The Norm on Supplementary Payments to Pensions Complies with the Satversme
On 13 February 2013 the Constitutional Court passed a judgement in Case No. 2012-12-01 “On Compliance of the Words “up to 31 December 2011” of Para 41 of Transitional Provisions of the Law “On State Pensions” with Article 91 and 109 of the Satversme of the Republic of Latvia”
Supplementary payments to pensions is a fixed-term support measure, which depends upon the possibilities of the special budget
Contested Norm
Para 41 of Transitional Provisions of the Law “On State Pensions” provides that recipients of the old age and invalidity pension residing in Latvia and the European Economic Area, for the length of period of insurance that is accrued up to 31 December 1995 and has been taken into account when granting (recalculating) the pension, shall be granted, up to 31 December 2011, a supplementary payment for each year of the insurance period. The Cabinet of Ministers shall determine the procedure, according to which the supplementary payment would be disbursed, as well as establish its amount that can not be less than 0.70 lats in the period from 1 January 2009 to 31 December 2011. Thus, irrespectively of a person’s period of service length, accrued until 31 December 1995, a person is entitled to a supplementary payment to pensions only if the person has retired by 31 December 2001.
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 realised without discrimination of any kind.“
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 members of the 11th Saeima, who submitted the application, hold that the contested norm restricts a person’s right to social security and infringes upon the principle of equality before the law and legal certainty.
Court Findings and Rulings
On the content and purpose of supplementary payments
The Constitutional Court recognises that the pension supplement was established with the purpose of providing support to those persons, who had small pensions and who had not had the possibility to participate in the contributions-based pension system for sufficiently long time. [9.3] It is a temporary, fixed-term support measure, which depends upon the possibilities of the special budget. [9.1]
The decision to introduce pension supplements was adopted at the time of economic growth, when also other decisions on introducing other additional social payments were taken. However, the Constitutional Court has repeatedly recognised that such decisions distorted the balance of the special budget and started to pose serious threat to its sustainability. [9.3]
On the State’s obligations in ensuring social rights
The Constitutional Court, assessing, whether the State has fulfilled its positive obligations, which follow from a person’s fundamental social rights, verifies, whether: 1) the legislator has implemented measures to ensure to persons the possibility to implement their social rights; 2) whether these measures have been duly implemented, i.e., whether persons have been provided with the possibility to implement their social rights at least on the minimum level; 3) whether the general principles of law, which follow from the Satversme, have been complied with. [11]
The Court recognised that those persons, who retired after 1 January 2012, had been the participants of the contributions based pension system for approximately sixteen years already, therefore the amount of their pensions is influenced to a comparatively lesser degree by the compensatory nature of the pension supplement and the insurance period accrued prior to 1996. Thus, evaluating the first assessment criterion, the Court recognised that the State had implemented measures to ensure to persons the possibility to implement their social rights. [12]
Evaluating the second assessment criterion the Court noted that the contested norm did not pertain to the basic services of the social insurance system, for example, issues of granting, calculating or disbursing a pension. The law envisages a minimum amount of pension, which depends upon the insurance period accrued by the person and the amount of the state social security benefit. Hence, the Court concluded that the contested norm did not apply to the implementation of social rights at least in minimum scope. [13]
The Court proceeded to verify the third criterion, establishing, whether the contested norm pertains to the principles referred to in the application.
On equality before the law and the safeguarding of legal certainty
The Constitutional Court concluded that in the context of the case under review all those persons, who by 31 December 1995 had accrued insurance period and were entitled to state pensions were in similar and comparable circumstances. [14.2.1] Those persons, who have retired by 31 December 2011 receive pensions supplement for the period until 31 December 1995, but those, who have retired later, do not receive the pension supplement. The Court had to establish, whether the differential treatment was grounded.
The Court noted that the contested norm had the legitimate purpose to ensure the sustainability of the special budget [14.2.3] In adopting the norm, the legislator assessed also a number of alternative solutions. The Constitutional Court noted that it had to verify, whether alternatives had been assessed, but the choice of the concrete solutions falls within the legislator’s discretion. [14.2.4].
As regards persons’ legal certainty, the Court noted that the contested norm came into effect one year before its application started. Such a transitional period is sufficiently long. Moreover, there are no grounds to consider that the persons, who had not been granted pension supplement, might have developed legal certainty regarding receipt of the supplement as a measure of additional social support. [14.3]
The Constitutional Court concluded that the contested norm did not violate the principle of equality before the law and the principle of legal certainty. Thus, the Court recognised that the general principles of law, which follow from the Satversme, had been complied with. In view of these arguments the Constitutional Court concluded that in this case the State had fulfilled its positive obligations, which follow from the person’s fundamental social rights.
The Constitutional Court recognised the words and numbers “up to 31 December 2011” of Para 41 of Transitional Provisions of the Law “On State Pensions” as compatible with Article 91 and Article 109 of the Satversme.
The Judgement is final and not subject to appeal, it comes into force as of the day of its pronouncement.
Linked case: 2012-12-01