KUALA LUMPUR (March 4): The High Court on Tuesday granted the government's stay application from paying RM1.7 billion to some 530,000 pensioners by April 16.
Judge Datuk Amarjeet Singh granted the government a stay of the order, pending the government's appeal to the Court of Appeal.
“The court is satisfied that there are exceptional circumstances to grant a stay of the court’s order on Jan 16,” the judge said.
He made no order as to costs.
On Jan 16, Amarjeet approved a pension increase for retirees sought by Aminah Ahmad, who represents 56 other former civil servants, based on their final salaries according to the 2016 Public Service Department (PSD) circular, effective from January 2022.
The court ordered that the sum be paid within three months from Jan 16. However, the federal government filed an appeal to the Court of Appeal on Jan 23, and sought a stay of Amarjeet’s decision.
Special circumstances as govt may have difficulty to recover sum if appeal allowed
Earlier, senior federal counsel Ahmad Hanir Hambaly @ Arwi, who appeared with federal counsel M Kogilambigai, told the court that there are special circumstances for the court to grant a stay, as it may cause difficulty to the government to recover the estimated RM1.7 billion payout should the government’s appeal is successful.
Ahmad Hanir argued that if pensioners are due to receive RM5,000 in arrears, the government cannot simply deduct future pensions to recover the sum if the appeal be successful, as some of the 531,976 former civil servants depend solely on their pensions.
“The government cannot deduct RM1,000 a month, or RM200 within three or four years, to recoup [the sum] should the Court of Appeal allow the appeal. Furthermore, the PSD needs to identify the various categories of pensioners, as they are involved in two different schemes, and the PSD has to peruse the pension records.
“The computation is complicated. Furthermore, as the court says that the arrears are to be paid from January 2022, the government would have to see those before 2016 and those after that. There are some pensioners whose posts are no longer in existence and hence given a new grade,” he said.
Furthermore, Ahmad Hanir said the government had last year announced an increase in civil servants' salaries, and this would affect the calculation.
He added that the government is not shying away from its commitment to pay, as it has the capacity but needs a stay to further calculate.
PSD DG says last year’s salary increase met with special payment to pensioners
Besides this, PSD director general Tan Sri Wan Ahmad Dahlan Abdul Aziz in his affidavit in reply on Monday said the purported reduction in pensions in 2013 as alleged by the former civil servants following the Federal Court decision had been balanced — when the government paid via special appreciation payment to pensioners (PKPP) as announced last year.
“This was directed at maintaining the welfare of the pensioners,” the PSD DG said.
Wan Ahmad Dahlan said the PKPP had stipulated the difference in current pensions and original pensions as can be seen in the difference in the sums. The amount of the PKPP was much higher than the arrears of the former civil servants' pensions before the Federal Court decision.
Following the High Court’s decision on Jan 16, Wan Ahmad Dahlan said the government had to relook further, in line with the 2024 increase.
Meanwhile, Datuk Shukor Ahmad, who appeared with Datuk Baljit Singh Sidhu, in reply to Ahmad Hanir said the government had previously said they could pay the sum, and hence they should execute it.
He added that the pensioners understand the complexity in calculating the arrears following adjustment, but this does not amount to special circumstances to seek a stay.
“The Retirement Fund (Incorporated) (KWAP) has a humongous fund, and there are enough funds,” he said, further suggesting that the sum of RM1.7 billion be deposited in court as a measure.
Looking at the court’s judgement, Shukor said it shows there is no effort by the government to comply with the court’s order.
Despite the submissions made, Amarjeet granted a stay, and also dismissed Shukor’s oral application to stay the court’s decision on Tuesday.
Jan 16 decision that entitled pensioners to an increment
Amarjeet in his Jan 16 decision said the 2016 PSD circular had 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 pensioner Aminah Ahmad’s appeal). The court makes no order as to costs,” the judge said in reading his decision.
In January 2022, a three-member Court of Appeal bench, in allowing Aminah’s appeal, ruled that the Pension Adjustment Act 2013 (PAA 2013) was null and void, when it declared Sections 3 and 6 of the amendment as being unconstitutional.
Aminah, a former Wisma Putra staff member who retired in 2002, brought the action in 2017, and named the government and the PSD DG as respondents.
She claimed that the PAA 2013 amendment, which had brought about a flat rate of 2% increment, was deemed unconstitutional when compared to the PAA 1980.
The PAA 1980 was deemed more favourable, because the pensions of government retirees were revised based on the prevailing salaries of incumbent civil servants in that grade.
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 contravened 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.
Arrears to apply prospectively from January 2022, not retrospectively
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.
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.
Goon’s unanimous 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 allowed a 2% increment annually was less favourable to pensioners, and upheld the declaration that it was null and void and in contravention with Article 147.
“We find no reason to depart from the Court of Appeal judgement. Hence, the apex court finds no merit in the appeal by the government and the PSD DG, and the appeal is dismissed,” Zabidin had said.