Cara Kira Pencen in Malaysia (Pension) : How to Calculate & Why It’s Important

Many civil servants in Malaysia rely on pensions as their main income after retirement. There are times when they ask you, as HR, to know how much their current retirement pension or pencen.

If you are figuring out how to give them calculations, you can find the steps in this article, along with the importance and other important information.

Overview of Retirement Pension (Pencen) in Malaysia

Pension is a monthly payment given to civil servants who retire after serving in a permanent government position. To qualify for the pension, an employee must complete at least 10 years of service. This system only applies to those under the public service pension scheme (JPA).

Besides the monthly pension, retirees may also receive one-time payments such as Ganjaran (gratuity) and GCR (cash award for unused leave), depending on how much leave was not used before retirement.

How Pension Is Calculated

There are three key components in the pension calculation set by Malaysia’s Public Service Department (JPA):

Ganjaran (Gratuity Payment): One-time lump sum paid after retirement.

Formula: 7.5% × Total Months of Service × Final Basic Salary

Monthly Pension: The amount retirees receive every month.

Formula: 1/600 × Total Months of Service × Final Basic Salary

The maximum is based on 360 months (30 years). Anything beyond that will not increase the percentage beyond 60% of the final salary.

GCR (Cash Award for Unused Leave): Paid for up to 150 days of unused annual leave.

Formula: 1/30 × Total Unused Leave Days × Final Basic Salary.

You can estimate pension amounts using the official JPA pension calculators here:

Kalkulator Persaraan Wajib

Key Factors Affecting Pension Amount

Several factors can impact how much pension a retiring employee receives:

Years of Service: The longer the service, the higher the pension. A minimum of 10 years is required to qualify.
Final Basic Salary: The last drawn salary is used in all pension calculations.
Unused Leave Days: These can increase the final payout through the GCR component.
Retirement Type: Whether the employee retires early, reaches mandatory retirement age, or retires due to health reasons can affect eligibility and payout details.

Why It Matters to Employers and HR

Employers and HR need to have a complete understanding of how the calculation of pension works, because it:

Provides clear and correct guidance to staff approaching retirement.
Supports smoother offboarding by making sure service years and unused leave are properly recorded.
Improves planning for retirement benefits, especially for long-serving staff.
Reduces the risk of miscommunication and financial disputes.

Resources for Calculation Reference

Here are some helpful tools and links for you to learn more on how to calculate pension:

FAQ

1. How do I calculate the monthly pension for a staff retiring in 2025?

Use the official JPA Retirement Calculator to estimate the pension. The amount depends on years of service, final basic salary, and unused leave (GCR). You will also need to factor in whether the retirement is mandatory, optional, or due to health.

2. What is the difference between Ganjaran, Pencen, and GCR?

Pencen is the monthly retirement income.
Ganjaran is a one-time lump sum payment, like a gratuity, paid after retirement.
GCR (Gantian Cuti Rehat) is compensation for unused annual leave, up to 160 days, paid in cash upon retirement.

3. Can unused leave increase someone’s pension?

Not the monthly pension, but unused annual leave can increase the total payout through GCR, which is separate from the monthly pencen.

4. Is there a minimum number of years required to qualify for pencen?

es. Generally, an employee must have completed at least 10 years of continuous service under a permanent government post to qualify.

5. Where can I check the full pension calculation formula?

You can refer to JPA’s official site. HR teams can also use Maukerja for simplified versions.

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Overview of Retirement Pension (Pencen) in Malaysia

How Pension Is Calculated

Ganjaran (Gratuity Payment): One-time lump sum paid after retirement.

Monthly Pension: The amount retirees receive every month.

GCR (Cash Award for Unused Leave): Paid for up to 150 days of unused annual leave.

Key Factors Affecting Pension Amount

Why It Matters to Employers and HR

Resources for Calculation Reference

FAQ

Need to Hire New Employees in Malaysia?