Guides
Retiree Returning to Work: Tax on Pension + Salary
Updated: 8 November 2026 Independently fact-checked.
Introduction
Retirees who return to work often wonder: "Is my pension taxed? What about my new salary?"
The answer depends on the type of pension, the retirement age and the scheme paying the pension. This article explains:
- when a pension is exempt from tax;
- when a pension is taxed;
- how to report a pension and a new salary together.
When a pension is exempt from tax
Under paragraph 30, Schedule 6 ITA, a pension arising from Malaysia paid to a person upon reaching age 55, or reaching the compulsory retirement age under any written law, or when the Director General is satisfied that retirement is due to ill-health, is exempt from tax.
This exemption only applies if:
- the pension is paid for service in previous employment in Malaysia;
- and, if not under a written law, it is paid from an approved scheme.
If a person is paid more than one pension, this paragraph only applies to the highest pension.
Paragraph 30A (politicians & office holders)
Paragraph 30A covers gratuities/pensions to the President/Deputy President of the Senate, Speaker/Deputy Speaker, State Assembly Speakers, and Parliament/DPR members. The exemption only applies when they reach age 55 or retire due to ill-health. If a person qualifies under both Paragraphs 30 and 30A, the exemption applies only to the highest.
When a pension is taxed
A pension is taxed in situations such as:
- retiring voluntarily before the compulsory retirement age (55) — the pension is taxed until reaching age 55;
- a pension from a non-approved scheme;
- more than one pension — the balance after the highest pension is exempt.
Derived pension
A derived pension — for example a pension received by a wife/husband after a spouse's death — is not taxed (HASiL FAQ).
Pension + new salary: how to report
A new salary after retirement is employment income under s.13 ITA. If you receive other taxable income (including a new salary), you remain responsible for reporting income and submitting a return:
- Form BE — if you are a resident without business income;
- Form B — if you have business income.
Deadlines for YA 2025: 30 April (BE) / 30 June (B); via e-Filing: 15 May / 15 July.
Public service retirement procedure
For public service, the employer submits Form CP22B (notice of termination) six months before retirement, and SPC (Certificate of Settlement of Tax) is issued. Form EA will show the pension and salary received.
Summary
| Situation | Tax treatment |
|---|---|
| Pension at age 55 / compulsory retirement age / ill-health | Exempt (approved scheme; highest only if more than one) |
| Voluntary retirement before 55 | Taxed until age 55 |
| Non-approved scheme | Taxed |
| More than one pension | Highest exempt; balance taxed |
| Derived pension (spouse's death) | Not taxed |
| New salary after retirement | Employment income (s.13) — must be reported |
Official sources
All sources below were reviewed on 8 November 2026. Official HASiL pages and documents: