AS TO THE ADMISSIBILITY OF
Applications Nos. 27004/95 and 27011/95
by Josef SZRABJER and Walther Kenneth CLARKE
against the United Kingdom
The European Commission of Human Rights (First Chamber) sitting
in private on 23 October 1997, the following members being present:
Mrs J. LIDDY, President
MM M.P. PELLONPÄÄ
E. BUSUTTIL
A. WEITZEL
C.L. ROZAKIS
L. LOUCAIDES
B. MARXER
B. CONFORTI
N. BRATZA
I. BÉKÉS
G. RESS
A. PERENIC
C. BÎRSAN
K. HERNDL
M. VILA AMIGÓ
Mrs M. HION
Mr R. NICOLINI
Mrs M.F. BUQUICCHIO, Secretary to the Chamber
Having regard to Article 25 of the Convention for the Protection
of Human Rights and Fundamental Freedoms;
Having regard to the applications introduced on 18 October 1994
and 23 September 1994 respectively by Josef SZRABJER and Walther
Kenneth CLARKE against the United Kingdom and both registered on
7 April 1995 under files Nos. 27004/95 and 27011/95;
Having regard to:
- the reports provided for in Rule 47 of the Rules of Procedure of
the Commission;
- the Commission's decision of 4 September 1996 that the
applications be joined;
- the observations submitted by the respondent Government on
17 January 1997 and the observations in reply submitted by the
applicants on 17 April 1997;
Having deliberated;
Decides as follows:
THE FACTS
The applicant in Application No. 27004/95 ("Mr Szrabjer") is a
British citizen, born in 1922. He lives in Heclefield, in Hampshire.
The applicant in Application No. 27011/95 ("Mr Clarke") is a British
citizen, born in 1926. He is detained at Albany prison, Isle of Wight.
Both applicants are represented by Mr S. Creighton, of the Prisoners'
Advice Service, London, with Mr B. Emmerson, barrister and Mr M. Smyth
of Clifford Chance, solicitors.
A. The particular facts of the cases
Mr Szrabjer paid contributions throughout his working life to a
state pension. When he reached pensionable age, on 11 February 1987,
he was entitled to draw a basic state pension and an additional pension
under the State Earnings Related Pension Scheme (SERPS). In March 1993
Mr Szrabjer was detained on a criminal charge, for which he was later
sentenced to three years in prison. Before his imprisonment,
Mr Szrabjer received a pension of approximately £128, made up of
approximately £58 basic pension, approximately £35 additional pension,
and approximately £35 as a payment for his wife as a dependant (the
precise figures are not agreed).
Throughout the period of his imprisonment, from March 1993 until
23 September 1994, Mr Szrabjer did not receive any pension payment,
although his wife continued to receive the dependant's benefit.
Mr Clarke reached pensionable age on 26 July 1991. He, too, as
a result of contributions made, became entitled to draw both the basic
pension and an earnings-related Category A pension. He continued to
draw his pension until 1 April 1993, when he was detained on a criminal
charge for which he was later sentenced to an eight-year term in
prison. The last pension payment he received was of £78.99, made up as
to £56.99 of the basic element, and as to £22 of the additional
pension.
Mr Clarke applied for his pension whilst in prison, but was told
on 12 January 1994 that he was disqualified because he was undergoing
imprisonment or detention in legal custody.
B. The relevant domestic law
The basic state retirement pension was introduced in 1948 by the
National Insurance Act 1946, it is not means tested and not dependent
on contributions. It continues to be paid to all pensioners upon
satisfaction of the basic eligibility criteria.
In the 1970's it was considered that there was too high a
dependency by pensioners on means tested supplementary benefits, due
to the severe financial hardship they faced on ceasing working life.
A contributory pension scheme was thus proposed by a White Paper in
1974 and introduced by the Social Security Pensions Act 1975 ("the 1975
Act"). The 1975 Act introduced an earnings related element, to
complement the flat rate basic pension. This earnings related scheme
is know as SERPS ("state earnings-related pension scheme"). The scheme
was specifically designed to help the lower paid, widows and those
suffering chronic ill-health. In addition to the flat rate basic
pension the SERPS additional earnings related element ("the earnings
related element") is payable to individuals who have actually paid
contributions on earnings. A pension which consists of both the flat
rate basic pension and an earnings related element is referred to as
a Category A pension.
