THE Federal Court today upheld the Court of Appeal’s decision that amendments to Sections 3 and 7 of the Pensions Adjustment (Amendment) 2013 Act (PAA) were unconstitutional as the amendments put pensioners in a less favourable situation. 

The five-member bench, in striking out the appeal from the Public Service Department (PSD) director-general and the government, ruled that the amendments contravened Article 147 of the Federal Constitution and therefore had no merit. 

Under Article 147(1) of the Federal Constitution, the Pensions Right stipulates that “The law applicable to any pension, gratuity or other like allowance (in this Article referred to as an ‘award’) granted to a member of any of the public services, or to his widow, children, dependant or personal representatives, 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 bench, headed by Court of Appeal president Abang Iskandar Abang Hashim, in a unanimous decision ruled that the amendment to Sections 3 and 7 of the PAA, which allows a 2% increment annually, was less favourable to pensioners. 

The other members on the panel were Chief Judge of Malaya Zabidin Mohd Diah, Chief Judge of Sabah and Sarawak Abdul Rahman Sebli and Federal Court judges Hasnah Mohammed Hashim and Rhodzhariah Bujang. 

The decision was delivered by Zabidin. 

In upholding the Court of Appeal’s decision, Zabidin said the appellate court was right in restoring the status quo by preserving the original Sections 3 and 6 prior to the 2013 amendment. 

Zabidin answered in the affirmative the first question posed by the government and PSD on whether Sections 3 and 6 of the Pensions Adjustment Act 1980 – as amended by Sections 3 and 7 of the Pensions Adjustment (Amendment) Act 2013 – contravened Article 147 of the Federal Constitution when a pensioner fails to prove that the adjusted pension received is actually less favourable compared to before. 

“The risk of a less favourable situation never existed in the original provision,” he said. 

Zabidin 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. 

The court made no order as to costs as Zabidin said the case was a “public interest litigation”. 

The action to challenge the amendments was brought by Aminah Ahmad, a former Wisma Putra staff member who retired in 2002. She filed the action in 2017. 

She challenged the January 2013 amendment that brought about a flat rate of 2% increment to pensions annually, stating that it was unfavourable compared to the previous scheme, where the pension of government retirees is revised based on the prevailing salary of incumbent civil servants at that grade. 

Aminah initially lost the case at the High Court, but the Court of Appeal on January 22 last year allowed the appeal when then-appelate court judge Darryl Goon allowed the appeal. 

Leave to bring it to the Federal Court was granted in June last year. The appeal was heard last December before the court arrived at the decision today. – June 27, 2023.