KUALA LUMPUR (Feb 24): The Public Service Department (PSD) and the government have denied that they do not have the financial capability to pay the RM1.7 billion coordinated pensions for pensioners following the High Court’s decision on Jan 16.
However, the director general of the PSD, Tan Sri Wan Ahmad Dahlan Abdul Aziz, in his affidavit in reply to pensioner Aminah Ahmad’s opposition for a stay, said any public funds would have to be managed regularly and carefully, to ensure that any planning that had been made would not be affected.
“This is to protect the interests of the government. As respondents, nowhere did we say that the Malaysian government does not have the ability to pay the sum. The cited figure of RM1.7 billion should not be deemed as a threat or create a threat to anyone, including to this honourable court.
“This (the RM1.7 billion) is based on the rough calculation based on the available data and cross-referencing with the service records of the pensioners,” Wan Ahmad Dahlan said.
Wan Ahmad Dahlan said this in reply to Aminah’s affidavit to the PSD and the government’s stay application for the Jan 16 decision that requires the PSD and the government to pay former civil servants the pensions entitled to them based on their final salaries according to the 2016 PSD circular, effective from January 2022. This payment must be made within three months from the Jan 16 date.
Aminah and other pensioners say the stay should not be allowed, as the government has not shown that there are no funds available to settle its payment obligations.
“Aminah (and the other pensioners) should realise that public funds have their own role, and are earmarked for certain purposes the previous year (according to the budget) — for other purposes like the development of the country, pension coordination, investment and savings. These public funds have to be managed based on careful planning and according to the advice of the Finance Ministry, to ensure a stable economy and finance of the ministries and their agencies,” the PSD chief added.
Wan Ahmad Dahlan further said that the Jan 16 decision had created special circumstances on the coordination of pensions, as this is a further burden when coupled with the government’s announcement of a review of the 2024 wages, which would have an impact on the pensions that former civil servants would receive.
The PSD DG further added that there would be a deep impact on the PSD and the government, if their appeal against the Jan 16 ruling is successful, since it would then require the pensioners to return the money if the government has already paid it out.
“The applicants themselves admitted that they are aged. Hence, as respondents, they (the PSD and the government) are faced with the risk of seeking back the payments (should the appeal be successful). The pensioners have to realise that if the government were to cut their pensions via a “one-off” [deduction], it would depend on the pensioners' finances.
“The PSD and the government are concerned that the reduction of their pensions would affect the pensioners’ livelihood, should they have spent the amount (if it had been disbursed and the government wins the appeal and has to recover the sum back),” he said.
Initially, the hearing of the stay application was scheduled for Monday (Feb 24) before High Court judge Datuk Amarjeet Singh. But Aminah had filed a reply to Wan Ahmad Dahlan’s affidavit on Monday after the PSD DG filed it on Saturday.
Senior federal counsel Ahmad Hanir Hambaly @ Arwi, who appeared with federal counsel M Kogilambigai, said that while they are prepared to make submissions on the stay application, they may have to first look at Aminah’s reply. As such, they requested for an adjournment of the hearing for a few days.
Amarjeet said the court itself had yet to look at Aminah’s reply.
Aminah’s lawyer, Datuk Dr Baljit Singh, said they are prepared to adjourn, but asked for the hearing to be adjourned to Friday, as the case is long-standing.
However, Amarjeet replied that the court would be tied up on that day, and hence fixed Tuesday (March 4) to hear the PSD and the government’s stay application.
Aminah’s reply
Aminah, a former Wisma Putra staff who retired in 2002, brought the action in 2017, naming the government and the PSD DG as respondents.
She claimed that the Pension Adjustment Act (PAA) 2013 amendment, which had brought about a flat rate of 2% increment, was unconstitutional when compared to the PAA 1980, which was more favourable, since pensions of government retirees were revised based on the prevailing salaries of incumbent civil servants at that grade.
In her reply to Wan Ahmad Dahlan’s affidavit, Aminah said that the alleged commencement of adjustments by the PSD is unsubstantiated by clear evidence and does not absolve them of the obligation to ensure prompt and complete disbursement of the outstanding arrears.
“The PSD and government have continuously denied their responsibility to make adjustments to our pensions and other pensioners following the Jan 13, 2022 Court of Appeal decision. Therefore, their assertion that a stay is not intended to evade responsibility in making payments for pension arrears is misleading,” she said.
She added that while the the PSD was trying to describe that calculating their pensions was an intricate process that cannot be simplified, it is misleading, as this is not backed up by evidence.
“It is tantamount to stating that the record-keeping on the part of the respondents (the PSD and government) is woefully poor and is in a disparate state. Even if that is so, such abject failure to keep proper records is not a ground for seeking a stay,” Aminah said, adding this is not an excuse for non-compliance with the court order on the adjustments and payments.
“The PSD and government’s reference to the salary review in 2024 is wholly irrelevant to their obligation to comply with the Jan 16 High Court order, as they cannot now claim that compliance has been rendered unduly complex due to subsequent developments.”
Amarjeet in his Jan 16 decision directed the PSD and the government, through a mandamus order (to compel them), to make the payment, saying that the PSD’s 2016 circular has the effect of a salary revision for all civil servants, and hence the pensioners are entitled to the increment.
“In light of the Federal Court’s decision (that dismissed the government and PSD’s appeal), the arrears are to be paid effective from January 2022 (the date of the Court of Appeal’s decision that allowed Aminah’s appeal). The court makes no order as to costs,” the judge had said in reading his decision.
Despite this being an action by Aminah on behalf of 56 other retirees, this decision will affect an estimated 531,976 former civil servants.
In January 2022, a three-member Court of Appeal bench, in allowing Aminah’s appeal, ruled that the PAA 2013 was null and void, when it declared Sections 3 and 6 of the amendment as being unconstitutional.
The Court of Appeal’s unanimous decision in January 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, dependants, 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.
However, in allowing Aminah’s appeal, the Court of Appeal ordered that the revision be based prospectively effective from its January 2022 decision, and not retrospectively from the PAA 2013 that had been declared null and void.