The framework for social security entitlements in England is
currently contained in the Social Security Contributions and Benefits
Act 1992 ("the 1992 Act"). Section 44 (1) of the 1992 Act lays down the
conditions under which entitlement to a Category A retirement pension
arises.
"A person shall be entitled to a Category A retirement pension
if
(a) he is of pensionable age; and
(b) he satisfies the contribution conditions for a
Category A retirement pension specified in [this Act]
Section 122(1) of the 1992 Act defines "pensionable age" as
sixty-five, in the case of a man.
The conditions that must be satisfied to entitle a person to a
Category A pension are laid down in Schedule 3, Part I, paragraph 5 of
the 1992 Act. The conditions state that the individual must, for a
requisite number of years of his working life, have paid or been
credited with contributions. The requisite number of years during which
contributions must have been made is calculated according to the length
of the individual's working life. However even if contributions have
been made for only half the requisite number of years (or at least
20 years), and in each of the other years the contributor concerned was
precluded from regular employment by responsibilities at home as
defined by the regulations (Social Security Contributions and Benefits
Act 1992 Schedule 3 para. 5 (7)), the entitlement to an earnings
related element remains.
Where an individual earns more than a defined minimum amount,
weekly payments must be made, currently amounting to 2% of earnings up
to a lower limit and 10% of earnings above this limit, up to a ceiling
above which no further contributions are payable. The employer also has
to make contributions in respect of his employee, the amount differing
depending on the employee's earnings. Low earners, who have no
compulsory contribution may chose to make voluntary contributions in
order to benefit from the scheme.
The amount of the earnings related element the individual will
receive at pensionable age is then based on the amount of the
individual's former earnings and the contributions made, with account
being taken of inflation.
The State pension, both the flat rate and the earnings related
element, are financed out of the National Insurance Fund. The income
received by this fund in any given year, from contributions made by
earners and employers, is used to finance the pensions paid out in that
same year. Unlike most private schemes, the National Insurance Fund is
not a fund consisting of contributions built up over the years, which
has sufficient resources from which payments to a person when they
retire can be made. In addition to the revenue from employers and
employees, the National Insurance Fund also receives revenue from
general taxation. The Social Security Act 1993 recently provided for
a special Exchequer Grant to meet the cost of up to 17% of the
expenditure of the National Insurance Fund, in order that the fund
could meet its expenditure commitments.
Separate from the existence of SERPS are occupational pension
schemes which provide their members with additional income in
retirement, generally related to earnings. Occupational schemes may be
geared to high earners or the needs of particular industries or
occupations, and have differing terms and conditions to SERPS. For
example, they may provide for retirement at an earlier age than does
SERPS. It is open to employers who have occupational schemes to
contract their members out of SERPS, on the condition they guarantee
to provide "Guaranteed Minimum Pensions" ("GMP"), roughly equivalent
to those that their employees would receive under SERPS. Employees
continue to have a residual right to earnings related pension if the
GMP they receive is less than the SERPS entitlement. In return for
contracting-out, employers and employees pay National Insurance
contributions at a reduced rate to reflect the saving to the State.
Some occupational pension schemes are not contracted out of SERPS and
in this case the employees benefit from SERPS plus their basic flat
rate state pension and also receive earnings related benefits from
their occupational pension scheme.
There are various provisions in the social security legislation
which operate to disqualify individuals from receiving social security
benefits. The relevant provisions are contained in Section 113(1) of
the Social Security Contributions and Benefits Acts 1992 and in
Regulation 2 of the Social Security (General Benefit) Regulations 1982.
The effect of these provisions is, inter alia, that persons undergoing
imprisonment or detention in legal custody are disqualified from
receiving a state pension. They are not entitled to receive either the
basic flat rate state pension or the earnings related element of the
pension.
