Court backs government retirees on pension scheme

PUTRAJAYA: The Federal Court here has affirmed a decision by the Court of Appeal that struck down a “less favourable” amendment to the law provision concerning civil servants’ pensions.

A five-judge bench of the apex court, chaired by Court of Appeal judge Justice Abang Iskandar Abang Hashim, dismissed the appeal by the government and the director-general of the Public Service Department (PSD) because it had no merit.

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

In the unanimous decision, which Justice Mohamad Zabidin delivered, the panel said it was not disputed that the amended Section 3(2) of the Pensions Adjustment Act 1980 (PAA 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 view that the Court of Appeal is correct in restoring the status quo. When a court strikes down a statute or an amendment to a statute, the pre-existing provision is automatically revived,” Justice Mohamad Zabidin said.

The court did not make an order as to cost. The appeal was brought forward by the government and the director-general of PSD, who were appealing against the Court of Appeal’s decision that reversed the decision of the High Court on Jan 8, 2020.

At the High Court level, pensioner Aminah Ahmad and 56 retired civil servants filed the lawsuit against the PSD because 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 the new pension scheme introduced gave pensioners a flat rate of a 2% annual increment.

Under the old scheme, government retirees were entitled to pensions 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 favoured the pensioners and reversed the dismissal.