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Content updated: 13-03-2020 11:58

The provision of the law on the enrolment of persons of a certain age for pension accumulation is not in conflict with the Constitution

10-02-2020

By its ruling passed today, the Constitutional Court has recognised that the provision “As from 1 January 2019, every three years, adult persons shall be enrolled for pension accumulation if they are under 40 years of age on 1 January of the year of enrolment for pension accumulation and the Republic of Lithuania’s Register of Persons Covered by State Social Insurance and Beneficiaries of Social Insurance Benefits (hereinafter referred to as the Register) contains data regarding their insurance on 2 January of the year of enrolment for pension accumulation” of Paragraph 1 of Article 6 of the Law on the Accumulation of Pensions is not in conflict with the Constitution.

The group of members of the Seimas, the petitioner, had doubts concerning the compliance of the provision of Paragraph 1 of Article 6 of the Law on the Accumulation of Pensions with Article 29 of the Constitution, which consolidates the principle of the equality of the rights of persons, Paragraph 1 of Article 46 thereof, which consolidates the freedom of individual economic activity, and Paragraph 2 of the same article, which lays down the duty of the state to defend the interests of consumers. In the opinion of the petitioner, by enrolling for pension accumulation only the adult persons who are under 40 years of age, these persons are discriminated on the grounds of age. In addition, according to the petitioner, such a legal regulation disproportionately restricts the freedom of these persons who have not been enrolled for pension accumulation so far to make their own decision whether to start participating in pension accumulation; thus, their freedom of contracts and the rights of consumers are restricted.

The Constitutional Court held that the provisions of Article 52 of the Constitution oblige the state to respect the imperative of the reality of guarantees of a social character. Under the constitutional imperatives of social solidarity, social harmony, and justice, the burden of social security falling upon the state is distributed among all the members of society; however, such distribution must be constitutionally grounded, it may not be disproportionate, it may not deny the social orientation of the state and the obligations to the state that stem from the Constitution. The principle of solidarity, which is consolidated in the Constitution, does not deny personal responsibility for one’s own fate; therefore, the legal regulation of social security should be such that it would create the preconditions and incentives for each member of society to take care of his/her own welfare by himself/herself rather than to rely solely on social security guaranteed by the state. The recognition of mutual responsibility between a person and society is important in ensuring social harmony, as well as in guaranteeing the freedom of a person and the possibility for a person to protect himself/herself from difficulties that the person alone would be unable to overcome; the legislature must, by means of a law, establish old-age pensions and has the duty to establish such a legal regulation that would ensure the accumulation of funds necessary for pensions. The legislature, when paying regard to the Constitution, has broad discretion to choose a system of pensions, it may establish various models of the system of old-age pensions, which are guaranteed in Article 52 of the Constitution.

In the context of this constitutional justice case, the Constitutional Court noted that, in implementing the duty of the state, stemming from Article 52 of the Constitution, to guarantee the right of a person to an old-age pension and having chosen a model of the system of old-age pensions where such a model is based, among other things, on the accumulation of funds designated for future old-age pensions in special pension funds, the legislature must consolidate in a law the grounds and conditions for the participation in pension accumulation. While paying regard, among other things, to the constitutional principles of the social orientation and social solidarity of the state and the imperatives of social harmony and justice, under which the burden of social security falling upon the state is distributed among all the members of society, the legislature may establish such a legal regulation on the framework for the participation in pension accumulation which would create the preconditions and incentives for the members of society to take care of their own welfare by themselves by participating in the accumulation of funds or part thereof designated for old-age pensions and, thus, to contribute to the welfare of all society. Having regard to the Constitution, among other things, the imperatives of the equality of the rights of persons and non-discrimination, which stem from Article 29 thereof, as well as the constitutional imperatives of social harmony and justice, and taking account of various social, demographic, and economic factors, the legislature may also establish such a legal regulation which would create the incentives for a group of members of society of a certain age, by taking care of their own welfare, to take decisions as early as possible concerning the participation in the accumulation of funds or part thereof designated for old-age pensions so that the preconditions would be created for the accumulation of a significant part of funds designated for the future old-age pension and for ensuring the harmonious functioning of the old-age pension system as a whole by contributing to the welfare of all society.

