “wide-ranging consultations with all stakeholders” had taken place. The Social Security Minister – the man whose entire job is the pension – found out what was in it from the budget speech. He had been told two days earlier that existing beneficiaries would not be affected. The means test, which affects existing beneficiaries, had apparently not come up in that conversation. Wide-ranging. All stakeholders. Except the minister. Except my grandmother. Except LALIT, who have been documenting this exact manoeuvre – the same IMF recipe, the same sudden discovery of fiscal urgency, the same Commission of people who will not be affected by what they recommend – since the 1970s, with a consistency that puts the parliamentary parties to shame.

On Friday 19 June 2026, the budget landed. The pension was renamed the State Age Pension – the SAP, an acronym that is either a coincidence or a confession. The means test was announced. The pension would taper, then disappear. By Monday 22 June – seventy-two hours later – the means test was frozen.

The Social Security Minister called a press conference. He confirmed he had not known the means test was in the budget. He remained in cabinet. The Prime Minister returned to parliament and announced he had listened to the concerns of the people and decided to freeze the means testing, “whilst it will have consequences for the budget deficit and public sector debt.”

So the consequences are manageable now. The same consequences were unmanageable when the alternative was keeping the universal pension. The deficit is not a fixed law of nature. It is a political choice about who bears it. On Friday it bore on the pensioner. By Monday it had shifted slightly, because the minister called a press conference and the streets were noisy. On Thursday, in Parliament, the Prime Minister announced, in response to the Private Notice Question, that the means test had been abandoned. He reiterated the decision in his closing speech to the budget debates on Friday. The pension reform itself, however, is far from being scrapped.

Fiscal disparity and the weight of VAT

No capital gains tax. No inheritance tax. Exporters pay three percent. The corporate tax rate in 1980 was fifty percent. Today it is fifteen. For twenty years we were told we could not raise it because businesses would leave. Then the OECD introduced a global minimum tax of fifteen percent and Mauritius complied. The businesses stayed. They are still here. The threat was always more useful as a political argument than it was real as an economic one. The pension was cut anyway.

The means test, as designed, excluded dividends from the calculation. A wealthy shareholder drawing Rs 200,000 a month in dividends would have kept the full pension. The formal salary worker at Rs 15,000 a month would have lost it. The means test was not designed to target wealth. It was designed to look like it did.

And then there is VAT. The most democratic tax in existence, in the worst possible sense of the word. VAT is a toll road where every car pays the same – the greengrocer’s van and the estate owner’s Range Rover. LALIT have been making this point for years: the primary revenue source of this republic is not corporate tax, not income tax, not capital gains – it is VAT.

The little guy funds the state through what he consumes. The big guy manages what he declares. The estate appreciates untaxed. The dividend departs untaxed. And when the state needs to cut, it cuts the pension of the man who spent his life paying VAT on everything he ever bought. I am a barrister. I know how to read a Finance Act. I know whose interests it was written to protect. It was not written for the man with the scale.

The radical argument: settlement of a social debt

Here is the radical argument. Not the technocratic one. Not the one that says raise corporate tax by five percent and close the exemptions and the numbers will balance. That argument is true and necessary and will never be made by anyone in power because the people in power and the people who benefit from the current arrangements are, in Mauritius as everywhere, the same people.

The radical argument is this: the old age pension is not a fiscal instrument. It is the price a society pays for the labour it extracted from its people over a lifetime. My grandmother was never paid for raising seven children who became the taxpayers and professionals who built this republic’s middle class. The greengrocer was paid only what the market would bear, which was never the full value of what he contributed. The cane cutter, the hotel chambermaid, the bus driver – paid wages that reflected their negotiating power, not their contribution. The pension is the partial settlement of a debt that was never properly paid.

The Commission of Experts is not restructuring a pension. It is renegotiating a debt settlement downward, on behalf of the creditors, without the consent of the debtors, in a republic where the debtors vote but the creditors govern.

The sugar estate did not ask whether its eight-year tax holiday was fiscally sustainable. The Smart City developer did not ask whether income tax exemptions, VAT waivers, and customs duty relief were a responsible use of the national treasury. The offshore structure does not ask whether routing billions through Port-Louis while contributing nothing to the Consolidated Fund is responsible.

Only the pension is asked to justify itself. Only the greengrocer’’s granddaughter must prove she deserves what she was promised.

A society that can afford an eight-year tax holiday for a sugar estate’s Smart City – built on land worked by her great-grandmother’s generation – but cannot afford the pension of the woman who cleaned its hotel rooms has not made a fiscal decision. It has made a moral one. And the least it could do is own it.

Kitfwa.

By Miguel Ramano, Barrister-at-Law