Opinion of the Advocate-General
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Mr President,
Members of the Court,
1 . In this reference for a preliminary ruling the Cour de cassation of the French Republic has submitted to the Court two questions on the interpretation of Article 51 of Council Regulation No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community .
2 . The provision in question forms part of a complex system of rules set out in Chapter 3 of Title III of Regulation No 1408/71 . This chapter contains a certain number of provisions relating to old-age and death benefits . The provisions relevant to this case are Article 46 ( which contains the rules relating to the award of benefits in the case of workers who have been subject to the legislation of two or more Member States ), Article 50 ( which guarantees, under certain conditions, the right to minimum old-age benefits ) and Article 51 ( revalorization and recalculation of benefits ). For a fuller account of these provisions I refer to the Report for the Hearing ( section I.1 ).
Background to the case
3 . Mr Alan Jordan ( hereinafter referred to as "Mr Jordan ") is a British national who worked as an employed person in the United Kingdom and then in France . With effect from 1 January 1979 an old-age pension was granted to him in those two States . Mr Jordan never agreed with the amount of the pension which was granted to him by the competent French institution, the Caisse nationale d' assurance vieillesse des travailleurs ( National Old-Age Pension Fund for Employees, hereinafter referred to as "the Fund "), and he brought legal proceedings which have been pending since 1979 . It is in the framework of those proceedings that questions have now been referred to the Court . More specifically, these questions stem from the fact that the applicable French legislation was amended in 1983 . In order that these questions may be fully understood, it is therefore necessary to summarize the French rules relating to the grant of old-age benefits, both before that amendment and afterwards . The following account is essentially based on the observations submitted by the French Government .
4 . In France, the amount of the old-age pension was and is calculated by applying two coefficients to the average salary of the revalorized "10 best years ". The first coefficient is the number of "proven" quarters under the French social security system . As a complete career is considered to comprise 150 quarters ( 37.5 years ), this coefficient is obtained by dividing the number of proven quarters by 150 . The second coefficient is the applicable rate . At the time when an old-age pension was awarded to Mr Jordan, this rate was fixed at 25% at 60 years, increased by 1.25% for each quarter following the date on which the person concerned reached the age of 60 ( so that the "normal" or "maximum" rate of 50% was attained when the old-age pension was awarded at the age of 65 ). This gives the following formula :
P = S x N x T
150
where
P = the annual amount of the pension;
S = the average salary of the "10 best" years;
N = the number of "proven quarters";
T = the applicable rate .
The legislation applicable at the time when Mr Jordan retired also provided for a minimum old-age benefit . The pension, determined in accordance with the aforementioned method, could not be less than the amount of the allocation aux vieux travailleurs salariés ( old workers allowance ), provided that the person concerned could prove at least 60 quarters . If that condition could not be met, the amount of the old workers allowance was reduced pro rata the number of proven quarters .
The rules for determining the first coefficient ( number of proven quarters ) were amended with effect from 1 April 1983 . ( 1 ) Thenceforth a rate ( second coefficient ) of 50% was to be granted when an insured person could produce evidence of 150 quarters . In respect of a person who had completed less than 150 quarters, that rate was reduced according either to age or to the number of proven quarters . A subsequent amendment of the law ( 2 ) also introduced a new minimum benefit, which replaced the old workers allowance . This new minimum benefit is granted to persons whose average salary for the 10 best years does not reach a given amount . The amount of the minimum benefit is determined in accordance with the number of proven quarters . Both amending enactments expressly provide that they do not apply to old-age benefits granted before the entry into force of those enactments .
