C-22/81

JUDGMENT OF T H E COURT (SECOND CHAMBER) 17 DECEMBER 1981 1

Regina v Social Security Commissioner, ex parte Norman Ivor Browning (reference for a preliminary ruling from the High Court of Justice, Queen's Bench Division, Divisional Court, London)

(Retirement pensions and death benefit — "Minimum benefit")

Case 22/81

Social security for migrant workers — Old-age and death insurance — Pension supplement — Guarantee of minimum income — Minimum benefit — Concept (Regulation No 1408/71 of the Council, Art. 50)

Article 50 of Regulation No 1408/71 is social security benefits a minimum to be interpreted as meaning that a income which is in excess of the amount "minimum benefit" exists only where the of benefit which they may claim solely legislation of the State of residence on the basis of their periods of insurance includes a specific guarantee the object and their contributions. of which is to ensure for recipients of

THE SOCIAL SECURITY COMMISSIONER (formerly the National Insurance Commissioner), ex parte NORMAN IVOR BROWNING,

on the interpretation of Article 50 of Regulation No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community,

T H E COURT (Second Chamber)

composed of: O. Due, President of Chamber, P. Pescatore and A. Chloros, Judges,

Advocate General : Sir Gordon Slynn Registrar: J. A. Pompe, Deputy Registrar

gives the following

Irish social security scheme from "A recipient of benefits to whom this September 1935 to 25 January 1955 and Chapter applies may not, in the States in after that date to the United Kingdom whose territory he resides and under social security scheme. whose legislation a benefit is payable to him, be awarded a benefit which is less than the minimum benefit fixed by that legislation for a period of insurance or On 8 May 1973 Mr Stanley reached the residence equal to all the periods of age of 65. Being resident in the United insurance taken into account for the Kingdom, he submitted in due time an payment in accordance with the application for an old-age pension to the provisions of the preceding articles. The Department of Health and Social competent institution of that State shall, Security. if necessary, pay him throughout the period of his residence in its territory a supplement equal to the difference By decision of 27 March 1973 the between the total of the benefits payable competent Insurance Officer awarded under this Chapter and the amount of Mr Stanley from 31 May 1973 a the minimum benefit." retirement pension calculated by reference to the periods of insurance he had completed in the United Kingdom in The amount of the supplement granted accordance with the provisions of Article to Mr Stanley represented the difference 46 (1) of Regulation No 1408/71 of the between, on the one hand, the Council of 14 June 1971 on the theoretical amount of the pension which application of social security schemes to he could have claimed pursuant to employed persons and their families Article 46 (2) (a) of Regulation No moving within the Community (Official 1408/71 if all the periods of insurance Journal, English Special Edition 1971 completed by him in Ireland and in the (II), p. 416; codified version: Official United Kingdom had been completed in Journal 1980, C 138, p. 1). Mr Stanley the United Kingdom alone, and, on the was also entitled to a retirement pension other hand, the total amount of pensions from the Irish social security institutions, granted him by the United Kingdom and calculated on a pro-rata basis in Ireland. accordance with Article 46 (2) of Regu- lation No 1408/71.