The Constitutional Court also noted that if the legislature establishes that an old-age pension or part thereof is accumulated in special pension funds administered by economic operators, a duty stems from Paragraph 3 of Article 46 of the Constitution for the legislature to regulate economic activity in the field of pension accumulation so that it serves the general welfare of the People. The economic activity of economic operators administering pension funds is linked with the implementation of one of the most important social rights of a person – the right to receive an old-age pension; therefore, this activity must be regulated and supervised by the state. In regulating economic activity in the field of pension accumulation, the legislature must balance the interests of a person and society, various constitutional values, among other things, social security, the protection of consumer interests, and freedom of individual economic activity and economic initiative, which includes, among other things, freedom of contracts.

When deciding on the compliance of the impugned provision of Paragraph 1 of Article 6 of the Law on the Accumulation of Pensions with the Constitution, the Constitutional Court noted that, under the impugned and related legal regulation, adult persons under 40 years of age, whose data regarding their insurance are contained in the Register, are enrolled for pension accumulation in seeking to encourage their participation in pension accumulation by, at the same time, ensuring more effective pension accumulation and higher income in old age for as many residents as possible. These persons must be provided with information, among other things, on all options available to them (to refuse to participate in pension accumulation, to conclude a pension accumulation agreement; to participate in pension accumulation on the basis of a law if a pension accumulation agreement has not been concluded and the refusal has not been submitted); on the grounds of the said information, persons may, within the established time limit, freely decide concerning the participation in pension accumulation. Such a legal regulation was established in the light of, among other things, demographic situation of the country and forecasts.

By means of the impugned legal regulation established in Article 6 of the Law on the Accumulation of Pensions and the related legal regulation and while taking account of various social, demographic, and economic factors, as well as balancing the interests of a person with the interests of society, the legislature sought to encourage a group of members of society of a certain age (adult persons who are under 40 years of age) to take decisions as early as possible concerning the participation in the accumulation of funds or part thereof designated for old-age pensions so that the preconditions would be created for the accumulation of a significant part of funds designated for the future old-age pension and for ensuring the harmonious functioning of the old-age pension system as a whole. As it is clear from the material of this case, the age limit of 40 years chosen by the legislature should be assessed as optimal for the accumulation of funds designated for the future old-age pension. Such legal regulation pursues objectives, which are important for each person and society as a whole and which are constitutionally justified, to create the preconditions and incentives for the members of society to take care of their own welfare by themselves by participating in the accumulation of funds or part thereof designated for old-age pensions and, thus, to contribute to the welfare of all society. In addition, a duty has been established to provide persons in that age group with information, among other things, on all options available to them, which are sufficient for them to make an independent decision within a specified period on the participation in pension accumulation.

Therefore, as the Constitutional Court held, such a legal regulation laid down in Paragraph 1 of Article 6 of the Law on the Accumulation of Pensions in seeking to encourage the participation of adult persons who are under 40 years of age in pension accumulation, while, at the same time, granting them the right to refuse to participate in pension accumulation on the basis of the information provided, should not be considered as restricting the freedom of contracts for these persons and limiting the rights of consumers.

In the light of the above, the Constitutional Court drew the conclusion that the legal regulation consolidated in Paragraph 1 of Article 6 of the Law on the Accumulation of Pensions, which encourages a group of members of society of a certain age (under 40 years of age) to take decisions as early as possible concerning the participation in the accumulation of funds or part thereof designated for old-age pensions, did not violate the imperatives of the equality of the rights of persons and non-discrimination, which stem from Article 29 of the Constitution, the freedom of contracts, which is consolidated in Paragraph 1 of Article 46 of the Constitution, and the imperative of the protection of the rights of consumers, which is established in Paragraph 5 of Article 46 of the Constitution.

The separate opinions by Justices Janina Stripeikienė and Danutė Jočienė were submitted in this case.