5 . At the hearing it became clear that it is the application of the ( former ) French rules relating to the minimum benefit which is at the nub of the dispute between Mr Jordan and the Fund . In his observations, Mr Jordan claims in this respect that, under the old French system, the grant of the old workers allowance was always accompanied, as regards workers of French nationality, by the grant of a supplementary benefit payable by the fonds national de solidarité ( National Solidarity Fund ). This latter benefit was not an old-age benefit based on contributions, but rather a minimum subsistence allowance not linked to contributions ( in the sense that it was not based on contributions paid by the recipient of that allowance . Again according to Mr Jordan' s observations, the Fund granted him in 1979 only an old workers allowance, without granting him ( and this is what he challenged ) the benefit of a non-contributory minimum benefit . In Mr Jordan' s view, the effect of the legislative amendment of 1983 was that the two aforementioned benefits were henceforth grouped together in a single "pension ". But since his old-age benefit was granted before 1983, he could not claim the benefit of the new rules . ( 3 )
In Mr Jordan' s view this state of affairs is contrary to Article 50 of Regulation No 1408/71 . The main dispute thus centres on the question whether, under Article 50, Mr Jordan could also claim the benefit of the additional non-contributory minimum benefit either before or after the amendment of the French legislative provisions .
As far as the former French legislation is concerned, the cour d' appel, Poitiers, decided, in a judgment of 14 February 1985 that Mr Jordan could not claim the supplementary benefit from the fonds national de solidarité on the basis of Article 50 . At the same time the Cour de Appel took the view that the new French regulations had to be applied to Mr Jordan on the basis of Article 51(2 ). Mr Jordan was therefore entitled to a recalculation ( under Article 46 ) of his old-age benefit under the new regulations, and accordingly, pursuant to Article 50, an additional amount was to be granted to him if the amount of his recalculated benefit was lower than the minimum benefit granted pursuant to the new French legislation .
The Fund lodged an appeal on a point of law against the cour d' appel' s judgment, submitting inter alia that the cour d' appel had misconstrued Article 51 of Regulation No 1408/71 .
6 . Before examining the questions asked by the Cour de cassation, I would point out the narrow compass of this case as it has been referred to the Court . As I have already said, the cour d' appel dismissed Mr Jordan' s claim as regards the application of Article 50 of Regulation No 1408/71 to the former French system . Given that none of the grounds of appeal relate to this part of the cour d' appel' s judgment, the latter has the effect of res judicata . It follows that the only question before the Cour de cassation is whether, on the basis of Article 51 of Regulation No 1408/71, the new French system ( and, therefore, also the new rules relating to the grant of a minimum old-age benefit summarized above ) must apply in Mr Jordan' s case . Should the reply to this question be in the affirmative, Mr Jordan may be entitled, in appropriate circumstances, to the grant of an additional amount on the basis of the new regulations pursuant to Article 50 . This latter question, concerning the application of Article 50 to the new French system, has not however been referred to the Court, since the Cour de cassation has merely raised a question relating to the interpretation of Article 51 . Moreover, I shall come to the conclusion, in paragraphs 11 and 13 infra, that Article 51 cannot be relied on to make amending provisions of national law, which are not intended to govern pre-existing situations, immediately applicable to the future legal effects of already existing situations . The question of the application of Article 50 to the new French law can, therefore in my view, be left aside . But for the eventuality that the Court takes a different view, I shall nevertheless examine briefly, at the end of my Opinion, the question of the application of Article 50 ( see paragraphs 14 and 15 ).
7 . I come now to the questions raised by the Cour de cassation which are as follows :
( 1 ) Are the alterations made by the legislation of the competent State to the method of determining the minimum old-age benefit covered by paragraph ( 1 ) or paragraph ( 2 ) of Article 51?
( 2 ) Must the rule set out in Article 51(2 ) be applied without any restriction, notwithstanding any provision of national legislation determining the date when the alterations to the method of determining or the rules for calculating benefits are to come into force and excluding from their scope of application pensions awarded prior to that date?
As is apparent from the preceding exposition it is above all the reply to the second question which will be relevant in resolving the main dispute . In fact, if it is assumed ( as I shall do ) that Article 51(2 ) does not in principle preclude the application of the abovementioned transitional national provisions, the first question is merely of academic interest . Nevertheless, I shall examine that question first because the Court has not yet had occasion to interpret Article 51 in a situation such as that underlying the main dispute .