In relation to occupational pension schemes which have opted out
of SERPS, disqualification provisions are contained in Section 21(2)
of the Pension Schemes Act 1993 and Regulation 35 of the Occupational
Pension Schemes (Contracting Out) Regulations 1984. Under these
regulations an employer may cease paying the GMP to an individual
undergoing a period of imprisonment or detention in legal custody.
However if the pension is so suspended the equivalent sum of the GMP
may be paid to one or more of the pensioner's dependants as the
trustees of the scheme may in their discretion determine.
COMPLAINTS
The applicants complain that their disqualification from
continuing to receive a SERPS earnings related element of their pension
whilst in prison, is a violation of the Convention in several respects.
First, the applicants submit that their disqualification violates
Article 1 of Protocol No. 1 to the Convention. They claim that, having
qualified for an earnings related element by their contributions over
the years - contributions which were calculated by reference to their
income - they have a "possession" within the meaning of Article 1 of
Protocol No. 1. They submit that there is no reason to deprive them of
that vested property right whilst they are in prison. In this
connection they contend that the disqualification has no legitimate
aim: the aim cannot be to avoid "double expenditure" as a SERPS
earnings related element (unlike the basic flat rate pension) is not
a social welfare benefit but an accrued property entitlement which
depends on a pensioner's past financial contributions rather that his
or her present needs. Moreover, the aim cannot be to punish, as it
would then penalise only those prisoners who have made steady
contributions to the state pension scheme, rather than all those
convicted of an offence. It would also impose a second penalty on those
who have already been sentenced for an offence.
The applicants regard disqualification from their entitlement to
a pension under Section 113 (1) as disproportionate to any aim that
might be legitimate. They claim they are deprived of a source of income
to which they have contributed all their working lives, for the sake
of an aim which is disproportionate and/or unfairly punitive.
Secondly, the applicants allege a violation of Article 14 of the
Convention, taken together with Article 1 of Protocol No. 1. They see
no justification for the difference in treatment of themselves and
those who have an occupational pension which has contracted out of the
SERPS scheme and guaranteed a GMP. They consider that they have been
discriminated against on grounds of their status as state pensioners.
Finally, the applicants see discrimination on the ground of their
status as prisoners.
PROCEEDINGS BEFORE THE COMMISSION
The applications were introduced on 18 October and 23 September
1994 and were both registered on 7 April 1995.
On 4 September 1996 the Commission decided to join the
applications and to communicate them to the respondent Government.
The Government's written observations were submitted on
17 January 1997, after an extension of the time-limit fixed for that
purpose. The applicants replied on 17 April 1997, also after an
extension of the time-limit.
On 4 March 1997 the Commission granted the applicants legal aid.
THE LAW
1. The applicants complain that the suspension of payment of the
earnings related element of their state pensions during their
imprisonment, amounted to a deprivation of property in breach of
Article 1 of Protocol No. 1 (P1-1) of the Convention.
Article 1 of Protocol No. 1 (P1-1) of the Convention provides as
follows:
"Every natural or legal person is entitled to the peaceful
enjoyment of his possessions. No one shall be deprived of his
possessions except in the public interest and subject to the
conditions provided for by law and by the general principles of
international law.
The preceding provisions shall not, however, in any way impair
the right of a State to enforce such laws as it deems necessary
to control the use of property in accordance with the general
interest or to secure the payment of taxes or other contributions
or penalties."
The Government submit that the entitlement to the earnings
related element of the pension does not constitute a "possession" for
the purposes of Article 1 of Protocol No. 1 (P1-1) of the Convention.
In particular they state that the earnings related element is part only
of the state pension which is financed not from a fund in which the
applicants have an identifiable share, but from contributions and
taxation transfers made during the same year in which benefits are paid
out. Further the National Insurance Fund, from which pensions are paid,
is funded largely from contributions from employers and general
taxation, not purely from contributions made by the applicants and
fellow employees. The Government also claim that under domestic law a
state pension does not constitute a possession and a state pension
entitlement cannot be the subject of any charge or be assigned (Social
Security Administration Act 1992, Section 187).