By an order of 18 December 1980 the The order made by the High Court of Divisional Court of the High Court of Justice was lodged at the Court Registry Justice, Queen's Bench Division, decided on 5 February 1981. pursuant to Article 177 of the EEC Treaty to suspend the proceedings pending a preliminary ruling from the In accordance with Article 20 of the Court of Justice on the following Protocol on the Statute of the Court of questions : Justice of the EEC written observations were submitted on 27 March 1981 by the "1. Is there a minimum benefit within Commission of the European the meaning of Article 50 of Council Communities, represented by John Regulation (EEC) No 1408/71 Forman, a member of its Legal where the legislation of a Member Department; on 24 April by the State makes entitlement to Insurance Officer, Norman Ivor retirement benefit at a flat rate Browning, the appellant in the main conditional on the yearly average of action, represented by David N. R. weekly flat-rate contributions paid Latham, Barrister, of the Middle or credited to a claimant during the Temple, instructed by Anne Brenda period between his entry into Farthing, Senior Legal Assistant at the insurance and his attaining Department of Health and Social pensionable age being not less than Security; and on the same date, 24 April 50, and, if that condition is not 1981, by Robert Stanley, the respondent satisfied but the yearly average is not in the main action, represented by less than 13, provides for a reduced Richard J. B. Drabble, Barrister, of the amount of retirement benefit Inner Temple, instructed by W.J. determined solely by reference to the Brazier & Forsyth, Solicitors. claimant's contribution average for that period? On hearing the report of the Judge- Rapporteur and the views of the 2. If the answer to Question 1 is in the Advocate General the Court decided to affirmative is the 'minimum benefit': open the oral procedure without any (a) the smallest amount of benefit preparatory inquiry. However, it asked that may be paid to an insured the Commission to explain in writing

what were the "minimum benefits" of paid or credited contributions was 13 within the meaning of Article 50 of or more, but less than 50. Regulation No 1408/71 laid down by the legislation of some Member States; the request was complied with within the In addition to that "flat-rate" pension time allowed. the Act provided for an enhanced pension, the "graduated benefit", which was a rudimentary earnings-related By an order dated 1 July 1981 the Court scheme. decided to assign the case to the Second Chamber pursuant to Article 95 (1) and (2) of the Rules of Procedure. There was no provision in the British legislation for minimum pension. The level of flat-rate benefit was entirely dependent upon the relation between the II — Written observations sub- number of contributions paid and the mitted to the Court length of insurance; in particular, there was no provision for any minimum benefit based on length of residence, The Insurance Officer, Norman Ivor time in insurance, or any given number Browning, the appellant in the main of contributions. action, considers that the reply to the first question raised by the High Court of Justice should be in the negative and that it is therefore not necessary to reply (b) The view that a beneficiary residing to the second. in the United Kingdom is entitled by virtue of Article 50 of Regulation No 1408/71 to a supplement to secure payment to him of benefit calculated (a) In 1973 entitlement to payment of a according to Article 46 (2) (a) of the retirement pension depended on Article regulation is based on a misconstruction 30 of the National Insurance Act 1965 of the concept of "minimum benefit": it and the regulations made thereunder. It takes "minimum benefit" within the was subject to the condition that the meaning of Article 50 to be equivalent to person entitled had paid not less than the "theoretical amount of benefit" 156 flat-rate contributions, payable referred to in Article 46 (2) (a). weekly, for the period between that However, that interpretation corresponds person's entry into the insurance scheme neither to the wording of Article 50 nor and the date on which he reached the to its objective and was rejected by the age of retirement, the yearly average of Court in its judgment of 30 November the contributions paid by him or credited 1977 (Case 64/77 Torri [1977] ECR to him being not less than 50. Any 2299). insured person who failed to meet both of the contribution conditions was not entitled in principle to any retirement Article 50 of Regulation No 1408/71 is pension at all; however, provision was limited in scope: it is to be applied only made in the National Insurance by the institutions of such Member States (Widows' Benefit and Retirement as lay down a minimum for the relevant Pensions) Regulations 1972 for a benefits; the supplement is intended to reduced pension to be payable to insured ensure that in those Member States persons who had paid more than 156 which recognize such a minimum contributions but whose yearly average benefit, the migrant worker should

