KUALA LUMPUR (Dec 1): Come Monday, the High Court is expected to announce its decision on whether pensioners are entitled to enforce the Court of Appeal's (COA) mandamus order, which mandates the government to pay them pre-2013 pension adjustment arrears prospectively from January 2022.

Judge Datuk Amarjeet Singh Serjit Singh is scheduled to deliver his decision, which would affect over 930,000 pensioners, after he heard submissions on Oct 2.

In October, lawyers for Aminah Ahmad, who filed a class action on behalf of pensioners, told the court that the pension arrears that they have yet to obtain should be calculated from January 2022 until the High Court enforces the judgment.

This argument follows her and other retirees' successful challenge to declare Sections 3 and 6 of the Pension Adjustment (Amendment) Act 2013 (PAA 2013), enacted during Datuk Seri Najib Razak's tenure as prime minister, as unconstitutional.

She had named the government and Public Services Department (PSD) director general as respondents.

Aminah, a former Wisma Putra staff member who retired in 2002, brought the action in 2017 challenging the Jan 2013 amendment that brought about a flat rate of 2% increment to pensions annually.

This was compared with the previous scheme, where the pension of government retirees was revised based on the prevailing salary of incumbent civil servants at that grade.

Following the non-compliance in implementing the arrears, Aminah’s solicitor from Messrs Shukor and Baljit wrote to the PSD earlier this year and reminded it of the Pension Adjustment Act 1980, which was restored by the Federal Court decision last year.

“The Pension Adjustment Act 1980 stipulates that pensioners have a right to receive such benefits of increment, which are equivalent to those who are still serving. The purpose is to ensure that those who receive pensions remain in the appropriate status of the present equivalent lifestyle of the officer in their grade,” the provision states.

Federal Counsel M Kogilambigai, in reply, said the 2013 PAA amendment is not considered a salary revision, but an improvement in the structure of wages, which may not apply to pensioners.

The Court of Appeal in a unanimous decision in Jan 2022, written by then judge Datuk Darryl Goon Siew Chye, agreed that the PAA 2013 amendment may result in a less favourable position, and hence contravenes Article 147 of the Federal Constitution.

Article 147 regarding the protection of pension rights stipulates — The law applicable to any pension, gratuity or other like allowance (in this constitution referred to as an “award”) granted to a member of any of the public services, or to his widow, children, dependant or personal representatives, shall be that in force on the relevant day or any later law not less favourable to the person to whom the award is made.

Goon — who sat with Datuk Vazeer Alam Mydin Meera and Datuk Abu Bakar Jais (both now Federal Court judges) — in finding the 2% increment imposed in the PAA 2013 to be unreasonable, said Section 3(2) prescribes that the Yang di-Pertuan Agong may prescribe different percentages of increment for different categories of recipients to remedy the situation.

The government and the High Court judge recognise that the amended Section 3(2) of PAA 2013 acknowledges that a less favourable condition may arise, the judge said in his written grounds.

“In our (COA) view, the amended Section 3(2) of the PAA 1980 is in fact an acknowledgement that the amendments could result in a less favourable situation. On this, we are in agreement with the High Court judge.

“However, the mechanism built into Section 3(2) to address a less favourable situation, should it arise, is merely permissive. This is because what is clearly stated is that should a less favourable situation materialise, the Yang di-Pertuan Agong '… may by order in the Gazette prescribe an appropriate higher percentage of increment to be applied in such case'.

“It is plainly obvious that the term 'may', in Section 3(2) of the PAA 1980 as amended, imposes no obligation to act. 'May' is merely permissive. In context, it simply cannot be read as 'shall' and there is also no submission by the respondents (the government and Public Services Department DG) to this effect,” he said.

“In our view, the amended Section 3(2) of the PAA 1980 does not ensure that Article 147 of the Federal Constitution is not contravened. It would have been so if, should a less favourable situation arise, the machinery provided for adjustment under the amended Section 3(2) were to be implemented automatically or that it shall be so implemented as of right, to extinguish the less favourable situation.”

The appellate court judge, in declaring the two amended sections as null and void, said under Article 147, it is the ‘later law’ that must not be ‘less favourable’ than previous amendments.

“There is no requirement that any pensioner, for example, must first suffer actual loss or damage before the less favourable law may be held to contravene Article 147,” he said.

Goon’s decision was upheld by the Federal Court in June 2023, when then chief judge of Malaya Tan Sri Mohamad Zabidin Mohd Diah said the PAA 2013 amendment that allows a 2% increment annually is less favourable to pensioners, and thus declared it null and void and in contravention with Article 147 on protection of pension rights.

“We find no reason to depart from the Court of Appeal judgment. Hence, the apex court finds no merit in the appeal by the government and the PSD director general, and the appeal is dismissed.

In an immediate response, Prime Minister Datuk Seri Anwar Ibrahim in July last year assured that the government would come up with a mechanism “to protect pensioners”, in response to the apex court’s decision to nullify and void the PAA 2013 amendment.

He further announced pension payments for civil service retirees for the July-December 2023 period will revert to an earlier mechanism before the 2013 revision.

Anwar in a statement said the government will also study the revision of civil service salaries, adding that the study will involve civil service retirees.

Pensions and derivative pensions for the July-December 2023 period will be paid using original pension amounts, in line with the apex court decision, Anwar said in announcing the Cabinet’s decision.

The pension amount is derived in two parts. For civil servants who retired before 2013, the payout is reverted to the December 2012 amount. For those who retired from 2013 onwards, the payment is reverted to the original amount upon retirement, it added.

The difference between the current and original payment amount will be paid in the form of special assistance termed special appreciation to retirees.

The Edge had on Sunday reported that ex-judges had last month received their arrears in pension.

Notably on July 31, this year, Retirement Fund Inc (KWAP) announced strong financial results for the year ending Dec 31, 2023, as its fund size grew from RM158.1 billion in 2022 to RM169.8 billion in 2023, marking a 7.4% growth.

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