Government Files Application to Suspend Pension Adjustment Decision for Retirees

The government has filed an application to suspend the High Court’s decision that allowed a judicial review by a pensioner regarding pension payment adjustments based on the final salary, as per the 2016 Public Service Department (JPA) circular, effective from January 2022.

The government and the Director-General of Public Service filed the application today at the High Court, citing special circumstances that warrant the suspension of the order until their appeal is decided by the Court of Appeal.

According to a supporting affidavit obtained by the media, the Director-General of Public Service, Tan Sri Wan Ahmad Dahlan Abdul Aziz, stated that the order, which involves back payments of pension amounting to an estimated RM1.7 billion from January 2022, would not only be payable to the applicants (Aminah Ahmad and 56 retired public servants) but also to 531,976 pensioners.

Wan Ahmad Dahlan explained that the back payment involves significant financial implications, requiring the government to restructure its funding allocations for national infrastructure, social, and economic development based on the advice of the Ministry of Finance, to channel funds to the Retirement Fund (KWAP) to cover the unforeseen expenses arising from the court order.

“Additionally, the pension adjustment process involving 531,976 pensioners has to be managed by 18 officers from the Pension Division and the Public Service Department (JPA), with assistance from operational officers at KWAP.

“This process will impact core tasks such as managing retirement matters for future pensioners and other retirement-related issues handled by JPA,” he stated in the affidavit.

Wan Ahmad Dahlan further elaborated that calculating the pension arrears is a lengthy and complex process, requiring JPA to manually review the service records of pensioners from various job grades and service schemes who retired on or before July 1, 2016, and were still receiving pensions as of January 2022.

“JPA must also determine which pensioners are eligible for the adjusted pensions as of January 2022,” he added.

Furthermore, he stated that JPA must also recalculate pension adjustments after 2024, following the salary review announced by the government for pensioners who retired on or before July 1, 2016.

“This is because the pension amount received after 2024 will change based on the necessary pension adjustments resulting from this High Court decision,” he explained.

Wan Ahmad Dahlan also pointed out that if the government wins the appeal, reclaiming the pension arrears already paid out would be time-consuming, costly, and labor-intensive, as all adjustments made per the court order, including those for 2024, would have to be reversed.

“If pensioners refuse to return the overpaid amounts, the respondents (the government and the Director-General of Public Service) would have to take legal action in court to recover the payments, which would further consume time and add to the government’s costs,” he added.

Meanwhile, Senior Federal Counsel Ahmad Hanir Hambaly confirmed the suspension application when contacted by reporters.

On January 16, High Court Judge Datuk Amarjeet Singh, while allowing the judicial review, had also ordered the government and JPA to pay the pension arrears within three months from the judgment date (January 16).

Aminah, a retired public servant from the Ministry of Foreign Affairs, sought a mandamus order compelling the respondents to expedite the pension adjustment in accordance with the formula outlined in Sections 3 and 6 of the Pensions Adjustment Act 1980 (PAA 1980), before its amendment under Sections 3 and 7 of the Pensions Adjustment (Amendment) Act 2013 (PAA 2013).

Filing the application on behalf of herself and 56 other retired civil servants, she also sought an order for the respondents to pay the pension arrears within 14 days and a declaration that the failure to do so violates the Federal Constitution.

Under the previous scheme, pensions were adjusted based on the prevailing salary of active civil servants in the same grade. However, the 2013 amendment introduced a flat annual increase of two percent.