Question 1
8 . As is apparent from the wording of the first question, the Cour de cassation is asking the Court whether the French legislative amendment is covered by paragraph 1 or paragraph 2 of Article 51 . It is clear that the Court cannot go as far as that in the context of proceedings pursuant to Article 177 of the Treaty . The Court' s task is merely to provide the national court with the necessary interpretative criteria to enable it to classify correctly the legislative amendment from the point of view of Community law, in this case Regulation No 1408/71 . ( 4 ) In this case, the interpretative criteria sought by the Cour de cassation are to be drawn from the wording of Article 51 itself and from the Court' s case-law on that provision .
Article 51 distinguishes between changes in benefits "by a fixed percentage or amount", resulting from "an increase in the cost of living or changes in the level of wages or salaries or other reasons for adjustment" ( paragraph 1 ), and alterations in "the method of determining or the rules for calculating benefits" ( paragraph 2 ). That distinction has been specifically considered in the Court' s case-law .
9 . I would first of all refer to the Sinatra judgment . ( 5 ) The main dispute in that case concerned a worker of Italian nationality, Mr Sinatra, who received an invalidity and/or old-age pension both in Belgium and in Italy . Since Mr Sinatra' s spouse took up paid employment, his Belgian pension "at the married rate" was converted into a pension at the "single rate" which was a considerably lower amount, pursuant to national rules against the overlapping of benefits . The question arose as to the manner in which this alteration in Mr Sinatra' s situation should be treated for the purposes of Article 51 of Regulation No 1408/71 .
The Court stated that Article 51 governed the manner in which Article 46 was to be implemented ( by providing for the amount of the benefit to be recalculated should the benefits be altered ), and held inter alia as follows :
"The right thus conferred upon the migrant worker to benefit from the most favourable social security system implies in principle that, whenever there is an alteration in the benefits granted under that system, a fresh comparison between the national system and the system of aggregation and apportionment is to be carried out in accordance with Article 46 of Regulation No 1408/71, in order to determine which system is the most advantageous following the alteration .
However, in order to reduce the administrative burden which a fresh examination of the insured' s situation following every alteration in benefits received would represent, Article 51 of Regulation No 1408/71 establishes a distinction between alterations and benefits 'by a fixed percentage or amount' resulting from 'an increase in the cost of living or changes in the level of wages or salaries or other reasons for adjustment' and alterations in the 'method of determining' or 'the rules for calculating' benefits . Paragraph 1 of that article provides that alterations of the first type must be applied directly to the benefits paid without any need for the recalculation expressly provided for in Article 51(2 ) in respect of alterations of the second type .
The regulation was thus intended to exclude a fresh calculation where the alterations in the benefits result from events unconnected with the personal circumstances of the insured and are the consequences of the general evolution of the economic and social situation .
Such exclusion may not, in the absence of appropriate specific provisions, be extended to alterations in benefits due to a change in the personal circumstances of the insured, such as his transition from the 'household' category to the 'single' category, particularly as it is not possible to envisage an application, by analogy, of Article 51(1 ) in such cases, since changes in the personal circumstances of insured workers, as opposed to the 'reasons for adjustment' referred to in that paragraph, are not of a general nature" ( paragraphs 8 to 11 of the judgment ).
The analysis contained in the Sinatra judgment was confirmed in the Cinciuolo ( 6 ) judgment in which the facts were similar .
10 . Whereas the first paragraph of Article 51, as is clear from the aforementioned judgments, is a provision allowing for derogations, the second paragraph is the general provision . In the Sinatra and Cinciuolo judgments, that general provision was construed in the case of changes in the personal situation of the insured persons, that is to say where "the method of determining benefits" had been altered . However, the general provision seems to me to be applicable also in a case where the rules for granting the benefits ( in the words of Article 51(2 ): "the rules for calculating benefits "), are altered . Although, unlike the position in the aforementioned judgments, this alteration did not come about as a result of a change in the personal situation of the insured person, it is equally not an alteration of a fixed percentage or amount, within the meaning of Article 51(1 ), owing to a general change in the economic and social situation . Alterations in the rules governing the conditions for granting and calculating old-age benefit seem to me to fall outside the scope of Article 51(1 ), given that they have more far-reaching effects than alterations in the personal situation of the insured person . It therefore seems to me irrefutable that the rule contained in Article 51(2 ) that "whenever there is an alteration in the benefits ..., a fresh comparison between the national system and the system of aggregation and apportionment is to be carried out in accordance with Article 46 of Regulation No 1408/71, in order to determine which system is the most advantageous following the alteration" ( 7 ) must be applied in such a case .
