Dr Ali, who turns 63 on Aug 29, is unlikely to be stepping down by this month, as claimed by some recent news reports.
Malaysiakini reported that Ali had had his contract extended by two years, and is only expected to retire in August 2020.
"It is a normal practice in the government that contract officers will have their contracts reviewed within six months before the service term ends.
"The decision to renew his contract had received the consent of the Yang di-Pertuan Agong and the letter was handed to him in March," a high-ranking government official told the news portal.
Another source close to the Prime Minister's Department told Malaysiakini that reports about Ali retiring this month were inaccurate because they had not taken the extension into account.
"Possibly, they did not know about it, as not many officials in the Prime Minister’s Department was privy to this information," said the officer.
However, the source added that although Dr Ali's contract had been extended, it is still the prerogative of the Prime Minister to decide whether or not to continue his service.
"The Prime Minister can decide to extend or shorten it. However, so far, we have not heard any word from Tun (Dr Mahathir Mohamad) about this," said the officer.
Dr Ali was made Chief Secretary in June 2012. He reached the retirement age of 60 in 2015, when the federal government first extended his term in office for another three years.
Dr Ali was widely considered to be on the chopping block. According to The Star on Aug 17, Ali had refused to comment on reports of his departure.
Malaysiakini reported that sources claimed that Pakatan Harapan cabinet ministers had grown to like Ali over the past three months.
They said he had been cooperating with the new administration and that he was consulted by several ministers for advice on the running of their respective ministries.
Mahathir, who was sworn in as the seventh prime minister on May 10, dropped several top government officials soon after assuming office.
Among those who had their contract shortened were former Treasury secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah, former attorney-general Tan Sri Mohamed Apandi Ali and former Election Commission chairperson Tan Sri Mohd Hashim Abdullah.
Former MACC chief commissioner Tan Sri Dzulkifli Ahmad, meanwhile, resigned.