Paku Midin: WHY MALAYSIAN CIVIL SERVANTS PENSION SCHEME DISCONTINUED?

CIVIL SERVICE PENSION SCHEME EXPLAINED

'This guide explains how the Civil Service Pension Scheme works - from how much you need to pay in to what you'll get when you retire'

@Jackie San

WHAT IS THE CIVIL SERVICE PENSION SCHEME MEANS ?

The Civil Service Pension Scheme covers staff of employers made up of government departments and non-departmental public bodies, such as museums, commissions and other organisations.

The type of pension you get from the Civil Service depends on when you joined, but it's one of the most generous of its kind. Known as a 'defined benefit' pension, civil servants get paid a retirement income based on the salary they had during their career.

The Civil Service Pension Scheme has been through many permutations over the years, with the latest version of the scheme introduced in April 2015.

This guide explains exactly what you need to know about the Civil Service Pension Scheme, telling you how much you pay in, what you get back and worked examples throughout which explain how the schemes work.

WHICH CIVIL SERVICE PENSION SCHEME APPLIES TO ME?

The scheme has five final salary sections: Classic, Classic Plus, Premium, Nuvos and Alpha.

Up to 30 September 2002, the only pension offered was the Principal Civil Service Pension Scheme (PCSPS). On 1 October 2002, a new scheme, called 'Premium', was introduced and the old scheme was renamed 'Classic'.

Members could either stay in the old scheme or join the new one. There was also a third option, Classic Plus, which is a hybrid of Classic and Premium.

Nuvos was the scheme offered to new joiners from 30 July 2007 until the latest version, Alpha, began from April 2015

Since 2002, new entrants have also had the option of joining Partnership, which is a defined contribution pension scheme with employer contributions.

The Partnership scheme doesn't pay you an income based on your salary while you were working as a civil servant. Instead, your pension contributions are invested in a pot, with which you can generate an income in retirement. You can find out more about this in our guide to 'what can I do with my pension pot?'.

HOW MUCH DOES THE CIVIL SERVICE PENSION SCHEME PAY?

The different schemes will pay out on a slightly different basis. Our examples will help you work out what you'll get.

There are a couple of bits of pension jargon to watch out for here.

Most of the calculations are based on 'pensionable earnings', i.e. all earnings that could count towards your pension. They may include non-cash items, such as uniforms or accommodation.

They also use your 'reckonable service' - this is the amount of time you've been working for the Civil Service and eligible for the pension it offers.

WHAT IS THE PENSION FOR PUBLIC SERVANTS IN MALAYSIA?

The maximum pension amount is for the reckonable service period of 30 years or more (360 months). The formula for the maximum pension calculation is 3/5 or 60 percent of an officer's/employee's last-drawn salary.

MALAYSIAN GOVERNMENT URGED TO RETAIN CIVIL SERVICE PENSION SCHEME

SEREMBAN: The government should not abolish the pension scheme currently being enjoyed by eligible civil servants, says the Congress of Union of Employees in the Public and Civil Services Malaysia (Cuepacs).

Its president Datuk Dr Adnan Mat said it should also not be made compulsory for new hires in the civil service to contribute to the Employees Provident Fund (EPF) like workers in the private sector as the public sector salary scheme is still low.

“Our stand is that if the government wants to implement something, it must be based on the principle of not reducing the current benefits enjoyed by civil servants.

“The government should ensure the salary received today is able to provide for the well-being of civil servants and at the same time, allow them to save for their retirement,” he said.

On Wednesday, Datuk Seri Dr Ahmad Zahid Hamidi said the government had to spend some RM120bil to cover pension payments by 2040 if new salary schemes for hiring public officers were not introduced.

The Deputy Prime Minister said the government would introduce a new civil service hiring policy, which will include a new pension scheme.

He said under this method, new intakes into the civil service would contribute to retirement schemes such as EPF and the Social Security Organisation.

Public Service director-general Datuk Seri Wan Ahmad Dahlan Abdul Aziz had also previously said that the relevant laws were still being amended to allow for the creation of a new civil service recruitment method and that it would reduce the country’s fiscal burden.

Adnan said the government should first hold engagement sessions with stakeholders before considering any proposal which includes making it mandatory for new civil servants to contribute to EPF rather than the pension scheme.

“Although there are serving civil servants who have chosen the EPF contribution scheme, the majority prefer the pension scheme because it is considered better and guarantees well-being after retirement,” he said.

He said if financial constraints were preventing the government from continuing with the public service pension scheme, the abolition of pensions to MPs, assemblymen and those appointed to executive positions such as exco, minister, deputy minister has to be first stopped.

”The abolition of pensions to this group first is the right step because most of them have only served around five years.

“This group not only receives high allowances and allocations while serving but also has various privileges compared to civil servants who on average serve more than 30 years,” he added.

Meanwhile, lawmakers in Selangor, Melaka and Johor said instead of cutting pensions of civil servants, the government should first stop paying them for ministers and elected reps.s

They also warned that a lack of job security in the new scheme for civil servants as compared to the pension system will affect the government’s overall productivity.

PKR MP Hassan Abdul Karim said the new contract system, which is supposed to start on Feb 1, could also affect the public’s desire to enter the civil service.

“Imagine if the civil servant’s contract is terminated at age 30 and above, he or she has already been in one specialisation for a few years and it might be difficult for them to switch jobs or start a business,” Hassan, the Pasir Gudang MP, told The Star yesterday in Johor Baru after handing out aid to 12 families whose roofs were destroyed in a recent storm.

Johor lawmaker, Ling Tian Soon, said instead of cutting pensions of low and middle-ranking civil servants, the government should first stop paying the pensions of ministers, deputy minister and elected reps.

“Yes, the government’s financial burden is great so perhaps such changes should first be made for elected representatives, ministers and all the YBs. Stop putting the rakyat on the spot,” said Ling, who is also Johor health and unity committee chairman.

“The healthcare sector is already in dire shortage of doctors and nurses. This issue will worsen the situation as the rakyat might not want to enter the civil service when they are only offered contract-based employment without pension,” said the Yong Peng assemblyman in a Facebook post.

A Melaka lawmaker, Dr Akmal Saleh, echoed this point saying that the pensions of MPs should be phased out first.

“We understand the financial pressure the government is facing at the moment. However, let the pension scheme phase out and start with MPs first,” the Merlimau assemblyman said on Facebook.

The Umno Youth chief added that MPs across the political divide can lead by example by agreeing to forego their pensions.

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