CEDH · CASELAW;DECISIONS;DECCOMMISSION;ENG — 23 octobre 1997

.sDD6737AE { font-size:11pt } .s211D6B00 { margin-top:0pt; margin-bottom:0pt; line-height:normal; widows:0; orphans:0; font-size:8.5pt } .sBB9EE52A { font-family:Arial }                          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