Ex-civil servants now demand adjusted pension within 14 days or could start contempt action against Putrajaya

KUALA LUMPUR, Dec 6 — Former civil servants have again demanded the Malaysian government pay for any shortfalls in the pension amount due to them after a Federal Court ruling restored an old pension scheme, this time setting a 14-day deadline instead of the previous 21 days for it to comply.

In a letter dated December 1 to the Public Service Department’s (JPA) pension division’s director Datuk Mohd Shaiful Ibrahim, former civil servant Aminah Ahmad — who had filed the court challenge in her personal capacity and in the capacity of 56 others — cautioned that they could seek to initiate contempt of court proceedings against the government if their demands are not met.

In the letter, the former civil servants’ lawyer Datuk Baljit Singh Sidhu said he has instructions from his client to give notice to JPA to take the necessary steps as demanded for in their previous October 6 letter — to adjust their pension payments if they are supposed to be receiving more under the now-restored old pension scheme — within 14 days from the date of this December 1 letter.

If JPA fails to fulfil the demands, the lawyer said steps will be taken to protect the client’s interests and rights, “including initiating legal actions that also covers contempt of court action against the relevant parties”.

Apart from making the 14-day demand, the former civil servants via Aminah also insisted that the Federal Court’s decision in their favour meant that JPA should pay more to make up for any shortfall in the pension amount they should receive, due to the reverting to the old pension scheme.

Baljit confirmed to Malay Mail that the letter was served on Monday to the JPA.

This latest letter by the pensioners was written in response to the JPA pension division director Mohd Shaiful’s October 17 letter, where JPA had different views from the pensioners.

What did JPA say previously

In that letter, JPA said the Federal Court’s June 27 ruling had restored the pension scheme to the old version but did not order the government to make retrospective payments to the pensioners.

JPA had also noted that the Court of Appeal’s January 2022 ruling — in favour of the pensioners — had declined to order the government to make retrospective pension adjustments to pay for any shortfall, as it had not been proven that the former civil servants in the court case had suffered any “actual loss”.

Following the Federal Court’s decision, the pension scheme has been restored to the version where pensioners’ pension rates are to be based on the “current salary scale,” which means the pensioners’ pension rate would increase if any existing civil servants’ salaries are increased.

This old pension scheme was in use until an amendment took effect in January 2013 and replaced it with the new pension scheme (where pensioners’ pension rates were increased by two per cent every year), but the Federal Court’s decision means Malaysia is now using the old pension scheme (where there are no annual increments but any increments would depend on whether civil servants who are still serving get any wage increases.)

Citing the old pension scheme that has now been restored, JPA said that since there were no changes in the “current salary scale” of civil servants since 2013, no adjustments or recalculations of pensions for government pensioners are carried out starting from 2013.

JPA claimed that the last increment for civil servants’ wages was in 2012 at between nine and 13 per cent.

In the same October 17 letter, JPA also stressed that the government had taken the necessary action in line with the Federal Court’s July 2023 decision to restore the old pension scheme.

JPA claimed that the restoration of the old pension scheme meant that starting from July 2023, civil servants who had retired before 2013 should receive pension amounts as of the December 2012 rate which took into account the government’s last salary revision in 2012, while those who retired from 2013 onwards should only receive pension based on the original amount when they retired as there was allegedly no salary revision for civil servants after 2012.

Even while saying that the government had followed the effect of the Federal Court ruling, JPA argued that the government had gone further by adding on a special financial aid from July to December 2023 to add on to the pensions received, in order to bring it back up to the same amount as June 2023 (before the Federal Court ruling restored the old pension scheme).

“Besides this, this department also wishes to stress that no adjustment and recalculation on pensions of government pensioners are carried out starting from 2013 since the government has not carried out changes to the current salary scale for public servants since 2013,” it said via the JPA pension division director.

JPA’s letter was itself in response to the pensioners’ October 6 legal letter, where the former civil servants had asked the government and JPA to have the pensions adjusted and to have any shortfall paid to them, with a 21-day deadline given.

The pensioners disagreed that the government’s last increase of civil servants’ salary scheme was in 2013, noting that the government had issued several circulars during the 2013 to 2023 period which did increase the salary scale for civil servants despite using other terms like ‘rationalisation’ or ‘improvement’. — Picture by Miera Zulyana

Why the pensioners insist on pension adjustments

In the pensioners’ same December 1 letter, the former civil servants argued that the Federal Court did not need to order the government to make the pension shortfall payments, as this would be the automatic effect or direct effect of the old pension scheme being restored.

The pensioners also disagreed that the government’s last increase of civil servants’ salary scheme was in 2013, noting that the government had issued several circulars during the 2013 to 2023 period which did increase the salary scale for civil servants despite using other terms like “rationalisation” or “improvement”.

In the December 1 letter, the pensioners concluded by pressing the government to adjust eligible pensioners’ pension amounts without delay.

Previously, the pensioners had on October 6 sent out its first legal letter to demand to the government for adjusted pension payments — within 21 days — after the Federal Court ruling.

Malay Mail understands that the pensioners had not filed any court action after the end of the 21-day deadline from the October 6 letter.

On April 28, 2017, Aminah had on behalf of the 56 others filed a lawsuit against the government of Malaysia and the public services director general to challenge the 2013 amendments to the Pensions Adjustment Act 1980, which changed the pension adjustment scheme to a new system with an annual two per cent increment.

Under the old pension scheme, the pension amount is adjusted or increased whenever there is a salary revision for serving government employees (who are of the same grade as the pensioner).

Under the new pension scheme introduced in 2013, 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. The annual two per cent increment under the new pension scheme meant pensioners’ pension amount would not need to be dependent on salary revisions.

Aminah lost in the High Court on January 9, 2020, but won her appeal at the Court of Appeal in January 2022. The Federal Court in June this year dismissed the government’s appeal and upheld the Court of Appeal’s decision.

The Federal Court struck down the 2013 amendments (which introduced the new pension adjustment scheme of an annual 2 per cent increment) as unconstitutional, and restored the previous version of the law (which contained the old pension adjustment scheme where existing public servants’ salaries revision would also increase pensioners’ pension amount).

As of December 31, 2022, there are 874,842 pensioners in Malaysia.

Prime Minister Datuk Seri Anwar Ibrahim had on July 12 said the Cabinet has decided to restore the pension amount paid to retired civil servants to the original amount following the Federal Court’s decision, while the Public Service Department’s pension division director on July 20 said a special payment would be paid to retired civil servants from July to December 2023 to ensure that they continue to receive the same amount as the current sum that they would have been receiving under the new scheme.

Anwar on July 27 said that a comprehensive study that would take up to eight months would be required before a proposed new salary and pension scheme for civil servants can be brought to the Cabinet, and had on September 3 said the salary scales of civil servants would be adjusted through the government’s Budget 2024 as a temporary measure until the comprehensive study is completed by next year.

In Anwar’s Budget 2024 speech tabled on October 13, he said civil servants’ salary scheme was last reviewed in 2012 and the government is currently reviewing it and that the study for this review is expected to be finalised by the end of 2024.

While waiting for the study on the review of civil servants’ salary to be completed, Anwar had said an “early incentive payment” would be paid out in the form of RM2,000 to civil servants grade 56 and below, and a RM1,000 incentive would also be paid out to all government retirees. He said these payments would be made at the end of February 2024 to lighten the burden of those preparing for their children’s schooling and preparations for the Muslims’ fasting month Ramadan and the month of Syawal when Hari Raya Aidilfitri is celebrated.