Question 2
11 . The second question concerns the division of competence between the Community legislature and the national legislature under Article 51 of Regulation No 1408/71 . It must therefore be assessed in a wider context inasmuch as it raises the problem of the scope of Community rules contained in Regulation No 1408/71 . The Court has already had occasion to examine this problem on a number of occasions and so the reply to this question may be deduced from existing case-law .
Let me first consider the precise scope of the second question . In the observations presented to the Court it is not made entirely clear which "effect" of the French legislation is at issue in this case . Contrary to the suggestion in the observations of the French Government, of the Fund and of the Commission, Mr Jordan is not seeking "retroactive application" of the new rules, in other words the application of the new rules to situations occurring under the old rules, in this case an existing entitlement to benefits, but to have "immediate effect" given to the new French rules, in the sense that they should be declared directly applicable to the legal consequences ( future benefits ) of claims for benefits arising and paid prior to the enactment of those rules . The French legislature did not however confer on the legislative amendments described above either retroactive effect or such immediate effect . On the contrary, it expressly provided that the earlier rules should remain in force with regard to the future legal consequences of claims to benefits arising before the enactment of the law and that the earlier rules should therefore in no way be affected by the new rules . The Court is therefore asked to reply to the question whether the applicable provisions of Community law ( in this case Article 51 of Regulation No 1408/71 ) preclude the introduction by a national legislature of legislative amendments having such effect ( that is to say preserving the earlier rules ).
12 . In the first Pinna judgment, ( 8 ) the Court held in general terms as regards the legal basis of Regulation No 1408/71, namely Article 51 of the EEC Treaty that :
"it must be observed that Article 51 of the Treaty provides for the coordination, not the harmonization, of the legislation of the Member States . As a result, Article 51 leaves in being differences between the Member States' social security systems and, consequently, in the rights of persons working in the Member States . It follows that substantive and procedural differences between the social security systems of individual Member States, and hence in the rights of persons working in the Member States, are unaffected by Article 51 of the Treaty" ( paragraph 20 of the judgment ). ( 9 )
In the Court' s case-law, this principle has emerged several times in connection with specific provisions of Regulation No 1408/71 . One example is to be found in the Brunori judgment of 1979 . ( 10 ) The main dispute in that case concerned an application by an Italian national who had established himself as a self-employed craftsman in Germany . The German legislation provided for a derogation from the compulsory social insurance scheme for craftsmen who had paid contributions for not less than 216 months in respect of an occupation for which pension insurance was compulsory . Mr Brunori considered that, for the purposes of the application of that rule, the insurance periods which he had already completed in Italy should also be taken into consideration . For that reason the German court making the reference asked the Court whether Article 45 of Regulation No 1408/71, on the taking into account of periods of insurance completed abroad for the purpose of the acquisition, retention or recovery of the right to benefits, was also to be applied by analogy with regard to the existence of a social insurance obligation . The Court endorsed the view of the Commission and replied in the negative, holding that Regulation No 1408/71 is intended only to ensure co-ordination between national social security laws . In those circumstances, Article 45 of that regulation contemplates the aggregation of insurance periods only for the purpose of the acquisition, retention or recovery of the right to benefits . As such it does not deal with questions relating to affiliation and cessation of affiliation to the various social security schemes, which are matters for the national legal system alone ( see paragraphs 5 and 6 of the judgment ).
The Court took a similar approach in the Coonan case ( 11 ) where it was asked to rule whether Regulation No 1408/71 gives a worker the right to be affiliated to the social security scheme of the Member State in which he takes up employment for the first time, where this right is denied to him on the basis of the national provisions alone . In its judgment the Court held, inter alia :
"Neither Article 18 nor Article 46 of Regulation No 1408/71 provides the answer to that question . Those provisions in fact govern the aggregation of qualifying periods and the effects thereof ..., in the case of a person who is or has been affiliated as a worker to the national social security scheme in one Member State, when, on the other hand, he has also completed qualifying periods in another Member State . They do not govern the preliminary question of ascertaining the conditions under which a national of a Member State may or must be affiliated to the social security scheme of another Member State where he is an employed person" ( paragraph 8 of the judgment ).
