RM1.3 bln needed to restore pension sum for civil service retirees already accounted for in Budget 2023

Datuk Seri Anwar Ibrahim (left) speaks during the “Cakna Madani” awareness programme with enforcement agencies today. – Bernama photo

PUTRAJAYA (July 13): Putrajaya’s coffers will not be impacted by the Cabinet’s decision to restore the pension amount paid to retired civil servants back to its original amount following the Federal Court ruling last month, Prime Minister Datuk Seri Anwar Ibrahim said today.

Speaking to reporters, Anwar said that the RM1.3 billion that was expected to be spent by the government via special aid has been included in the Budget 2023 that was approved earlier this year.

“The financial implications are RM 1.3 billion. But this is included in the national budget … this is not extra,” he said after attending the “Cakna Madani” awareness programme with enforcement agencies.

Following that, Anwar also announced that he will chair a special committee meeting to address the issues related to civil servants and its retirement schemes.

He admitted that the government needs to reevaluate the civil service salary and retirement schemes.

“In about a week, I will chair the committee’s first meeting to look into the entirety of the service and retirement scheme for civil servants.

“Depending on our financial standing, we will see how we can increase (financial allocations) to civil servants so that they receive reasonable and fair funding,” he added.

Yesterday, Anwar said that the Cabinet has decided to restore the pension amount paid to retired civil servants to the original amount following the apex court’s verdict last month.

However, the prime minister said for those who were receiving pension sums that were higher than the original amount, the government will continue to pay this difference in the form of a special aid.

On June 27, the Federal Court had decided that a 2013 amendment to the Pensions Adjustment Act — which introduced a new pension scheme that adjusts pension payments every year by a two per cent increment — carries the risk of being financially “less favourable” to retired civil servants.

The Federal Court upheld the Court of Appeal’s decision to declare the 2013 amendments as invalid, and ruled that the striking down of the 2013 amendments meant that the older version of the Pensions Adjustment Act was automatically restored.

Under the 2013 amendments which took effect on January 1, 2013, it introduced a new scheme of an annual two per cent increment.

Under the new scheme, when salaries for current civil servants go up, it would not affect the pension sum to be paid to pensioners even if they are of the same grade.

Before the 2013 amendments introduced the new scheme of an annual 2 per cent increment, the old scheme resulted in the pension amount being adjusted or increased whenever there is a salary revision for serving government employees (of the same grade as the pensioner).

Following the Federal Court’s decision, the old scheme of pension adjustment is the one that now applies in Malaysia. This scheme is the one where existing public servants’ salaries revision would also increase pensioners’ pension amount. – Malay Mail

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