The Constitutional Court again recognized actual social insurance contributions as compliant with the Satversme
On 25 January 2012, the Constitutional Court adopted a decision in the case No. 2011-08-01 “On Compliance of Section 4 (1) of the Law on State Funded Pensions with Article 1 and Article 109 of the Satversme of the Republic of Latvia”.
On equal responsibility of the State for sustainability of the pension system
Contested Norm
Section 4 (1) of the Law on State Funded Pensions provides that Contributions in a funded pension scheme shall be part of the contributions for State pension insurance.
Facts
The applicants, twenty members of the 10th Saeima [Parliament] indicate that the Contested Norm fails to comply with the principle of legitimate expectations, that of a social state and social solidarity that follow from Article 1 of the Satversme.
Taking into account the fact that an employee makes social insurance contributions by mediation of its employer, the applicants hold that the rights of persons subject to social insurance cannot be related with the fact whether another person, i.e. the employer has or not duly executed all stipulated duties. This is the State rather than the employee that is committed to assuring that the employee makes social insurance contributions. However, the person shall have the right to trust into the fact that all public institutions would comply with the law and ensure collection of social insurance contributions.
Findings and the Ruling
On relation with previous case-law
The Constitutional Court indicated that, when examining the case No 2011-03-01 (the judgment was adopted on 19 December 2011), it has already assessed constitutionality of procedure of making social insurance contributions and concluded that, when introducing the procedure of making actual social insurance contributions, the legislator has observed all principles that follow from the Satversme and acted within its margin of appreciation. Therefore conclusions on the procedure of making actual social insurance contributions made in the case No. 2011-03-01shall be applicable to the regulatory framework of the Contested Norm [4].
On margin of appreciation of the legislator and assurance of essence of the social rights in the frameworks of the effective pension system
The Constitutional Court has already indicated in its case-law that Article 109 of the Satversme does not regulate provisions of the pensions system. Therefore structure and functioning principles of the pension system shall be regarded as an issue to be resolved by means of legislation, namely, the legislator shall have the right to concretize content of the social rights in laws [5].
The Constitutional Court indicated that, when elaborating the procedure for making factual social insurance contributions, the legislator has not restricted the fundamental rights of a person to social insurance in case of old age because the right to pension at the amount, at which a person has participated in accumulation of pension capital, are preserving irrespective of the procedure of registration of social insurance contributions made and the pension level, in which they have been made. Therefore the Contested Norm cannot be regarded as restriction to the right to social security. The Contested Norm neither applies to the positive duty of the State to form and maintain a system aimed at social and economic protection of persons having reached the retirement age. The Constitutional Court concluded that, in this case, the right to social security at least at the minimum level are not infringed [5].
On aims of the Contested Norm
The Constitutional Court concluded that the Contested Norm has been adopted to protect important interests of the society and certain constitutional values. It is aimed at assurance of sustainability of the pension system, balancing of incomes and expenses of the social budget and thus also protection of welfare of the society and rights of other persons [9].
On compliance of the Contested Norm with the principle of legitimate expectations
The Constitutional Court indicated that the Contested Norm has been adopted on 20 December 2010 and came into force on 1 January 2011. The procedure of actual social insurance contributions was applied to social insurance contributions to be made in the future. The Contested Norm does not influence those social insurance contributions that have been made in accordance with the procedure of declared social insurance contributions. Neither has it established new income to private persons. Consequently, in the particular case, the legislator did not have to establish a transitional period for persons to be able to get adapted to the new procedure [10].
Consequently, the Court concluded that the Contested Norm does not infringe the principle of legitimate expectations; therefore it did not assess compliance of the norm with the above mentioned principle [10].
On compliance of the Contested Norm with the principle of a socially responsible State
The Constitutional Court considers that the Contested Norm does not establish any general changes in the national policy in respect to functioning of the State funded pension system; instead, it applies to the procedure of registration of means contributed to it. Moreover, the Contested Norm neither releases an employer from the duty to make stipulated social insurance contributions nor releases the legislator from its constitutional duty to elaborate such mechanism that would permit the executive power to duty collect social insurance contributions [11].
According to the Constitutional Court, a person has the right to request that the employee makes and the State duly collects social insurance contributions [11].
On effectiveness of mechanism for right exercise established in respect to a person
Once again, the Court draw attention to the fact that, in normative acts, a person has been provided several ways of receiving information on social insurance contributions made by the employer, namely, by addressing the employer, the State Social Insurance Agency [Valsts sociālās apdrošināšanas aģentūra], as well as online in several web sites, including www.manapensija.lv.
The Constitutional Court recognized Section 4 (1) of the Law on the State Funded Pensions as compliant with Article 1 and Article 109 of the Satversme of the Republic of Latvia.
The judgment of the Constitutional Court is final and not subject to appeal, it shall come into force on the date of publishing it.
Linked case: 2011-08-01