ECJ 21 February 2013, case C-282/11 (Concepción Salgado González - v - INSS and TGSS), Free movement, Pension

Facts

Spanish law makes entitlement to a State old-age pension conditional on having paid contributions into the system for at least 15 years (180 months). A person who satisfies this condition is entitled to a pension based on his or her average contribution base (base reguladora) divided by 210. The average contribution base is equal to the total of the person’s contribution bases during the last 15 years divided by 15. The number 210 equals the number of contributions made during that same period, being one ‘ordinary’ contribution every month (= 180) plus on average two ‘extraordinary’ contributions per year (= 30).

Ms Salgado González contributed to the Spanish pension scheme for self-employed persons from 1 February 1989 to 31 March 1999, a total of just over ten years. Subsequently, she moved to Portugal, where, following a brief uninsured period, she contributed to a similar Portuguese scheme for almost six years. She retired in 2006 and applied for a Spanish pension.

Regulation 1408/71 provides that, where the legislation of a Member State makes the acquisition of benefits subject to the completion of periods of insurance, the competent institution of that Member State shall take account of insured periods completed under the legislation of any other Member State. Therefore, given that Ms Salgado González had completed 10 + 6 = over 15 years of insurance, she satisfied the requirement of having made contributions for over 15 years and was awarded pension benefits.

However, those benefits of about € 336 per month were less than Ms Salgado González felt justified. The institution(s) that calculated the pension did so by taking as the base reguladora her average contribution base, not during the 15 years preceding her retirement (1991-2005), but during the 15 years before she stopped contributing to the Spanish scheme (1984-1999). As this included about five years (1984-1989) when she had not contributed at all, this reduced the average.

National proceedings

Ms Salgado González protested against this method of calculating her average contribution base. It may be noted that Ms Salgado González did not object to the other aspect of the calculation. This was that the pension she would have received had all of her working years been completed in Spain (the theoretical pension) was multiplied, first, by 53% (to account for the fact that she had only contributed for a portion of the 35 years that Spanish law requires for a full pension) and then by 63.86% (to account for the fact that only a portion of her contributing years were completed in Spain). Therefore, the only point of dispute was the way the authorities had calculated the average contribution base.

The court of first instance found against Ms Salgado González, but on appeal the Tribunal Superior de Justicia de Galicia referred four questions to the ECJ. All four questions were essentially seeking guidance on the calculation of Ms Salgado González’s pension pursuant to Regulation 1408/71.

ECJ’s findings

1. Regulation 1408/71 applies, rather than its successor, Regulation 803/2004, because Ms Salgado González’s retirement date preceded the date on which the latter regulation came into force (§ 32-34).

2. Given that Regulation 1408/71 coordinates, but does not harmonize, the national social security schemes, it is for the legislator of each Member State to determine the conditions for entitlement to benefits. In exercising those powers, Member States must nonetheless comply with EU law, in particular with the TFEU’s provisions on free movement (§ 35-37).

3. Under Article 46(2) of Regulation 1408/71, the amount of Ms Salgado González’s benefits must be calculated as if she had worked exclusively in Spain. Annex VI to Regulation 1408/71 provides that under Article 47 of the Regulation (which deals with the calculation of benefits), the calculation of the Spanish benefit is to be carried out on the basis of the insured person’s actual contributions during the years immediately preceding payment of the last contribution to Spanish social security. Articles 46(2) and 47(1) of Regulation 1408/71 must be interpreted in the light of the objective laid down by Article 48, which implies in particular that migrant workers must not suffer a reduction in the amount of their social security benefits as a result of having availed themselves of their right of free movement (§ 41-43).

4. No reduction would have been made if Ms Salgado González had paid contributions only in Spain. This is contrary to Article 46(2) of Regulation 1408/71. The situation would be different if Spanish legislation had adjustment mechanisms, for example adjusting the divisor 210 to reflect the number of contributions actually paid in Spain.

Ruling

Article 48 TFEU and Regulation 1408/71 […], must be interpreted as precluding legislation of a Member State, such as that at issue in the main proceedings, under which the theoretical amount of the retirement pension of a self-employed worker, migrant or non-migrant, is invariably calculated on contribution bases paid by that worker over a fixed reference period preceding the payment of his last contribution in that Member State, to which a fixed divisor is applied, when it is impossible for either the duration of that period or the divisor to be adapted so as to take account of the fact that the worker concerned has exercised his right to freedom of movement.