Pension puzzle solved: Court decision sparks govt action for retirees

KUALA LUMPUR: The cabinet has decided that pension payments from July to December 2023 will be based on the original pension amount.

This, Prime Minister Datuk Seri Anwar Ibrahim said, was following the decision of the Federal Court on June 27 that Sections 3 and 7 of the Pensions Adjustment (Amendment) Act 2013 were invalid.

Therefore the law before the amendment is applicable by itself for pension adjustment.

"The government has brought this matter up during the cabinet meeting to find a solution to ensure the welfare of retirees continues to be taken care of.

"It was decided that the pensions for July to December 2023 are to be paid using the original pension amount, in line with the Federal Court's decision," said Anwar in a statement today.

The prime minister added that for civil servants who retired before 2013, pension payments would revert to the amount as in December 2012.

"For those who retired starting in 2013, the pension will be based on the original amount upon retirement.

"The difference between the current pension amount and the original pension amount will now be paid in the form of a special assistance called "Special Appreciation for Pensioners".

"This programme will provide direct financial assistance to retirees, ensuring that the amount they receive remains the same as their current pension amount as of June 2023."

The prime minister said the government always values retirees' contributions during their years of service and is concerned about their welfare in the current situation.

"In line with this, a review of public service salaries will be conducted, with the participation of civil service retirees.

"The pension adjustment will be implemented based on the percentage increase outlined in the Pension Adjustment Act 1980 [Act 238].

"We hope that it will have a positive impact on civil servants and retirees, and subsequently the government," he said.

On June 27, the Federal Court dismissed an appeal by the government and the Public Service Department (PSD) director-general against a Court of Appeal decision to declare an amended pension law null and void.

A five-member panel chaired by Court of Appeal president Tan Sri Abang Iskandar Abang Hashim ruled that both appellants' appeals had no merit.

When reading the unanimous decision, Chief Judge of Malaya Datuk Mohamad Zabidin Mohd Diah said the amendments made to Sections 3 and 7 of the Pensions Adjustment (Amendment) Act 2013 would be less beneficial to the respondent.

Aminah Ahmad, who retired as a civil servant with the Foreign Affairs Ministry, sued in her personal capacity and on behalf of 56 retired members of the public service, claiming that the amendments to the Pensions Adjustment Act resulted in a situation "less favourable" to her as compared with the preceding retirement adjustment scheme under the Pensions Adjustment Act 1980.

Under the old scheme, a retiree's pension is revised based on the prevailing salary of incumbent civil servants in that grade.

However, the 2013 amendment was introduced based on a flat rate of two per cent annual increment.

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