"... it is for the legislature of each Member State to lay down the conditions creating the right or the obligation to become affiliated to a social security scheme or to a particular branch under such a scheme provided always that in this connexion there is no discrimination between nationals of the host State and nationals of the other Member States" ( paragraph 12 of the judgment ).
The Brunori and Coonan judgments have been recently confirmed in the Schmitt judgment ( 12 ) in which it was stated that :
"Both Article 51 of the EEC Treaty and Regulation No 1408/71, adopted in pursuance of that provision, merely provide for the aggregation of periods of insurance completed in the various Member States . On the other hand, those provisions do not govern the conditions under which these periods of insurance are completed" ( paragraph 15 of the judgment ).
13 . The Court' s case-law shows a clear division of competence . On the one hand Regulation No 1408/71 requires the national social security institution to take account of periods of insurance or residence completed abroad when determining inter alia the right of migrant workers to old-age benefits, but on the other the acquisition, retention or recovery of such a right depends in the first place on the applicable national legislation . In the light of this division of competence, it would appear hard to deny that, as Community law stands at present, the determination of the temporal effect of a national rule falls within the competence of the national legislature . If it is accepted that the national legislature is competent to regulate the affiliation or cessation of affiliation to a social security scheme ( the Brunori and Coonan judgments ) and to determine the conditions under which periods of insurance are completed ( Schmitt judgment ), it must also be accepted as being competent to regulate the temmporal effect of such rules provided that it does not thereby infringe the rules on aggregation in Regulation No 1408/71 amd does not introduce any discrimination prohibited by the Treaty or by Regulation No 1408/71 .
To summarize the foregoing, it is correct that, as was stated in the Sinatra judgment ( see in particular paragraph 8, quoted above ), Article 46 ( read in conjunction with Article 51 ) gives the insured person in principle the right to a fresh calculation whenever the benefits granted under the applicable system are changed . The Brunori, Coonan and Schmitt judgments imply, however, that this Community right to the application of the most favourable social security provision presupposes that the new provision is made applicable to the insured person by the national legislature both from the point of view of the matters covered and the temporal effects .
Final observation : Article 50 of Regulation No 1408/71
14 . I consider that the foregoing elements are sufficient to reply to the national court' s questions in the manner indicated in the concluding part of this Opinion . However, should the Court take a different view as regards the second question and consider that, under Community law, the French legislative amendments should be regarded as having immediate effect, it may be useful to indicate, in the light of the Court' s case-law, the criteria which the national court should use in determining which elements of the minimum benefits under the new French legislation are to be regarded as "a minimum benefit" within the meaning of Article 50 .
The Court' s case-law with regard to this question once again illustrates the division of competence, outlined above, between the Community legislature and the national legislature .
15 . In its judgment of 30 November 1977 ( Case 64/77 Torri (( 1977 )) ECR 2299 ), the Court stated that :
"Article 50 covers cases where the periods of employment of the worker under the legislation of the States to which he was subject were relatively short with the result that the total amount of the benefits payable by those States does not provide a reasonable standard of living" ( paragraph 5 of the judgment ), and
"... Article 50 ... is applicable only in cases in which provision is made in the legislation of the Member State in whose territory the worker resides for a minimum pension" ( paragraph 13 of the judgment ).
That judgment was confirmed and developed in the judgment of 17 December 1981 in Case 22/81 Browning (( 1981 )) ECR 3357, in which the Court held that Article 50 was to be interpreted as meaning that a "minimum benefit" exists only where the legislation of the State of residence includes a specific guarantee the object of which is to ensure for recipients of social security benefits a minimum income which is greater than the amount of the benefit to which they are entitled on the basis of their periods of insurance and their contributions alone ( in other words pursuant to the rules for calculation laid down in Article 46 ).
