KUALA LUMPUR: The government has filed an application to stay the High Court’s decision allowing a judicial review by a pensioner regarding the payment of pension adjustment for retirees based on their final salary according to the 2016 Public Services Department Circular, effective January 2022.
The government and the Director-General of Public Service (KPPA) filed the application today at the High Court here, citing the existence of special circumstances that justify the stay of the decision pending appeal at the Court of Appeal.
Based on the affidavit, KPPA Tan Sri Wan Ahmad Dahlan Abdul Aziz said that the pension adjustment and arrears, involving an estimated RM1.7 billion from January 2022, must not only be paid to the applicants (Aminah Ahmad and 56 other public service pensioners), but also to 531,976 other pensioners.
He explained that as the payment of these pension arrears has significant financial implications, the government would need to reorganize its funds allocated for the country’s infrastructure, social, and economic development, as advised by the Ministry of Finance, in order to channel funds to the Retirement Fund to cover the unexpected expenses arising from the court order.
“Furthermore, the pension adjustment process, which involves 531,976 pensioners, needs to be managed by 18 officers in the Pension Division and the Public Service Department (PSD), with assistance from operational officers at the Retirement Fund Incorporated (KWAP),” he added.
“This pension adjustment process will affect the execution of core duties, such as retirement matters for prospective retirees and issues related to pension affairs handled by the PSD,” he said in the affidavit.
Wan Ahmad Dahlan explained that the calculation of pension arrears is a long and complicated process, as it requires the PSD to manually review the service records of pensioners, which consist of various job grades and service schemes, who retired on or before July 1, 2016, and are still receiving pensions as of January 2022.
“The PSD also needs to determine which pensioners are eligible to receive the adjusted pensions as of January 2022,” he said.
In addition, he said that the PSD now needs to recalculate the pensions to align them after 2024, following the salary adjustment announced by the government for pensioners who retired on or before July 1, 2016.
“This is because the amount of pension to be received after 2024 will change based on the pension adjustment that must be carried out following the High Court’s decision,” he said.
Wan Ahmad Dahlan further stated that if the appeal favours the government, the process of recovering pension arrears that have already been paid would take time, incur costs, and require effort, as all processes carried out to adjust pensions according to the court’s order would have to be reversed, including the pension adjustment for 2024.
“If the pensioners refuse to return the pension arrears that have been paid, the respondents (the government and the KPPA) will have to file a lawsuit in court to recover the pension arrears. This will, indirectly, take time and incur additional costs for the government,” he said.
Meanwhile, Senior Federal Counsel Ahmad Hanir Hambaly, when contacted by reporters, confirmed the application for the stay.
On Jan 16, the High Court Judge Datuk Amarjeet Singh, who allowed the judicial review application, also ordered the government and PSD to pay the arrears within three months from the date of the judgment (Jan 16).
Aminah who retired as a civil servant with the Ministry of Foreign Affairs, filed the judicial review application on Jan 12 last year in her capacity and on behalf of 56 retired members of the public service.
She was seeking a mandamus order to compel the respondents to expedite the pension adjustments to the qualifying amount following the formula contained in Sections 3 and 6 of the Pensions Adjustment Act 1980 (PAA 1980) before amendments were made under Sections 3 and 7 of the Pensions Adjustment Act (Amendment) 2013 (PAA 2013).
Aminah also sought an order for the respondents to pay the pension arrears within 14 days, in addition to a declaratory order stating that the failure to pay violates the Federal Constitution.
Under the old scheme, the 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.
