“CAN a worker’s pension rights be revoked?”
I was posed that unexpected question by a government retiree (in his late 60s) from Penang. He dropped in for a visit recently on his way home from a Sunday shopping spree at Padang Besar, Perlis.
I told him the correct way to approach the issue is in the context of the worker’s contractual rights.
If on the day he was first appointed, he is promised pension rights (i.e. he is placed on a pensionable establishment) – then his rights cannot be revoked unilaterally.
If, on the other hand, he is appointed on a temporary basis or on contract with no pension rights, then he has no pension rights whatsoever.
The government is at liberty to change the pension law at any time it considers fit.
If over the last five decades since independence, it has granted pension rights to its civil servants, it can decide to do away with that practice at any time it chooses – this year or next year.
Presumably it has considered all the pros and cons of such a drastic move.
The change in the law, however, cannot deprive a contractual right already vested in (enjoyed by) the worker.
New civil servants will be governed by the change in the law, but it will be unjust and in bad faith to apply the law to serving civil servants.
It will also be unconstitutional.
A civil servant’s pension rights is protected by Article 147 of the Federal Constitution which states in Clause (1) that “The law applicable to any pension … granted to a member of any of the public services… shall be that in force on the relevant day or any later law not less favourable to the person…”
Under Clause (2)(c), the “relevant day” for the civil servant who becomes a member of the public services after Merdeka Day is the “date on which he first became such a member”.
The government’s official portal (http://www.jpapencen.gov.my ) states that its pension scheme is “to acknowledge and appreciate” the civil servant’s “excellent service, loyalty, dedication and honesty”.
The scheme is to provide “subsistence for the dependants” of the civil servant who dies during the term of his service or after his retirement.
The portal also states that pension, gratuity or other pension benefits granted under pension laws “is not absolute right” of any civil servant.
He must “fulfil all the terms stipulated in the pension laws to be eligible for pension benefits.”
In law, it is called a “qualified right”, a right that has to be earned by the civil servant in accordance with the nation’s pension laws.
According to a 2013 decision by the Supreme Court in India, a government employee’s pension right cannot be taken away from him pending departmental or criminal proceedings.
The court said “It is an accepted position that gratuity and pension are not bounties. An employee earns these benefits by dint of his long, continuous, faithful and un-blemished service.
“It is thus hard earned benefit which accrues to an employee.”
On Sept 7, Prime Minister Tun Dr Mahathir Mohamad told journalists that the Malaysian government will retain the pension scheme for civil servants until a new mechanism is drawn up to lighten the burden on the nation’s coffers.
No decision has been reached yet on the matter as it has not been discussed by the Cabinet.
He said that pension payments have now become a huge financial burden.
“We will continue with the existing pension scheme, but we are still looking for ways so that the government can afford to do so and the civil servants don’t lose out,” he added.
The Prime Minister’s assurance came as welcome relief to Malaysians after the Public Service Department director-general Datuk Seri Borhan Dolah said recently that from 2020, newly appointed civil servants may no longer be placed under the pensionable scheme, but appointed on a contract basis.
He said the move was aimed at trimming the civil service (now 1.7 million-strong) and reducing the pension burden which now stands at RM28 billion annually.
Borhan said that civil servants appointed on contract may not enjoy the benefits of the existing permanent and pension schemes such as housing and car loans, but these benefits may be translated into higher allowances.
They would also be “more dynamic and tailored to Generation Y”.
The writer formerly served the Attorney-General’s Chambers before he left for private practice, the corporate sector and academia.