Improved pension benefits

This news article from The New Straits Times tells us that the government can afford to pay an extra RM1.3billion next year to pensioners because of revision in the rules pertaining to pension payments to retired government servants and their family members, after their deaths.

Among the changes made are that the maximum amount of pension is increased from half of last drawn salary to six tenth of last drawn salary. Also the payment to spouses and eligible children of deceased pensioners after 12.5 years, will be increased from the current 70% of the retiree's pension to a full 100% of the retiree's pension.

These are very good improvements to an already excellent pension benefits to civil servants.

The only setback to the government pension scheme is the lack of vesting and guarantee. A government servant who decides to leave the government service after a substantial number of years will not get any pension benefit and neither will benefit from contributions to EPF for his/her past services. This may not encourage staff with good opportunities to serve outside the government to leave. Also if the retiree falls foul of the law to the extent that the pension benefits can be withdrawn the whole pension benefit is withdrawn and the family members will suffer during their years of needs.

Additional RM1.3b for pension benefit

PUTRAJAYA: The government will spend an additional RM1.3 billion on remunerations, gratuities and other benefits for more than 500,000 retirees and dependants next year.

This year, the pension benefit payout is estimated at RM7.6 billion.

Pension Department director Datuk Yeow Chin Kiong said additional expenditures would have to be incurred following the implementation of several new benefit and derivative pension schemes as well as revised pension formula as endorsed by the government.

Beginning January, under a revised formula, pension will be computed based on a maximum of 30 years of service as opposed to the current 25 years.

The government has also agreed to restore derivative pension to 100 per cent to those who receive 70 per cent after 121/2 years from the date of retirement or death of a civil servant.

Also from January, a mother or father of an unmarried civil servant who died while in service will be paid an ex-gratia in one lump sum.

"This is the best offer pensioners or their dependants could ever have hoped for. Pension is like a lifetime gratuity.

"The government, taking into account affordability, could pay the significant increases despite the current economic climate," Yeow told a press conference in his office yesterday.

The department also anticipated a "change in heart" in some 66,000 civil servants who had opted for the Employees' Provident Fund prior to the implementation of the revised pension perks.

"I believe more than half of them will opt for pension scheme in view of the better and improved benefits," he said, adding that civil servants have until Feb 1 to do so.

"The government would also spend about RM32 million on 1,989 retirees who had migrated next year. "In the past, we did not pay non-resident retirees."

Yeow said most of the retirees migrated to follow their children or work overseas.

Retirees or dependants who have doubts or queries can call the department at its hunting line at 03-88854906, or Yeow's assistant director Ahmad Nizam Norati at 03-88854125.

They can also surf its website at www.jpapencen.gov.my or go to the department's branch office on the fifth floor of the Maju Junction Hall in Jalan Sultan Ismail or the Public Service Department headoffice at Presint 1 here.

These "goodies" were among improved pension perks revealed by Prime Minister Datuk Seri Abdullah Ahmad Badawi at a public sector Workers' Day gathering in May.

Among others, Abdullah had said the government decided to raise the retirement age from 56 to 58 in view of the longer life span of Malaysians.

In recognition of their contributions to the country, Abdullah had also said retirees with at least 25 years of service would be given RM720 in pension, also effective January.