Veterans, retirees seek RCI on pension calculation formula

A group of roughly 70 retired veterans and civil servants approached the Parliament building in Kuala Lumpur today, carrying a memorandum requesting a royal commission of inquiry (RCI) into the pension calculation formula contained within the Public Service Remuneration System (SSPA) 2024. The memorandum was presented to Perikatan Nasional secretary-general Takiyuddin Hassan outside the Parliament premises.

Rafique Ali Ahmad Nordin, who led the group of veterans and retirees, explained that the RCI should investigate why amounts linked to a previous 2% annual pension increase mechanism continue to be incorporated into the current scheme. This 2% mechanism was struck down as unconstitutional and invalid by the Federal Court in a 2023 ruling. Nordin asked, "The main question is why the effect of the 2% mechanism, which was struck down by the Federal Court, is still reflected in the SSPA 2024 pension calculation."

The new SSPA scheme, which began on December 1, 2024, now links pension adjustments to the revised salary structure, rather than the previous 2% annual increase. According to the government, the pension adjustment for retirees under the SSPA is determined based on the equivalent final salary for 2024, calculated as one-600th of the equivalent final salary multiplied by the years of service. Additionally, a special appreciation to pensioners (PKKP) component may be applied, depending on the individual case.

Nordin noted that this issue impacts approximately 530,000 civil service pensioners and armed forces veterans who retired prior to 2013. He explained that the fixed 2% increase created a disparity among pensioners since those with higher pensions experienced larger increases than those with lower pensions. The memorandum suggests that the proposed RCI should examine whether the current method complies with the Pensions Adjustment Act and related regulations, as well as the circumstances surrounding the formula's development.

Nordin emphasized that the inquiry is not intended to interfere with ongoing court proceedings over the pension adjustment method, but rather aims to provide a comprehensive understanding of the facts, documents, policies, and administrative processes involved, ultimately seeking a lasting resolution to the pension dispute.