Remedying, Reinstating and Reviving A Legitimate Right of the Right Pension

The Court Of Appeal’s unanimous judgement on pensions of January 13 for those who retired before 2012 is of the greatest significance for various reasons. The COA panel consisting of Dato Vazeer Alam bin Mydin Meera, Dato Abu Bakar Jais and Dato’ Darryl Goon decided to restore to pensioners, including recipients of derivative pensions, the right to enjoy the full benefit of pensions that would be payable on the basis of a matrix that corresponds to prevailing and prospective salary scales. The initiators of this legal process which enabled the decision on the rectification of an anomalous situation have to be acknowledged and commended.

2013 Amendments Contravened Constitution

The COA ruled that amendments to sections 3 and 6 of the Pensions Adjustment Act of 1980 contravene Article 147 of the Federal Constitution. The amendments may have created a situation where the quantum of pensions payable are less favourable than that stipulated in the original Pensions Amendment Adjustment Act of 1980(PAA1980 Act). The relevant section of that Act, as referred to in the judgement reads:

3(I) Pensions and other benefits granted to officers and their dependents on or before the implementation of any current salary scale shall be adjusted in accordance with the provisions of the PAA1980 Act.

Pensions had thus to be adjusted whenever there was a revision of salary for serving public sector employees.

It was intended that “ current salary scale” meant the latest or the most up-to-date scale which would be applicable to officers of the public sector.

The 2013 Amendments Act deleted this vital section 3 of the Act and substituted it with a provision that pensions and other benefits granted to officers and their dependents shall be adjusted annually by a fixed increment of two percent. On the surface this amended provision may have seemed very reasonable and attractive as whether or not public sector employees received an upward revision of salaries those drawing pensions would still get a two percent increase. This new method of adjusting pensions was applied o those retirees and their dependents who had retired before January 1, 2012. In other words septuagenarian, octogenarians, nonagenarians and the sharply contracting pool of centenarians who had served in the public sector earlier would receive a two percent annual increment to their drawable pension.

It is pertinent that after providing for this two percent annual increase in pensions for these earlier retirees the government in its service circular 1/2012 dated March 30 2012 signed by the director general of the public services department provided for salary increases ranging from 7 to 9 and, in some cases, even 13 percent for serving public sector employees. Service circular 5 of 2013 signed by the same authority dated June 12 2013 provided for further increases in public sector employees’ wages.

The COA matter-of - factly just pointed out that the amendments to the earlier pension act of 1980 contravened Article 147 of the Constitution which states that:

(1) The law applicable to any pension, gratuity or other like allowance ( in this Article referred to as an “award “) granted to a member of any of the public services, or to his widow, children, dependent or personal representatives , shall be that in force on the relevant day or any later law not less favourable to whom the award is made.

Pensions Must Be Relevant to Current Salaries

The key issue that the COA elucidated is that the pension should have a correlation that corresponds to the last drawn salary on current or existing salary scales. Obviously the annual two percent proviso did not meet this threshold satisfactorily.

For a septuagenarian civil servant it is incomprehensible how a well-intentioned and competent government could have been responsible for this act of chicanery where the older retirees and their spouses and dependents were given less favourable terms than that provided by the law.

In 1980 when the PAA 1980 was passed by parliament a compassionate and enlightened government was in office. It was led by the highly competent and principled Tun Hussein Onn as prime minister, Tengku Razaleigh Hamzah as finance minister, Tan Sri Hamzah Abu Samah as attorney general , Tan Sri Hashim Aman/ Tun Abdullah Ayub as Chief Secretary and Tan Sri Osman C Cassim as director-general of the Public Services Department. It will be recalled that these were the men who introduced a good scheme for civil servants with allowances for housing, entertainment and other allowances. Pensions, constantly maintained at a certain level with commensurate prevailing and prospective salaries, were an integral part of the package.

It is obvious that by 2013 the quality of both the political as well civil service leadership had declined to a point where a two percent annual increase was deceitfully presented as a foolproof and far superior equivalent of a much higher percentage increase given to serving public officers.The COA saw through this deceit and rectified it. In effect the COA indicted the government of Dato Sri Najib Tun Razak for taking away a constitutionally provided right given to public sector employees who retired before 2012.

Integrity Issues Are Important

The maintenance of pensions with two percent annual increases may or may not be related to the reported embezzlement of RM 4 billion of pension funds. However that again showed up the utter disregard for the highest trusteeship functions in safeguarding pension funds.

Financial Implications

The present decision of the COA in restoring and reinstating public sector pensions for those who retired before 2012 will have some serious financial implications. Currently some 49 percent of the government’s annual budget goes towards paying emoluments and pensions. It is essential with this additional burden of revised pensions that a serious review is done on the overall role and size of the public sector and a proper regimen is enforced to ensure an efficient and transparent public service sector. Further abuse of office and corruption by the governing elite has to be totally eliminated so that there is no wastage and leakage of public funds.

Integrity Is Importamt

There is certainly no place to co-opt another David Zaidner, Marc Rich or a Jho Low into the system. Holders of high level positions in policy, regulatory, enforcement, operational and preventive agencies must also be chosen on the basis of excellent qualifications, character, ability, and impeccable integrity. There must be transparency in selecting them and retaining them. High level officials must radiate trust and authority as well as symbolise accountability, dignity and transparency. Arrogance, defiance, and haughtiness are not desirable characteristics when holding a high public position. The recent episode involving MACC supremo Azam Baki has demonstrated that clearly.

M Santhananaban

January 19, 2022