In a unanimous decision today, a five-member apex court panel led by Court of Appeal president Abang Iskandar Abang Hashim held that the appeal by the director-general of public service and the government had no merit.
The other members on the panel were Chief Judge of Malaya Zabidin Diah, Chief Judge of Sabah and Sarawak Rahman Sebli and Justices Hasnah Hashim and Rhodzariah Bujang.
Delivering the decision, Zabidin said both the High Court and the Court of Appeal had acknowledged that an amendment to Section 3(2) of the Pensions Adjustment (Amended) Act passed in 2013 had put former civil servants in a “less favourable situation” with regard to their entitlement to increments in their pension.
“The risk of a less favourable situation never existed in the original provision,” said Zabidin.
The apex court said the existence of such a risk meant that the amended Section 3(2) breached the constitutional protection accorded to pensioners by Article 147 of the Federal Constitution.
Under Article 147, the law applicable to any pension granted to a member of any of the public services or to his dependents “shall be that in force on the relevant day or any later law not less favourable to the person to whom the award is made”.
The Federal Court went on to order the reinstatement of the original Section 3 of Pensions Adjustment Act, 1980.
No order was made as to costs.
The case arose after former Wisma Putra staff member Aminah Ahmad and 56 retired civil servants filed a lawsuit against the public service department (JPA) claiming that Sections 3 and 7 of the Pensions Adjustment (Amended) Act violated Article 147.
They were challenging the amendments made to the Act by which a new pension scheme was introduced giving pensioners a flat rate of 2% annual increment.
Under the scheme which was in force before the amendment, the pension of government retirees was to be revised based on the prevailing salary of incumbent civil servants in the same grade.
Aminah and her former colleagues were represented by lawyer Lim Choon Khim, while senior federal counsel Shamsul Bolhassan and Liew Horng Bin appeared for the government.