A Case Initiates with Regard to Applying a Negative Index in Updating the Pension Capital
On 24 September 2015 the 4th Panel of the Constitutional Court initiated a case on the compliance of the first part of Section 12 of the law “On State Pensions”, insofar it provides for using an index that is smaller than “1” in updating pension capital, and sub-paragraph 65.2 of Transition Provisions of the law “On State Pensions” with the first sentence of Article 91, Article 105 and Article 109 of the Satversme of the Republic of Latvia.
The Contested Norms
The first part of Section 12 of the law “On State Pensions” defines a formula for calculating old-age pensions. Whereas sub-paragraph 65.2 of Transitional Provisions of the Law envisage, inter alia, that to those persons, to whom an old-age pension has been granted or re-calculated in the period from 1 January 2010 to 31 January 2015, it is updated by re-calculating the initial pension capital and the pension capital, as well as by taking into consideration the budgetary possibilities of the State.
The Norms of Higher Legal Force
Article 91 of the Satversme: All human beings in Latvia shall be equal before the law and the courts. Human rights shall be realized without discrimination of any kind.”
Article 105 of the Satversme: “Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law. Expropriation of property for public purposes shall be allowed only in exceptional cases on the basis of a specific law and in return for fair compensation.”
Article 109 of the Satversme: “Everyone has the right to social security in old age, for work disability, for unemployment and in other cases as provided by law.“
The Facts
The case has been initiated with regard to an application submitted by the members of the Saeima, noting that the contested norms allegedly allow applying to the updating of pension capital such salary ratio of insurance contributions that is smaller than “1” and envisage that such updating of pensions depends upon the budgetary possibilities of the State. If a salary ratio of insurance contributions that is smaller than “1” is applied to updating of pension capital, the amount of pension is said to decrease; thus, the pension that has been granted to persons or has been recalculated in the period following 1 January 2010, is said to be significantly lower compared to persons with similar length of employment and social contributions, but who retired before 2010.
The members of the Saeima express the opinion that this situation is incompatible with the principle of equality and proportionality, and that it also violates the rights of pension recipients to own property and to social security.
Legal proceedings
The Constitutional Court has invited the institution, which adopted the contested act– the Saeima – to submit to the Constitutional Court a written reply on the facts of the case and the legal substantiation by 24 November 2015.
The term for preparing the case is 24 February 2016. The Court shall decide on the type of procedure and the date for hearing the case after the case has been prepared.
Linked case: 2015-21-01