There is no significant distinction between the main case and Torri, where the Court held that Article 50 applied only when the legislation of the Member State in whose territory the worker It is contended that a "minimum benefit" resided made provision for a minimum within the meaning of Article 50 can pension. The United Kingdom legislation only exist where the legislation of the has established a pension the amount of Member State provides clearly for such a which is calculated by a comparison "minimum" and where the conditions between the working life of the worker for payment of such a minimum, if any, and the number of contributions he has are dependent solely upon periods of made during that period; there is no residence or insurance. That is the case provision for a level of pension which is for those Member States (France, Italy to be paid irrespective of the number and and Luxembourg) whose legislation average amount of the contributions provided at that time for a "minimum" paid, the length of the insured period of the kind to which Article 50 was and the duration of the residence. The intended to apply and which made position varies from claimant to claimant declarations pursuant to Article 5 of the depending on his individual insurance regulation. history, as in the Torri case. It is out of the question for the "minimum benefit" to vary from nil to the maximum flat- rate benefit payable for a contribution average of 50. The result of the amendment to the revised declaration by the United Kingdom provided for in Article 5 of Regulation No 1408/71 (Official Journal 1977, C 89, p. 2) is that there is no (c) Further, Regulation No 1408/71 provision under British legislation for a requires the declarations of Member minimum benefit within the meaning of States specifying the minimum benefits Article 50. referred to in Article 50 to be notified and published in accordance with Article 96. Such a declaration presupposes the existence of a readily identifiable level of benefit, the "minimum benefit", and is not apt if Article 50 is intended to secure Robert Stanley, the respondent in the the payment of a benefit which is main action, submits that the concept of dependent upon an assessment of the "minimum benefit" within the meaning average of the contributions paid by the of Article 50 of Regulation No 1408/71 person concerned, his remuneration or refers to the smallest amount that would other such variable factors. The concept be payable under the relevant legislation,

(a) As to the manner in which Regu- lation No 1408/71 is to be applied to the British flat-rate system it must be remembered that the British authorities (d) If Article 50 of Regulation No are bound to take into account the fact 1408/71 is to be interpreted on the basis that flat-rate contributions have been of the social aims pursued by the paid throughout the periods of insurance legislation of other Member States, completed in Member States other than namely to guarantee a minimum level of the United Kingdom; the difficulties income, it must be observed that the flat- encountered in the main action stem rate pension payable under the British principally from a failure to grasp the legislation has all the essential charac- fact that consideration of the number of teristics of a minimum pension in the flat-rate contributions paid amounts to broad sense of the term. If the British consideration of the duration of a system before 1975 had provided for completed insurance period. both a minimum pension of a flat-rate kind payable once a claimant had been insured all his working life and an earnings-related element, there would be no difficulty in characterizing the pension as a minimum pension within the meaning of Article 50; the differences (b) Accordingly, Article 50 of Regu- between the British position prior to lation No 1408/71 must be understood 1975 and the hypothetical position in to mean that it assumes that flat-rate which there was no earnings-related contributions have been paid throughout element and entitlement to the flat-rate the periods taken into account in calcu- pension depended upon an annual lating the payment in accordance with average of the flat-rate contributions

paid or credited, are not fundamental (a) The most recent declaration made ones. by the United Kingdom pursuant to Article 5 of Regulation No 1408/71 for the purposes of Article 50 has the word "none" under the heading "Minimum benefits referred to in Article 50 of the regulation" (Official Journal 1977, C 89, (e) Mr Stanley submits that, despite the p. 2). The declaration is identical with change in terminology, it is the clear those made by four other Member States intention of the new British pensions (Denmark, Ireland, Federal Republic of scheme set out under the Social Security Germany and The Netherlands) whilst Act and the Social Security Pensions Act the declarations made by Belgium, 1975 that every pensioner who has been France, Italy and Luxembourg contained insured in the United Kingdom all his more or less detailed references to working life should qualify for the "basic national legislation (Official Journal component" of a pension; further, the 1980, C 139, p. 1); the same applies in question whether a claimant qualifies for respect of Greece (Official Journal 1981, the flat-rate basic pension component C 143, p. 1). may be determined by reference solely to the duration of the completed insurance periods, just as can the question of determining the amount of the basic pension component which is payable (b) It was laid down in the Torri case when the claimant has insufficient that Article 50 of Regulation No "qualifying years" to be eligible for the 1408/71 is applicable only in cases in full flat-rate amount. On the other hand, which provision is made in the legislation the amount of the "additional pension of a Member State in whose territory the component" may be ascertained only by worker resides for a minimum pension; it reference to the actual earnings received was further stated in the judgment that by the claimant. It is submitted Article 50 covers cases where the periods accordingly that there is no difficulty in of employment of the worker under the identifying the basic pension component legislation of the States to which he was as the "minimum pension" within the subject were relatively short with the meaning of Article 50 of Regulation No result that the total amount of the 1408/71 and that it would be anomalous benefits payable by those States does not to hold that there was no "minimum provide a reasonable standard of living, pension" before 1975 simply because the and that in order to remedy that flat-rate pension was all that was situation Article 50 provides that where provided for, without any additional the legislation of the State of residence component. lays down a minimum benefit, the benefit payable by that State shall be increased. The Court also referred to the "limited object" of Article 50.

