Amendments to pension law contravened constitutional protections by creating a less favourable situation for pensioners, affirming the necessity of maintaining existing rights under Article 147.

Introduction

[1] The Government of Malaysia and the Director General of Public Service who are the Appellants, are appealing against the decision of the Court of Appeal which reversed the decision of the High Court delivered on 8 January 2020. The High Court had, on the said date, dismissed the Respondent's Originating Summon challenging the validity of certain amendments made to the Pensions Adjustment Act 1980 ("PAA 1980").

Background Fact

[2] The Respondent, Aminah Ahmad, is a pensioner who served the Government for more than 33 years. She retired from public service in September 2002.

[3] In 2013 the Pensions Adjustment Act 1980 (PAA 1980) was amended by ss 3 and 7 of the Pensions Adjustment (Amendment) Act 2013 ("2013 Amendment Act") whereby and 6 of the PAA 1980 was deleted.

[4] The definition of "corresponding last drawn salary" in s 2 of the PAA 1980 was also deleted and introduced two new sections, that is, ss 3A and 3B to the PAA 1980.

[5] The said amendment came into effect on 1 January 2013.

[6] On 28 April 2017 the Respondent together with 56 other pensioners filed a summons against the Appellants, inter alia, praying for the following reliefs:

(a) A declaratory order that ss 3 and 7 of the 2013 Amendment Act are ultra viresart 147 of the Federal Constitution ;

(b) A declaratory order that ss 3 and 6 of the Pensions Adjustment Act 1980 as amended by s 3 and 7 of the 2013 Amendment Act which came into force since 1 January 2013 are ultra viresart 147 of the Federal Constitution ;

(c) That the provisions of ss 3 and 6 of the Pensions Adjustment Act 1980 prior to the Amendments by ss 3 and 7 of the 2013 Amendment Act be restored accordingly; and

(d) That the proper adjustments be made retrospectively to the pensions received by the recipients whose pensions had been calculated based on the post 1 January 2013 formula and any shortfall resulting therefrom be paid to the respective recipients accordingly.

Proceeding In The High Court

[7] On 9 January 2020, the High Court dismissed the Respondent's application with no order as to costs. In deciding so, the High Court made, inter alia, the following observations and findings:

"(a) Subsection 3(1) as amended by the 2013 Amendment Act changed the criteria by which pension is adjusted under the PAA 1980. It changed the statutory mechanism for the adjustment of pension from one that is based on the latest revision of an applicable salary scale to an adjustment mechanism that is based on a fixed rate of increment of 2%pa.

(b) The amended sub-sections 3(1), 3(2) and 3(3) in its entirety together with the new sub-sections 3A(1), 3A(2)(a), 3A(2)(b), and 3A(3) that Parliament was aware that the amendment from the variable rate of pension adjustment pegged to the latest revision of the applicable salary scale to a fixed rate adjustment of 2% pa could result in certain pensioners or their widows, children, dependants or personal representatives being put in a position that is less favourable from their position prior to the amendments in the PAA 1980 coming into effect.

(c) Therefore, in order to ensure that the constitutional guarantee enshrined in art 147 of the Federal Constitution is preserved and to protect against the likelihood of situations where pensioners or their widows, children, dependants or personal representatives are put in a less favourable position because