Yes, that's a common misconception. For junior grades, MAS definitely underpays compared to MX scheme (which is used as a reference by stat boards too) - there are many anecdotes of public service officers taking double digit paycuts to join MAS.

This is less likely at higher grades. It sort of makes sense because FIs start off with (relatively) low pay for junior grades too but the subsequent increments are larger than public service, and MAS pegs its compensation schemes to FIs instead of MX scheme.

Of course, this also means that those who stay longer in MAS end up getting higher pay than public service from the cumulatively larger increments. And on the other end of the spectrum, there is a chronic shortage of junior staff who are underpaid compared to both FIs and public sector.