KUALA LUMPUR, July 12 — The Cabinet has decided to restore the pension amount paid to retired civil servants to the original amount following the Federal Court’s decision last month, Datuk Seri Anwar Ibrahim announced today.

However, the prime minister said for those who were receiving pension sums that were higher than the original amount, the government will continue to pay this difference in the form of a special aid.

"We hope this decision will give a positive impact towards civil servants, and retirees from public and government services,” he said in a statement.

Anwar said the Cabinet decided that the pensions and derivative pensions for July to December 2023 would be paid based on the original pension amount, in line with the Federal Court's decision.

Therefore, the original pension amount means that civil servants who retired before 2013 will see their pension sum restored to the amount in December 2012. Meanwhile, civil servants who retired from 2013 onwards would see the pension payments restored to the initial sum when they retired.

"The difference between the current pension amount and the original pension amount will continue to be paid in the form of special assistance named Penghargaan Khas Kepada Pesara (PKKP) to make the amount received by retirees the same as the current pension amount, namely the pension amount in June 2023," he said. The special assistance's Malay name translates to "special appreciation towards retirees".

This would mean that the total received by pensioners would continue to be the same amount which they have been receiving.

Anwar said the Malaysian government always appreciates the contribution of the pensioners when they were serving and cares about their welfare now.

"Therefore, the government will also study a review of the public service wages and this will also involve retirees of the public service," he said, adding that the pension amount payable will also be adjusted according to the increment rate set in line with the Pensions Adjustment Act.

The Cabinet decision was made after this issue was raised in the Cabinet meeting to find a solution to ensure the welfare of government retirees, following the Federal Court's decision.

On June 27, the Federal Court had decided that a 2013 amendment to the Pensions Adjustment Act — which introduced a new pension scheme that adjusts pension payments every year by a two per cent increment — carries the risk of being financially "less favourable" to retired civil servants.

The Federal Court upheld the Court of Appeal's decision to declare the 2013 amendments as invalid, and ruled that the striking down of the 2013 amendments meant that the older version of the Pensions Adjustment Act was automatically restored.

Under the 2013 amendments which took effect on January 1, 2013, it introduced a new scheme of an annual two per cent increment.

Under the new scheme, when salaries for current civil servants go up, it would not affect the pension sum to be paid to pensioners even if they are of the same grade.

Before the 2013 amendments introduced the new scheme of an annual 2 per cent increment, the old scheme resulted in the pension amount being adjusted or increased whenever there is a salary revision for serving government employees (of the same grade as the pensioner).

Following the Federal Court's decision, the old scheme of pension adjustment is the one that now applies in Malaysia. This scheme is the one where existing public servants' salaries revision would also increase pensioners' pension amount.