BUDGET 2026-27 | From January 1, 2027: SAP with Means Test replaces BRP

â No payment provided if the beneficiary's income exceeds Rs 50,000 per month

â Ramgoolam strives to reassure that the new pension formula, with the State Age Pension, will not affect nine out of ten beneficiaries

After eliminating any doubt about an adjustment to the Value Added Tax (VAT) as part of fiscal consolidation, the Prime Minister and Minister of Finance, Navin Ramgoolam, tackled head on the big part of the 2026-27 budget, the pension reform aspect. From the outset, he took care to emphasize that the Basic Retirement Pension, “being an unfunded – a pay-as-you-go system, was financed totally by taxpayer's money.” This budget represented 25% of expenditure during the 2024-25 financial year, i.e. the allowances budgetary aspects of three ministries, notably education, health and social housing. He made it clear that although the committee of experts on pension reform submitted an interim report a month ago, the government considered it urgent to put into practice the recommendations submitted for this purpose.

Thus, from January 1, 2027, the Basic Retirement Pension (PRB) will be replaced by the State Age Pension (SAP). And with the introduction of a Means Test for income exceeding the Rs 50,000 mark and the elimination of the Eiligibility Criteria of age. In the same breath, “the transitional measures announced in 2025 remain in place for the phased eligibility between the ages of 60 to 65 to the State pension”. At the same time, the CSG Allowance will be integrated into the State Age Pension, while the payment of Traditional Income Support for those who were not eligible for the Basic Retirement Pension will be discontinued from next December. However, with the new reform, the Prime Minister has strived to reassure that nine out of ten retirees will not be penalized in any way.

People reaching the age of 60 between January 1, 2027 and August 31, 2029 can also choose to receive SAP from this age. The SAP will be reduced by 0.5% per month during which the beneficiary chooses to receive it before retirement age during the transition period, i.e. a reduction of 6% per year. The beneficiary can also choose to defer payment of the SAP beyond their retirement age. retirement and until age 70. He will benefit from a monthly increase of 0.5% in SAP until age 65, then an additional monthly increase of 0.75% per month of deferral after age 65.

For example, a person who will be 60 years old on September 1, 2026 will be entitled to a SAP of Rs 15,555 at age 62 on September 1, 2028. If they opt for immediate payment of the SAP on January 1, 2027, i.e. 20 months earlier, the amount of the SAP, before calculating resources, will be Rs 14,000 (see table).

A b