THE government has announced a wide-ranging suite of reforms and benefits for public servants under Budget 2026, designed to honour their service and ensure greater security, stability, and opportunity — from housing to education and beyond.
Speaking on behalf of the MADANI administration and the people of Malaysia, Prime Minister Dato’ Seri Anwar Ibrahim expressed “deepest appreciation to all civil servants who continue to serve with dedication in fulfilling the MADANI agenda for the wellbeing of the rakyat.”
Housing access for government employees receives a significant uplift, with nearly RM2.2 billion allocated for the construction, maintenance, and refurbishment of quarters — benefiting doctors, nurses, military personnel, police officers, teachers, firefighters and prison staff. Among key projects is the RM500 million development of the Rumah Keluarga Angkatan Tentera in Kuantan, Pahang, expected to house 800 armed forces personnel.
To address the challenges faced by contract-based public sector workers in securing home loans, the government will provide up to 120% loan guarantees via SJKP, with Bank Simpanan Nasional committing RM500 million to fund first-time homebuyers — including KEMAS kindergarten and nursery teachers.
The youth-focused Home Financing Scheme under LPPSA has been extended to 31 December 2026, aimed at benefitting up to 48,000 public servants under 30. Additionally, the maximum financing limit under LPPSA will be raised to RM1 million, and second-home financing will soon be allowed without needing to fully settle the first loan, beginning as early as Q4 2026.
Other key measures include:
"To honour the sacrifices of contract KEMAS retirees, the government will raise their monthly cost-of-living assistance from RM300 to RM500," Anwar said.
The government will also disburse a one-off RM500 special payment to nearly 120,000 holders of the Pingat Jasa Malaysia — recognising their military service — at a cost of RM60 million.
In recognition of long-serving public servants whose promotions have been stalled due to structural limitations, the government will expand the *Performance-Based Incentive Assistance* to include the Management and Professional Group within the Federal public service.
Under this provision, officers who have served at least six or eight years (depending on grade) and consistently demonstrated high performance will be granted a monthly incentive equivalent to one annual salary increment, without requiring an actual promotion.
To encourage academic advancement, public servants under the Half-Scholarship Federal Training Award (HLP Separa Biasiswa) will receive a monthly allowance of RM900 from 2026. The intake will also be increased to 150 participants annually, up from 100.
Addressing the judiciary, which has not seen salary adjustments since 2015, the Prime Minister noted, “Judges are prohibited from holding office or conducting business. Recognising this, and in support of our increasingly respected and independent judiciary, the government agrees to raise judges’ salaries by up to 30% effective 1 January 2026.”
Meanwhile, all Cabinet Ministers will continue their voluntary 20% salary cut.
The long-awaited Phase 2 of the Public Service Remuneration System (SSPA) will officially take effect in January 2026. Accounting for a RM18 billion increase in the 2026 payroll — along with direct rakyat support via Sumbangan Tunai Rahmah (STR) and SARA — the government will also issue a special financial aid of RM500 to all civil servants at Grade 56 and below, including contract hires. Pensioners, including both retired and non-pensioned veterans, will receive RM250.
This Aidilfitri payment will be made in early March 2026.
Additionally, a special RM500 one-off contribution will be provided to 70,000 religious personnel — including KAFA and Takmir teachers, imams, bilals, mosque caretakers and officials — with an allocation of RM35 million.
The sweeping measures reflect the government’s resolve to strengthen the role, morale and living standards of Malaysia’s civil service as key partners in national development under the MADANI vision. - October 10, 2025
