Brussels, 22/02/2013 (Agence Europe) - In a ruling returned on 21 February (case 282/11), the Court of Justice of the EU states that the Spanish rules on the method of calculating the old-age pension are against Union law, as they do not take sufficient account of periods spent by the individual in question working in another member state.
Spain makes the allocation of a contribution-based retirement pension conditional on a contribution period of at least 15 years. The “base amount” of this pension is calculated by adding up the contribution basis of the worker over the 15 years immediately preceding the last contribution paid in Spain, and by dividing this figure by 210. This divisor of 210 corresponds to a total of 12 ordinary and two extraordinary contributions a year, paid over a period of 15 years.
The Supreme Court of Justice of Galicia (Spain) has been called upon to judge the case of a Spanish worker who had paid 10 years of contributions in Spain and five in Portugal, who was denied by the Spanish Social Security Institute (INSS) the right to include the contributions paid in Portugal in calculating his old-age pension. The Spanish court stated that it was in no doubt that contributions paid in Portugal cannot be included in the calculation of a pension to be paid by Spain, but asked the Court of Justice whether the Spanish rules, which do not allow any changes to be made to either the duration of the contribution period or of the divisor used to take account of the fact that the worker had exercised his right to the freedom of movement, comply with EU law. The Court takes the view that this rule brings about inequality of treatment between workers who remain in the country of origin and those who migrate: - for an equivalent contribution effort, the migrant worker in the EU would receive a lower base amount than a worker who remained in Spain and made contributions there only; - the more a worker contributes in a member state other than Spain, the less time he or she has in his or her professional career to be able to make Spanish contributions - the only ones which can be taken into account when calculating the pension.
The Court of the EU recognises this disparity and finds against the Spanish system. It states first of all that although the member states retain competence in arranging their own social security systems, the social security payments made to migrant workers cannot be reduced on the grounds that they have exercised their right to move freely within the EU. It goes on to point out that when a state provides for pension payments to be calculated on the basis of an average contribution - as is the case in Spain - the calculation of the average contribution base should be based only on the level of contributions actually made. However, in this particular case, the INSS took account not only of the 10 years of contributions actually paid in Spain, but also of a fictitious contribution period of five years to make up the 15 years preceding his last Spanish contribution. As these periods necessarily returned a value of zero, the fact that they were taken into account resulted in a drop in the average contribution base. However, it must be noted that there would have been no such reduction if the person in question had made contributions in Spain only, without exercising his right to the freedom of movement, an outcome which runs counter to EU law. This would not happen if the Spanish legislation provided for mechanisms making it possible to adapt the calculation of the base old-age pension amount, taking account of the fact that the worker had exercised his right to the freedom of movement. In this case, the divisor could be adjusted to reflect the number of ordinary and extraordinary contributions the individual in question had actually made.
As a result, the Court takes the view that it is against EU law to have a national rule whereby the base old-age pension amount of an unsalaried worker, whether or not this person is a migrant, is invariably calculated on the basis of his or her contributions over a fixed reference period preceding the payment of his or her final contribution in that state, to which a fixed divisor is applied, without it being possible to adapt either the duration of this period or the divisor to take account of the fact that the worker in question had exercised his or her right to the freedom of movement. (FG/transl.fl)