The Government go on to submit that even assuming the entitlement
to the earnings related element of the pension constitutes a possession
under Article 1 of Protocol No. 1 (P1-1), the suspension of payment
amounts to a control of property that strikes a fair balance between
the general interest of the community and the requirements of the
protection of the individual's fundamental rights. The Government argue
that the deprivation of a pension forms part of the punishment during
imprisonment for a criminal offence and that as long as the prisoner
is maintained at public expense there is no need for him to receive a
state pension of any kind.
The applicants argue that the entitlement to the earnings
related element of the pension is a possession within the meaning of
Article 1 of Protocol No. 1 (P1-1), as the level of this part of the
state pension is calculated by reference to the payments actually made
by the applicants during their working life. The applicants further
state that the accumulation of the SERPS earnings related element could
at any time be exchanged for a GMP under an occupational pension scheme
and therefore has a value which is fixed at any given moment in time.
The applicants further argue that a contributor to a private scheme has
a property right in relation to the pension fund he has paid into and
that SERPS was set up on the principles of a private scheme, with the
amount paid out to pensioners being fixed according to their payments
in and not susceptible to fluctuations due to Treasury constraints;
thus contributors under SERPS should likewise have a property right
regarding the earnings related element of their pension.
The applicants consider that the suspension of the earnings
related element of the pension during imprisonment constitutes a
deprivation of property, and that such deprivation cannot be justified
as being in the public interest, has no legitimate aim and unjustly
penalises those individuals who have made steady contributions during
their working life.
The Commission recalls that it has considered the status of
contributory pensions in relation to Article 1 of Protocol 1 (P1-1) in
the past. In X v. Netherlands (No. 4130/69, Dec. 20.7.71, Yearbook 14,
pp. 224, 240) the Commission held that "the making of compulsory
contribution to a pension fund may, in certain circumstances, create
a property right in a portion of such fund and that such right might
be affected by the manner in which the fund is distributed". In Müller
v. Austria, No. 5849/72 (Comm. Report 1.10.75, D.R. 3, p. 31), the
Commission held that, "it is conceivable that the right to be a
beneficiary of an old age insurance system to which one has paid
contributions is a right of ownership guaranteed by Article 1 of
Protocol No. 1 (P1-1)".
The Commission notes that SERPS was set up out of a sense of
social solidarity due to the financial hardship suffered by so many
pensioners. It combines the principle of social solidarity with an
earnings related pension scheme. Whilst there is a relationship between
the amount paid into the scheme by and on behalf of an individual and
the amount that individual will receive as a pensioner, the equation
is complicated by the fact the National Insurance Fund (from which the
pensions are paid out) receives Government grants and taxation monies
and that solidarity policies mean that individuals who have not in fact
contributed over the requisite period due to responsibilities in the
home, can still benefit from the scheme. Thus there are elements of
SERPS that resemble a state benefit as opposed to a private pension
plan. However the Commission recalls the case of Gaygusuz v. Austria
(Eur. Court HR, judgment of 16 September 1996, Reports 1996-IV, No. 14,
paras. 33-42), which considered the right to emergency assistance for
an unemployed person. In that case the Court noted that emergency
assistance was linked to and dependent upon a payment of contributions
and held that in these circumstances the right to emergency assistance
was a "pecuniary right" under Article 1 of Protocol No. 1 (P1-1). The
Commission thus considers that, whilst SERPS contains a social
solidarity element as opposed to being a purely earnings related
pension, the right to such a pension is dependent on some contribution
and therefore does constitute a pecuniary right for the purposes of
Article 1 of Protocol No. 1 (P1-1).
The effect of domestic legislation was to deprive the applicants
of payments under their state pension, including the earnings related
element, during their imprisonment. The question then arises as to
whether such deprivation can be said to be in the public interest. The
Commission notes that the state pension is merely suspended during
imprisonment; upon release the pension becomes payable again at the
appropriate updated level. The Commission further notes that the
dependant wife of the first applicant continued to receive "dependant's
benefit" while her husband was in prison. The Commission also notes
that whilst SERPS was payable only to those who had made sufficient
contributions, the scheme received Government grants and had social
solidarity elements.
