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Content updated: 21-06-2022 13:37

The Law on Returning Part of Disproportionately Reduced Remuneration, which does not impose the obligation to compensate for the difference of the state pensions of officials and servicemen in cases where that difference occurred not due to the payment of the disproportionately reduced remuneration, is not in conflict with the Constitution

17-06-2022

The Constitutional Court, by its ruling of 17 June 2022, has recognised that the Law on Returning Part of the Disproportionately Reduced Remuneration (Salary) due to an Economic Crisis to Persons Who Are Paid Their Remuneration from the Funds of the State or Municipal Budgets (hereinafter referred to as the Law on Returning Part of Disproportionately Reduced Remuneration), insofar as that law does not consider the difference of the amounts of the granted state pensions of officials and servicemen to be a loss as a result of the disproportionate reduction of remuneration (salary) due to an economic crisis (where such a loss should be calculated and paid accordingly), where, as a result of returning part of the disproportionately reduced remuneration and an increase in the average remuneration, the person refers to such a new period (were, based on the average remuneration paid within that period, the state pension is calculated) of 12 consecutive months (which are the most favourable to the calculation of that pension) of the five successive years of service, where the average remuneration within that new period increased due to returning part of the disproportionately reduced remuneration of officials (because of such disproportionate reduction the state pension of officials and servicemen for service is recalculated), is not in conflict with the Constitution of the Republic of Lithuania.

The Constitutional Court emphasised that the legislature, when implementing its constitutional duty to establish a mechanism for compensating for the losses incurred, as a result of the disproportionately reduced remuneration (salary) due to an economic crisis, by persons who are paid their remuneration from the funds of the state or municipal budgets, adopted the Law on Returning Part of Disproportionately Reduced Remuneration, which, among others, established a legal regulation that considers the difference of the amounts of the granted state pensions of officials and servicemen to be a loss as a result of the payment of the disproportionately reduced remuneration of the officials of the establishments of the interior where the state pension of officials and servicemen was granted by taking into account the average remuneration within the period chosen by the official in accordance with the established procedure where that period falls within the period during which the remuneration (salary) disproportionately reduced due to an economic crisis was paid; such a difference is compensated respectively in accordance with the established procedure.

According to the legal regulation enshrined in the Law on the State Pensions of Officials and Servicemen, the state pension of officials and servicemen for service is granted by taking into account the average remuneration (determined in accordance with the procedure specified by law) of the respective official’s period of service – 12 consecutive months (which are the most favourable to the calculation of that pension) of the five successive years of service served by the official (this period does not include the official’s service period specified in the law); the right to choose, in accordance with the procedure established by law, a specific period of service where, based on the average remuneration paid within that period, the state pension for officials and servicemen will be granted, is given to the official himself/herself.

When assessing the compliance of the impugned law with Article 52 of the Constitution and the constitutional principle of a state under the rule of law, the Constitutional Court held that the legislature, having chosen to establish in the Law on Returning Part of Disproportionately Reduced Remuneration such a legal regulation that does not consider the difference of the granted state pensions of officials and servicemen to be a loss (which is not compensated for in accordance of the established procedure) where that loss occurred not because of the disproportionately reduced remuneration of an official, but because of the manner how the official himself/herself has chosen the implementation of his/her right (the right to choose, in accordance with the procedure established by the law, a specific period of service where, based on the average remuneration paid within that period, the state pension for officials and servicemen will be granted), among others, took into account the particularities of granting state pensions for officials and servicemen under the Constitution, inter alia, Article 52 thereof. Consequently, the legislature, by establishing the above-mentioned legal regulation in the Law on Returning Part of Disproportionately Reduced Remuneration, has properly implemented its discretion, implied by its constitutional duty to determine, in a fair manner and within a reasonable period of time, a mechanism for compensating for the losses incurred as a result of the disproportionately reduced salaries due to an economic crisis by persons, inter alia, officials and servicemen, who are paid their remuneration from the funds of the state budget, by taking into account the particularities, implied in the Constitution, inter alia, Article 52 thereof, of granting the state pensions of officials and servicemen, to determine which differences of the state pensions of officials and servicemen paid by taking account of the remuneration of officials and servicemen should be considered to be losses that are incurred by officials and servicemen and that must be compensated for in accordance with the established procedure due to the disproportionate reduction in remuneration.

When assessing the compliance of the impugned law with paragraph 1 of Article 29 of the Constitution, the Constitutional Court noted that officials who chose that the state pension of officials and servicemen would be paid to them by taking into account the remuneration disproportionately reduced due to an economic crisis, and officials who, when implementing their right (the right to choose, in accordance with the procedure established by law, a specific period of service where, based on the average remuneration paid within that period, the state pension of officials and servicemen would be granted), chose that such a state pension would be paid to them based on the average remuneration paid within the period outside the period of the economic crisis, cannot be considered to be in an equal position. In other words, there is a difference in the legal situation between officials who were paid the state pension by taking into account the remuneration disproportionately reduced due to an economic crisis and officials who were paid such a pension by taking into account the average remuneration of a different period chosen by them.