PSD should explain how pensions were adjusted

IN the recent pension adjustment exercise following the implementation of the new Sistem Saraan Perkhidmatan Awam (SSPA) or Public Service Remuneration System, the Public Service Department (PSD) should have provided pensioners with an explanatory note showing how their pensions were adjusted to the current SSPA scales.

This adjustment was carried out pursuant to the Pensions Adjustment Act 1980, which requires pensions to be aligned with current salaries.

Although the PSD’s website outlines the adjustment methodology in general terms, it offers little practical guidance to these pensioners who are seeking to apply the formula to their respective cases.

Central to the methodology is the concept of the corresponding last drawn salary of the retiree, which is defined in the Act as “...the equivalent salary that the officer would have drawn under the current salary scale prior to death in service or to retirement had he been in service on the implementation of the current salary scale and had it been applied to him.”

The definition introduced a legal fiction of a retiree being treated as if he were still in service, for the purposes of pension adjustment. And it is the PSD that makes the determination of the corresponding last drawn salary for each individual case under the Act.

Moreover, in the decade preceding the SSPA, the PSD had introduced substantial changes to the civil service remuneration schemes. These included improvements to the minimum and maximum salaries, consolidation and amalgamation of certain schemes, award of a one-off increment, abolition of certain posts and the introduction of a RM1,200 minimum starting pay.

As a result, the number of service schemes was reduced from 252 to 240. Undeniably, these reforms provided the crucial foundation for the new SSPA.

Unfortunately, those who had retired on or before Jan 1, 2013 were, according to the relevant PSD service circulars, ineligible for these remunerative changes, which have implications for pension calculations.

This is evidenced by the higher pensions drawn by their peers who retired subsequently.

Consequently, this cohort would understandably be keenly interested to know how the PSD navigated these clusters of remunerative changes – undoubtedly key building blocks of the SSPA – when determining that a particular salary point on the new SSPA grade corresponds to their last drawn salary.

Regrettably, pensioners were not provided with a note specifying the current SSPA salary on which their pensions have now been based under the Act.

This concern is especially acute for those whose former posts were amalgamated with higher grades or abolished altogether as a consequence of the revamp of certain existing schemes prior to the SSPA but who did not benefit from these changes, prompting the legitimate question, “Where do I now stand within the new SSPA?”

NG PENG KONG

Kuala Lumpur