In two earlier judgments on references for a preliminary ruling, the Court has already had occasion to deal with the non-contributory element of the minimum old-age benefit provided for in the new French legislation . The underlying dispute in those two cases specifically concerned the supplementary allowance paid by the fonds national de solidarité, and the Court was asked whether, in pursuance of Article 4(4 ) of Regulation No 1408/71, that allowance did not fall outside the scope of that regulation
on the ground that it constituted social assistance . In both cases the Court held that an additional allowance paid by a national solidarity fund financed from taxation and granted to recipients of old-age, widows or invalidity pensions in order to ensure a minimum level of means of existence does fall within the matters covered by Regulation No 1408/71, provided that the persons concerned have a legally protected right to the grant of such an allowance . ( 13 )
If the Torri and Browning judgments are read in conjunction with the Giletti and Zaoui judgments, the position is as follows . Article 50 is also applicable to minimum benefits ( whether wholly or in part non-contributory ), whereby national legislation seeks to ensure a "reasonable standard of living" for everybody ( including persons who would have no such claim under the ordinary contribution rules ), but only provided that the persons concerned are entitled to those minimum benefits under the applicable legislation .
16 . On the basis of the arguments set out above, I propose that the Court should reply in the following terms to the questions raised by the Cour de cassation :
"( 1 ) Article 51(2 ) of Regulation No 1408/71 must be interpreted as meaning that it is applicable to amendments to national legislation relating to the conditions for the grant and the calculation of old-age benefits .
( 2 ) As Community law now stands, neither Article 51 of the Treaty nor Article 51 of Regulation No 1408/71 preclude a national legislature from limiting the tempora1 effect of social security rules to benefits granted after the enactment of the new rules, so long as that rule on temporal effect does not infringe the rules on aggregation in Regulation No 1408/71 and does not introduce any inequality of treatment prohibited by Community law ."
(*) Translated from the Dutch .
( 1)1 Order No 82-270 of 26 March 1982, Journal Officiel de la République Française of 28.3.1982, p . 951 .
( 2 ) Law No 83-430 of 31 May 1983, Journal Officiel de la République Française of 1.6.1983, p . 1639 .
( 3 ) The French Government observes that Mr Jordan ( under the former system which is allegedly still applicable to him ), if his income justifies doing so and he makes a request to that effect, may claim an additional benefit from the fonds national de solidarité, but that his average annual revalorized salary on 1 April 1983 exceeded the amount which confers entitlement to the additional benefit .
( 4 ) Judgment of 21 June 1988 in Case 197/86 Brown v Secretary of State for Scotland (( 1988 )) ECR 3205 .
( 5 ) Judgment of 2 February 1982 in Case 7/81 Sinatra (( 1982 )) ECR 137 .
( 6 ) Judgment of 1 March 1984 in Case 104/83 Cinciuolo (( 1984 )) ECR 1285, in particular at paragraphs 11 and 12 . See also the judgment of 4 May 1988 in Case 83/87 Viva (( 1988 )) ECR 2521 .
( 7 ) See paragraph 8 of the Sinatra judgment, already quoted in extenso at paragraph 9 of this Opinion .
( 8 ) Judgment of 15 January 1986 in Case 41/84 Pinna (( 1986 )) ECR 1 .
( 9 ) In paragraph 21 of the judgment it was stated that freedom of movement for workers is facilitated if conditions of employment are as similar as possible in the various Member States . For that reason Community rules on social security may not add to the disparities which already stem from the absence of harmonization of national legislation . ( These considerations led to a declaration that Article 73(2 ) of Regulation No 1408/71 was void .)
( 10 ) Judgment of the Court of 12 July 1979 in Case 266/78 Brunori (( 1979 )) ECR 2705 .
( 11 ) Judgment of 24 April 1980 in Case 110/79 Coonan (( 1980 )) ECR 1445 .
( 12 ) Judgment of 28 February 1989 in Case 29/88 Schmitt (( 1989 )) ECR 581 .
( 13 ) See the judgment of 24 February 1987 in Joined Cases 379 to 381/85 and 93/86 Giletti (( 1987 )) ECR 955, at paragraph 12, and the judgment of 17 December 1987 in Case 147/87 Zaoui (( 1987 )) ECR 5511, in particular at paragraph 9 .
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