Pension Increase 2026 – Eligibility & Calculation How to

Also Read: Minimum Wage of SSPA Grade 1–22 (SSPA Circular)

Increase in Pension 2026 – What do you need to know?

The increase in pensions 2026 is part of the implementation of the Public Service Remuneration System (SSPA) announced by the Prime Minister of Malaysia at the 19th Public Service Prime Minister’s Council on August 16, 2024.

SSPA introduces pay and pension adjustments in phase 1 beginning on December 1, 2024 and Phase 2 begins on January 1, 2026.

These adjustments are made based on the percentage of pensioners’ final salary increases according to their respective service groups, in accordance with the provisions of the Pension Coordination Act 1980 (Act 238).

The increase in pensions 2026 also involves government retirees, where the amount of pensions will be coordinated based on the percentage of salary adjustments on retirees.

This means that pensioners will receive higher pensions, in line with the increase in active civil servants’ salaries.

This new method replaces the 2% annual hike system previously used, beginning in 2025.

For the Malaysian Armed Forces (ATM) retirees to retire before January 2013, they will receive a double pension adjustment, which is 8% from December 2024 and 7% in early 2026, bringing the total increase of 15%.

According to the President of the Government and Private Retirement Association (PEKASMA), this move is highly anticipated by over 900,000 retirees nationwide.

To ensure that you are eligible for 2026 pension adjustments, make sure your SSPA service and options are constantly updated.

Officers who reject the SSPA option or no longer serve on the date of execution are no longer eligible to receive this adjustment.

For those of you who want to calculate the amount of pension or salary increase, the Public Service Department (PSD) has provided an official calculator on their portal to facilitate accurate calculations. Browse:

Source: Pension Division, PSD

A summary of pension increases

Salary and pension adjustments are made in a mase:

• Phase 1 begins 1 December 2024
• Phase 2 begins January 1, 2026

The rise rate for active civil servants in phase 2 is:

• Top Management Group: 3%
• Management and Professional Group: 7%
• Implementing Group: 7%

Increase in pension pensions were also coordinated according to an active civil servant’s salary increase to replace the 2% annual increase system abolished from 2025.

The Malaysian Armed Forces (ATM) retired prior to January 2013 received a double adjustment of 8% in December 2024 and 7% in January 2026, a 15% increase.

In order to be eligible to receive, retirees must be:

• Retired before or on 1 January 2026
• Do not reject the SSPA option
• Still receiving pensions or derivative pensions (heirs)

Officers who reject the SSPA option or no longer serve on the date of implementation are no longer eligible for this increase.

Why is this increase?

The government through the decision of the Council of Ministers and the announcement of PM Anwar Ibrahim emphasized that the coordination of pensions according to the final salary of the retirement officer was an attempt to:

• Addressing the current cost of living
• Harmonizing an old pension system with a new pay structure
• Guarantee the welfare of pensioners including derivative pension recipients

2% annual cancellation of system

As stated above, the 2% annual hike system introduced in 2013 has been abolished since January 1, 2025 after reviewing the Federal Court’s Guide. Today, pension adaptation is based on the last increase in civil servants.

In simple terms, 2% increase each year, is gone and has been replaced by the pension coordination method.

If there is a salary adjustment of a public servant, then it will be a pension coordination. This coordination will begin on January 1, 2026.

Also Read: KGT Annual Salary Increase by SSPA Grade KGT KGT

Who is worthy?

In order to be eligible to receive a pension increase 2026, retirees must meet the following requirements:

• Retired before or on 1 January 2026
• Receiving pensions and/or derivative pensions (heirs)
• Does not reject the SSPA option and still serve on the date of implementation of the increase

Government retirees retired before or on January 1, 2026, including derivative pension recipients (beneficiaries), disability pensions, dependent pensions, retirement allowances and derivative allowances are eligible to receive pension coordination based on SSPA.

Retirement that rejects the SSPA or non -government pension recipients is not eligible for this adjustment.

How to calculate SSPA pension adjustments

Step 1: Calculation of the final pay amount 2024 should be done first.

The method of obtaining an equivalent final salary is as follows:

1. Implementing and Management & Professional Group:

• Final/equivalent salary + (final salary/equivalent × 8%) If, the final salary amount exceeds RM3,000 or
• Final/equivalent salary + RM240, if the final salary/equals less than RM3,000

2. The Highest Management Group

• Final/equivalent salary + (final salary/equivalent × 4%)

Steps: Pension Calculation Based on Final Salary (Step 1) To get a new pension amount from December 2024 using the following formulas:

[1/600 × Gaji akhir bersamaan 2024 × tempoh perkhidmatan]

Examples of calculations:

A pensioner of the implementing group with a final salary of RM3,000 (December 2024):

Fasa 1: RM3,000 + 8% = RM3,240

Fasa 2: RM3,240 + 7% = RM3,467

If the service period of 30 years (maximum):

• Monthly pensions = 60%× RM3,467 = RM2,080.20
• Monthly pensions = 60%× RM3,467 = RM2,080.20

You can also continue to visit the following links to calculate the estimated pension estimates:

Use:

1. If the service period exceeds 30 years, the pension is subject to 3/5 or 60% of the final salary equivalent to 2024
2. The 2% automatic increase was abolished from 2025. After phase 2, adjustments only occur if there is a new payroll review of civil servants.
3. Pension recipients (beneficiaries), disabled pensions, and dependent pensions are also eligible for this adjustment.
4. Make sure your SSPA option status and service eligibility are reviewed on the PSD/KWAP official portal.

SSPA Pension Coordination FAQ List

More information

For more information, inquiries and latest information on pension pensions, please refer to:

Frequently Asked Questions – Increase in Pensions