The Commission notes that it is clearly set out within the terms
of SERPS, that in the case of imprisonment pension payments will be
suspended. The pension is not, however, stopped permanently and the
money the individual has paid into SERPS remains undiminished during
the period of imprisonment. Further, the pension payments suspended
during imprisonment recommence on release at the appropriate updated
level. The Commission considers in the circumstances it can be
considered as being in the public interest that during a period of
imprisonment, when prisoners are kept at the expense of the State, a
state pension, including an earnings related element of the pension,
is suspended. To do otherwise would leave the prisoner in an
advantageous situation of benefiting from accumulating a lump sum by
receiving a regular pension, without having any outgoing living
expenses.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
2. The applicants complains under Article 14 (Art. 14) of the
Convention taken together with Article 1 of Protocol No. 1 (P1-1). They
refer to the difference of treatment under occupational pension schemes
with a GMP and SERPS. They also consider that they have been
discriminated on the grounds of their status as prisoners.
"The enjoyment of the rights and freedoms set forth in this
Convention shall be secured without discrimination on any ground
such as sex, race, colour, language, religion, political or other
opinion, national or social origin, association with a national
minority, property, birth or other status."
The Government state that pensioners receiving an earnings
related element of the state pension are not in an analogous position
to those who are members of a contracted out occupational pension
scheme and thus there can be no issue under Article 14 (Art. 14) of the
Convention. They further argue that even assuming the two schemes are
considered to be analogous, the disqualification in relation to the
state pension is justified on the grounds both of punishment and the
fact the prisoner is being maintained at public expense.
The applicants submit that as state pensioners, as opposed to
pensioners under an occupational pension scheme with a GMP, they were
discriminated against. The applicants had their pension, including the
earnings related element, suspended during their time in custody.
However, pensioners with an occupational pension scheme, although their
basic rate state pension was suspended, could have their occupational
earnings related pension transferred to a dependant during the period
of imprisonment. The applicants further argue that the suspension of
the earnings related element of their pension during imprisonment
amounted to discrimination on the basis of their status as prisoners.
The Commission recalls that Article 14 (Art. 14) affords
protection against discrimination, that is treating differently,
without an objective and reasonable justification, persons in
"relevantly" similar situations (Eur. Court HR, Fredin v. Sweden
judgment of 18 February 1991, Series A no. 192, p. 19, para. 60). In
the present case, a comparison of prisoners with non-prisoners is a
comparison of two different factual situations and as such discloses
no discrimination under Article 14 (Art. 14) of the Convention.
With regard to the complaint that the applicants were treated
less favourably than prisoners who had paid into an occupational
pensions scheme, the Commission makes the following observations.
Occupational pensions were subject to legislative control in that
employers, whilst able to opt out of SERPS and have their own earnings
related pension scheme for their employees, had to provide at least as
good a return to pensioners as under SERPS, that is a GMP. Under State
regulations governing occupational pension schemes it was permissible
to suspend the pension on imprisonment, but also permissible to award
such pension to a dependant of the prisoner (a possibility not
available under SERPS). The fact that such schemes in certain
circumstances may have offered more advantageous conditions with regard
to suspension and returns to pensioners, cannot constitute
discrimination by the Government against the applicants. The payments
in to occupational schemes by employees and employers would have varied
between different occupational schemes (taking SERPS as a minimum) and
thus there can be no direct comparison with either the levels or the
terms of pension returns under SERPS and occupational pension schemes.
The Commission thus considers this complaint also to be a comparison
of two different factual situations which as such discloses no
discrimination under Article 14 (Art. 14) of the Convention.
It follows that this part of the application is manifestly ill-
founded within the meaning of Article 27 para. 2 (Art. 27-2) of the
Convention.
For these reasons, the Commission, unanimously,
DECLARES THE APPLICATIONS INADMISSIBLE.
M.F. BUQUICCHIO J. LIDDY
Secretary President
to the First Chamber of the First Chamber
Full & Egal Universal Law Academy