KUALA LUMPUR: The government's liability for pension payments, including retirees from the civil service, members of parliament (MPs) and administration officials, political secretaries, and judges, is increasing by over RM1 billion annually.
Minister in the Prime Minister's Department (Federal Territories), Dr Zaliha Mustafa, said the government paid RM32.01 billion to 931,707 retirees last year, an increase of RM1.75 billion compared to the previous year's payment to 902,999 retirees.
She said in 2022, the government paid pensions amounting to RM30.26 billion, an increase of RM2.22 billion compared to 2021, which was paid to 878,441 retirees involving a payment of RM28.04 billion.
"In 2020, the government paid RM26.39 billion to 859,422 retirees," she said in a written reply in parliament. She was responding to a question from Khairil Nizam Khirudin (PN-Jerantut) who asked about the actual amount of pension payments to retired civil servants involved from 2020 to 2023 and the percentage of pension allocations from the total government expenditure.
Meanwhile, responding to Wong Chen's question (PH-Subang), Dr Zaliha said the government's retirement benefit liability is projected to increase every year.
She said that in 2023, the total expenditure on retirement benefits is RM32.01 billion and is expected to reach RM46.36 billion by 2030 and RM120 billion by 2040.
Therefore, she said, to ensure that the government can manage the country's financial expenditure more sustainably, a new permanent appointment method is being studied, and the implementation of this new permanent appointment method is expected to provide long-term savings to the government in terms of pension liabilities.
"The interim contract appointment is a temporary step towards introducing a new permanent appointment method for civil service officers.
"The duration of this interim contract appointment shall not exceed three years before the officers are appointed permanently without the need for re-recruitment," she said.
Wong Chen asked about the amount of financial savings the government can achieve over the next 20 years when the civil service pension system is replaced with contract-based recruitment for new appointments.
Responding to a question from Datuk Siti Zailah Mohd Yusoff (PN-Rantau Panjang) regarding the government's current policy on civil service pensions and the long-term impact study on societal and national development, Dr Zaliha said that at present, the pension scheme for serving officers and existing retirees is still ongoing, but the financial implications regarding retirement benefit obligations are increasing every year.
Therefore, she said, to ensure that the government can manage the country's financial expenditure more sustainably, the government is studying a new permanent appointment method and will present the results of the study to the cabinet for consideration and approval.
According to her, the new permanent appointment method to be introduced by the government is a significant step towards offering a long-term solution to the issue of increasing civil service pension liabilities while ensuring the continuity and fiscal sustainability of the state in financing expenditures related to the emoluments and retirement benefits enjoyed by civil servants.
"Newly appointed officers through the new method will receive the same salary, allowances, and benefits as permanent appointees and existing retirees. This includes any fixed allowances such as the Fixed Entertainment Allowance (ITK) and the Fixed Housing Allowance (ITP), as well as other allowances eligible for specific service and task schemes.
"Through initiatives under the Civil Service Remuneration System Study, the government is also focusing on increasing the disposable income of civil servants in line with the current cost of living," she said.
In addition, she said, with the introduction of new retirement benefits and initiatives under the Civil Service Remuneration System Study, it is expected that the productivity of civil servants will increase, thereby encouraging them to provide optimal contributions to the civil service.