15-05-2025
- Business
- New Straits Times
SSPA to retain monthly retirement payment system currently in use
KUALA LUMPUR: The new Public Service Remuneration System (SSPA), which will replace the current pension scheme, is expected to maintain the existing monthly payment method.
Under the system, civil servants who meet the retirement age limit will be paid monthly like the previous pension method, instead of being allowed to make a lump sum withdrawal.
Public Service Department director-general Tan Sri Wan Ahmad Dahlan Abdul Aziz said the proposal had also been agreed upon by the Finance Ministry (MoF) and the Employees Provident Fund (EPF).
"We are currently drafting the system so that permanent appointees who contribute will receive monthly payments, similar to pensioners now. That can be implemented because there is agreement from MoF and EPF.
"We have also informed the prime minister (Datuk Seri Anwar Ibrahim)... If (retirees) receive a lump sum (as done currently), some may become scam victims and lose all their money within just two days of withdrawal.
"So we are drafting the system to ensure they receive monthly payments instead. If their annual requirement is RM25,000, the remainder of their savings will be reinvested in the EPF… because they will continue to earn annual dividends," he said.
Wan Dahlan said this after the Bicara Figura Risda programme at the Rubber Industry Smallholders Development Authority headquarters here, today.
He said simulations conducted showed that the new system would provide better financial returns for contributors.
"From the simulation carried out by PSD with MoF and EPF, for instance, someone who joins the service at Grade 1 at the age of 20 and retires at Grade 3 at 60 years old could accumulate RM1.36 million in savings.
"So I believe this scheme is very attractive and will not pose any disadvantages to civil servants," he said.
During the talk, he was also asked whether the government would allow early access to retirement funds, at least from the age of 50, for those intending to retire early.
"For those opting for early retirement, the matter needs to be discussed. I may bring it up with the Retirement Fund (Incorporated), which manages pension matters.
"Besides, this is also subject to the Pensions Act, which must be carefully reviewed to ensure it does not contradict any of the provisions under the act," he said.
The cabinet has agreed that new permanent positions in the public service will no longer come with a pension.
