Budget 2026: Civil servants, judges to get raises, housing aid

Civil servants, including contract staff, teachers, and judges, are set to benefit from improved housing schemes, loan guarantees, and special financial aid as announced by Prime Minister Anwar Ibrahim for Budget 2026.

Tabling the nation’s budget in the Dewan Rakyat today, Anwar also noted that all members of his cabinet will continue to take a 20 percent pay cut - a measure he introduced in 2022 amid concerns over hardships faced by the people.

As part of the budget, civil servants in Grade 56 and below, including contract staff, will receive a special financial aid of RM500, while government pensioners and veterans - both with and without pensions - will receive RM250.

The funds will be paid in early March next year in conjunction with Aidilfitri celebrations.

The budget further provides a special contribution of RM500 in appreciation of the service of 70,000 Kafa teachers, religious instructors, imams, bilal, mosque caretakers, and marbut, with an allocation of RM35 million.

The government has also agreed to raise the cost-of-living assistance for 4,000 Kemas contract retirees from RM300 to RM500 per month, and to provide a special RM500 payment to 120,000 recipients of the Pingat Jasa Malaysia, with a total allocation of RM60 million.

Judges will also see their salaries increased by up to 30 percent effective next year, marking their first pay adjustment in a decade.

Anwar noted that, unlike other public service schemes, judges are not entitled to annual increments and are also prohibited from holding positions or engaging in business.

“Acknowledging this, and recognising that the judiciary, once seen as tarnished, has now become more authoritative, with greater integrity and independence, the government has agreed to raise judges’ salaries by up to 30 percent effective Jan 1, 2026,” he said.

Housing for civil servants

Other matters announced by Anwar today include a RM2.2 billion allocation for the construction, maintenance, and repair of quarters for doctors, nurses, military personnel, police, teachers, firefighters, and prison officers.

A total of RM500 million has also been allocated for the setting up of an Armed Forces Family Housing at the Kuantan Air Base in Pahang, with the initiative set to benefit nearly 800 personnel.

To assist contract civil servants struggling to secure housing loans, Syarikat Jaminan Kredit Perumahan will guarantee up to 120 percent of the loan value, with a total allocation of RM1 billion, while Bank Simpanan Nasional will provide RM500 million to finance first-home loans for contract staff, including Kemas preschool and daycare teachers.

“The Youth Housing Financing Scheme under LPPSA (Public Sector Home Financing Board) will be extended until Dec 31, 2026, which is expected to benefit up to 48,000 young civil servants under the age of 30,” Anwar said.

“The maximum eligibility limit for LPPSA financing will be raised to RM1 million, in line with salary adjustments and increases in property market prices.

“Following this increase, second financing applications will be simplified without requiring the first financing to be settled, subject to the remaining eligibility limit. This will be introduced as early as the fourth quarter of 2026,” he added.

Long-service reward and incentive to further studies

To further recognise the contributions of long-tenured civil servants, the government will expand the Performance-Based Incentive Assistance scheme to include the Management and Professional Group within the federal public service.

The incentive is aimed at rewarding officers who have consistently shown strong performance but remain unable to advance due to structural limitations in their respective service schemes.

Under this expansion, officers whose promotions depend solely on vacancies and who have served for at least six or eight years, depending on their grade, will be eligible for a special incentive equivalent to one annual salary increment at their current grade.

The incentive will be paid monthly.

To encourage civil servants to further their studies, Putrajaya is set to introduce a monthly cost-of-living allowance of RM900 for recipients of the Federal Training Award (Partial Scholarship) beginning in 2026.

The number of recipients under this scheme will also be increased from 100 to 150 per year.

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