Mauritius CSG Crisis in 2025: What Employers and Employees Need to Know Now

The Contribution Sociale Généralisée (CSG), Mauritius’ primary social security mechanism since 2020, faces unprecedented financial and operational challenges. With the fund depleted and payment delays disrupting households, employees and employers alike demand clarity on its future. Here’s what you need to know about the crisis and its implications.

What is the CSG? Origins and Purpose

Introduced in September 2020 under the Social Contributions and Social Benefits Act, the CSG replaced the National Pension Fund (NPF) to address systemic gaps in Mauritius’ social security framework. Unlike the NPF—a contributory system where employee and employer payments accrued in individual accounts—the CSG operates as a pay-as-you-go tax, pooling contributions to fund pensions, allowances, and government social programs.

Why Did CSG Replace the NPF?

The NPF faced criticism for inequities:

• Limited coverage: Only formal sector workers benefited, excluding self-employed and informal workers.
• Unsustainable returns: With an ageing population, the NPF’s investment-based model struggled to meet growing pension demands.

The CSG aimed to broaden coverage and redistribute resources. However, critics argue it transformed retirement savings into a generalized tax, redirecting Rs 44.6 billion in contributions to short-term social spending rather than long-term capital growth.

Current Crisis: Fund Depletion and Payment Delays

Prime Minister Navin Ramgoolam confirmed in May 2025 that the CSG fund had zero balance as of April 2025, with all Rs 44.6 billion collected since 2020 spent. Key repercussions include:

Delayed Allowances

• May 2025 payments were split into two tranches (9 May and 12 May) due to administrative constraints caused by weather disruptions.
• Similar delays occurred in June 2024, highlighting systemic processing flaws.

Political Fallout

The PM accused previous administrations of using Rs 34 billion for “pre-election voter seduction,” including inflated social programs and public sector allowances. Opposition leaders counter that the CSG’s design—reliant on continuous contributions without investment—made collapse inevitable.

Contributions Rate Continue

Despite the empty fund, current rates remain unchanged:

• Private sector employees:
  • Earning ≤ MUR 50,000: Employee 1.5%, Employer 3%
  • Earning > MUR 50,000: Employee 3%, Employer 6%
• Public sector employees:
  • Employer only: 4.5% (≤ MUR 50,000), 9% (> MUR 50,000)
• Self-employed:
  • Fixed MUR 150 per month

The Role of the MRA in CSG

Mauritius Revenue Authority (MRA) is at the heart of the CSG system, handling both the collection of contributions and the distribution of benefits.

Key Functions:

• Collection: The MRA collects CSG contributions from employers, employees, and the self-employed, ensuring compliance and applying penalties for late payments.
• Distribution: It manages the payment of CSG Allowance and the Guaranteed Minimum Income to eligible beneficiaries.
• Enforcement: The MRA monitors for fraud, investigates false claims, and recovers unpaid contributions using its legal powers.

The government has introduced several new allowances funded through the CSG, such as:

• CSG Income Allowance: Monthly financial support for employees and self-employed individuals, scaled by income bracket.
• CSG Child Allowance: Monthly payments for children up to age three (recently increased to Rs 2,500 per month).
• CSG School Allowance: Monthly payments for children aged 3 to 10.

Recent Challenges:
Payment delays in May 2025 highlighted operational vulnerabilities, prompting the MRA to improve communication and streamline processes. The authority is also planning to introduce new digital tools to enhance efficiency and transparency.

CSG in the 2025–2026 Budget: Reform Proposals

As Mauritius prepares for its June 2025 budget, stakeholders demand structural reforms:

1. Business Community Demands

• Public-private taskforce: Business Mauritius proposes a committee to redesign the system, prioritizing sustainability.
• Transparency: Employers seek clarity on how contributions are allocated, given the fund’s depletion.

2. Union-Led Proposals
The Federation of Civil Service and Other Unions (FCSOU) advocates:

• Extending the CSG Income Allowance (Rs 3,000 for earners ≤Rs20k) through June 2026.
• Raising the income tax exemption threshold to Rs 1 million annually to offset living costs.

3. IMF and Fiscal Risks
The IMF’s 2025 Article IV review may push for austerity measures, as maintaining enhanced benefits via general revenues risks widening Mauritius’ fiscal deficit (projected at 3.4% of GDP in 2024/25).

What’s Next for Employers and Employees?

For Employees

• Monitor allowance timelines: Delays may persist until reforms stabilize the system.
• Advocate for pension safeguards: Only 28% of CSG funds were allocated to pensions.

For Employers

• Prepare for rate hikes: Business groups warn contributions could rise to sustain benefits.
• Engage in consultations: Submit feedback via the Mauritius Budget 2025–2026 platform by March 2025.

Policy Watch

• Supreme Court case: A pending ruling on CSG’s constitutionality could force restructuring.
• Corporate Climate Levy: A proposed 2% tax on profits >Rs50 million may fund social programs, indirectly affecting CSG dynamics.

What Lies Ahead for CSG and Social Security in Mauritius?

The Mauritian National Budget for 2025-2026 will be presented on June 5, 2025. For now, the nation awaits the upcoming Budget Speech from Minister of Finance Navin Ramgoolam to learn what’s next for the CSG and the future of social security in Mauritius.

The CSG crisis underscores the fragility of Mauritius’ social safety net. While the 2024–2025 budget expanded benefits—like raising the minimum income to Rs 20,000—the fund’s collapse reveals systemic flaws. As debates intensify ahead of the 2025-2026 budget, employees, and employers must stay informed, engage stakeholders, and demand sustainable solutions that balance social protection with fiscal responsibility.

Stay updated through the MRA’s employer workshops in June 2025 and the Ministry of Finance’s pre-budget consultations.