Amendments to Pensions Adjustment Act unconstitutional, rules Federal Court

PUTRAJAYA: The Federal Court here has affirmed a Court of Appeal decision that struck down a "less favourable" amendment made to laws governing civil servants' pensions.

A five-judge bench chaired by Court of Appeal judge Justice Abang Iskandar Abang Hashim, dismissed the appeal by the government and the director-general of public services on grounds that it had no merit.

Other judges on the panel were Chief Judge of Sabah and Sarawak Justice Abdul Rahman Sebli, Federal Court judges Justices Hasnah Mohammed Hashim, Rhodzariah Bujang and Mohamad Zabidin Mohd Diah.

In the unanimous decision delivered by Justice Mohamad Zabidin, the panel said it was not disputed that the amended Section 3(2) of the Pensions Adjustment Act 1980 acknowledged that a less favourable situation could arise with regards to pensioners' entitlement.

The decision by the Federal Court also reinstated the original provision.

"It is our considered view that the Court of Appeal is correct in restoring the status quo.

"This is because when a court strikes down a statute or an amendment to a statute, the pre-existing provision is automatically revived," Justice Mohamad Zabidin said here on Tuesday (June 27).

The court did not make an order as to costs.

Lawyer Lim Choon Khim represented Aminah and her ex-colleagues, while senior federal counsel Shamsul Bolhassan and Liew Horng Bin appeared for the government.

The case was brought forward by the government and the director-general of public service who were appealing against the Court of Appeal's decision that reversed the decision of the High Court on Jan 8, 2020.

At High Court level, pensioner Aminah Ahmad and 56 retired civil servants filed the lawsuit against the Public Service Department (JPA) on grounds that Sections 3 and 7 of the Pensions Adjustment (Amended) Act 1980 violated Article 147 of the Federal Constitution.

The group was challenging the amendments made to the Act, where under a new pension scheme, pensioners were given annual increments at a flat 2% rate.

Under the old scheme, government retirees were entitled to pension based on the prevailing salary of incumbent civil servants in the same grade.

On Jan 8, 2020, the High Court dismissed Aminah's legal challenge.

However, on Jan 13, 2022, the Court of Appeal ruled in favour of the pensioners and reversed the dismissal.