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No possibility of determining anew the amount of an old-age pension, based on the quarterly indexation formula for old-age pension insurance premiums and the initial capital, with respect to persons who applied for an old-age pension before 1 June 2021 P 7/22

On 15 November 2023 at 10.00, the Constitutional Tribunal considered the question of law, referred by the Circuit Court in Elbląg (4th Division – Labour and Social Insurance), as regards the lack of the possibility of determining anew the amount of an old-age pension, based on the quarterly indexation formula for old-age pension insurance premiums and the initial capital, with respect to persons who applied for an old-age pension before 1 June 2021.

The Constitutional Tribunal adjudicated that Article 17 of the Act of 24 June 2021 amending the Act on the Social Insurance System and certain other acts (hereinafter: the 2021 Amending Act) in conjunction with Article 25a(2)(2) and Article 25a(2a) of the Act of 17 December 1998 on Old-Age and Disability Pensions from the Social Insurance Fund (hereinafter: The Old-Age Pensions Act) – insofar as it overlooks old-age pensions granted upon applications submitted before 1 June 2021 – is inconsistent with Article 32(1) in conjunction with Article 67(1) of the Constitution of the Republic of Poland.

The Tribunal discontinued the review proceedings as to the remainder.

The ruling was unanimous.

By the 2021 Amending Act, the law-maker introduced a new mechanism for the quarterly indexation of old-age pension insurance premiums; the new mechanism was more advantageous than the one which was binding previously. This way the law-maker addressed the problem of the so-called “June old-age pensions”, which had been unresolved for many years. However, in Article 17 of the 2021 Amending Act, the law-maker provided that the new rules for determining the amounts of “June old-age pensions” would be applicable only to the old-age pensions granted upon applications submitted after 31 May 2021. In the opinion of the Circuit Court in Elbląg, the scope ratione personae of this legal provision was delineated too narrowly. Indeed, not only old-age pensioners who submitted their applications in June 2021, but also the persons who had lodged their applications in June in previous years are in the same situation. Consequently, the court referring the question of law challenged the fact that Article 17 of the 2021 Amending Act did not take account of all persons sharing the same essential characteristic, which – in the said court’s view – led to unjustified differentiation in the group of “June old-age pensioners”, and also resulted in the lack of the proper realisation of constitutional rights and/or freedoms to which the persons belonging to the said group are entitled.

The Constitutional Tribunal held that it was justified to allege that the challenged provision infringed Article 32(1) in conjunction with Article 67(1) of the Constitution.

The Constitutional Tribunal accepted the stance adopted by the court referring the question, as well as supported by the Polish Ombudsman [also referred to as the Polish Commissioner for Human Rights], namely that – in the context of the constitutional issue under examination – similar persons were all insured persons born after 31 December 1948 (covered by the system of the defined old-age pension insurance premium) who applied for their old-age pensions in June, and the amounts of their old-age pensions were determined by applying Article 25a(2)(2) of the Old-Age Pensions Act, in the version that was binding prior to the entry into force of the 2021 Amending Act. In the Tribunal’s opinion, within the said group, there was unjustified differentiation: some persons (covered by the 2021 Amending Act) gained the possibility of re-calculating the old-age pensions granted earlier, by taking account of the new more advantageous way of quarterly indexation, whereas there were some other persons who had been refused such a possibility.

The Constitutional Tribunal held that the solution under review was not relevant in nature. There was no direct relation between the said solution and the declared purpose for which it had been introduced. Indeed, the said purpose was to improve the previous legal situation and to adopt uniform rules for indexing old-age insurance premiums, also with regard to persons who would apply for an old-age pension in June, and in particular for the persons who had also submitted such an application prior to the entry into force of the 2021 Amending Act.

The Constitutional Tribunal emphasised that, when limiting the scope of application of the new rules for quarterly indexation only to the narrow category of “June old-age pensions”, granted prior to the entry into force of the 2021 Amending Act, the legislature actually provided no constitutional arguments to justify such a decision. In the Tribunal's view, the introduction of differentiation in the manner of indexing old-age pension insurance premiums in the group comprising persons sharing the aforementioned common essential characteristic (i.e. June old-age pensioners) in no way contributes to the implementation of the principle of equal treatment of insured persons in the system of the defined old-age pension insurance premium.

The Tribunal noted that what was indicated as the only circumstance justifying the scope ratione personae of the transitional regulation expressed in Article 17 of the 2021 Amending Act was the excessive financial impact of applying the repair mechanism to a broader group of old-age pensioners. In the light of all the circumstances analysed in the present case, the Tribunal, however, deemed that the legislature’s argument about the necessity to maintain a balanced budget – as the reason for allowing the recalculation of only some previously granted “June old-age pensions” – was illusory, and thus also arbitrary. The legislature did not prove that the application of the repair mechanism with regard to all persons in an essentially similar situation would threaten the common good or serve the implementation of the principle of social justice. The Constitutional Tribunal agreed with the Ombudsman that the preservation of the disadvantageous way of the quarterly indexation of “June old-age pensions” resulted in the unjust treatment of the group of insured persons whom the legislature had deprived of the possibility to correct – in accordance with the method introduced by the 2021 Amending Act – the amounts of old-age pensions already granted. At the same time, the Tribunal pointed out that, for many years, the legislature had been aware of the “defects” existing in the quarterly indexation mechanism applicable to “June old-age pensions” and, despite that, for a long time, the legislature had undertaken no repair measures. Hence, it may be said that the legislature itself contributed to the increase in the costs of the subsequent measure, which it tried to lower by granting the possibility of recalculating “June old-age pensions” to a randomly limited group of eligible persons. In the Tribunal’s view, such a measure on the part of the legislature may not be justified by the need to safeguard social justice, but rather it may be regarded as contrary to the principle of loyalty, derived from Article 2 of the Constitution.

The Constitutional Tribunal also indicated that it is necessary for the law-maker to comply with the Tribunal’s judgment. Firstly, the Tribunal clarified that the judgment in the present case constitutes the so-called judgment on omission. That category of judgments do not result in any provisions ceasing to have effect and they did not, per se, lead to a change in the legal system. Such a change must be made by the legislature. Secondly, the Tribunal stressed that, in the present case, it adjudicated as part of a review instituted in the context of a specific case and was bound by the scope of allegation delineated in the question of law, determined by the facts of the case with relation to which the said question of law had been referred. Therefore, the judgment, in its operative part, concerns omission arising from Article 17 of the 2021 Amending Act in conjunction with Article 25a(2)(2) and Article 25a(2a) of the Old-Age Pensions Act, which pertains to “June old-age pensions” granted upon applications submitted prior to 1 June 2021. However, the scope of legal regulation arising from the indicated provisions is not limited only to old-age pensions granted upon applications, but it also comprises old-age pensions obtained on the basis of Article 24a of the Old-Age Pensions Act as well as family pensions provided to eligible relatives of deceased persons. Taking into consideration the grounds that weighed in favour of declaring unconstitutionality in the present case, the legislature should make appropriate changes with regard to all the addressees of Article 17 of the 2021 Amending Act in conjunction with Article 25a(2)(2) and Article 25a(2a) of the Old-Age Pensions Act who are in an analogous situation to the one of “June old-age pensioners” and could not – on the basis of those provisions – take advantage of the possibility of recalculating their pensions which had been granted on less favourable terms.

The adjudicating bench of the Constitutional Tribunal in the case was composed of: Judge Stanisław Piotrowicz – Presiding Judge; Judge Piotr Pszczółkowski – Judge Rapporteur; Judge Justyn Piskorski; Judge Bartłomiej Sochański; Judge Wojciech Sych.