(d) In the context of the declarations by the new Member States to be made In no case does Article 50 permit under Article 5 of Regulation No advantage to be taken of a national 1408/71, the United Kingdom stated in social security system to establish a relation to the minimum benefits referred minimum pension and hence award an to in Article 50 of the regulation increased benefit as if the various periods (Official Journal 1973, C 43, p. 7) that had all been completed in the relevant " . . . The rates of flat-rate old-age Member State. Article 50 is concerned pension and survivors' benefits depend with the payment of the minimum upon the yearly average of contributions benefit, which depends on the period of paid or credited throughout the insurance or residence, where this is insurance life and these rates are laid fixed by the legislation of that Member down in regulations made" under, in State and where it would not be payable particular, the National Insurance Act even taking into account the periods 1965 of 5 August 1965. This statement completed in the Member State (or was interpreted at the time by the British States) other than the Member State of authorities to mean that if the total residence. amount was less than the amount which would have been payable had all the periods of insurance been completed in the Member State of the Community in which the person was permanently resident, that country would pay him a A study of the declarations made by the supplement equal to the difference other Member States is sufficient to between the two amounts. show that the minimum benefits to which reference is made in Article 50 are

2 From the file on the case it appears that the respondent in the appeal before the High Court of Justice, Robert Stanley, an Irish national living in the United Kingdom, completed periods of insurance first in his country of origin and later in the United Kingdom. On reaching pensionable age in 1973 he was awarded, by a decision of the Insurance Officer of 27 March 1973, a retirement pension calculated in accordance with the provisions of Article 46 (1) of Regulation No 1408/71. In addition to the pension the Insurance Officer awarded him a supplement pursuant to Article 50 of the

BROWNING

same regulation, according to which a recipient of benefits may in certain circumstances be entitled to receive a supplement to his pension equal to the "difference" between the total of the benefits payable under the regulation and the amount of the "minimum benefit".

3 The Insurance Officer considered that the "minimum benefit" was the benefit payable under the United Kingdom legislation, and the "difference" referred to in Article 50 was the difference between that benefit and the pension which would have been payable had all the periods of insurance been completed in the United Kingdom. He therefore awarded Mr Stanley a pension equal to the "theoretical amount" defined in Article 46 (2) (a) of the regulation. The decision was based on the fact that at the time in question the United Kingdom Government had made a declaration pursuant to Articles 5 and 50 of Regulation No 1408/71 that certain benefits payable under, in particular, the National Insurance Act 1965 as subsequently amended were the "minimum benefits referred to in Article 50 of the regu- lation" (Official Journal 1973, C 43, p. 7, Section II).

7 The Insurance Officer appealed against that decision to the Divisional Court, Queen's Bench Division, of the High Court of Justice. Contrary to the opinion of the National Insurance Commissioner his view, based on the declaration made by the United Kingdom Government in 1977, is that the "minimum benefit" referred to in Article 50 of the regulation is in fact unknown to United Kingdom legislation.

8 In order to obtain clarification of this concept the High Court of Justice referred to the Court two questions worded as follows :

"1. Is there a minimum benefit within the meaning of Article 50 of Council Regulation (EEC) No 1408/71 where the legislation of a Member State makes entitlement to retirement benefit at a flat rate conditional on the yearly average of weekly flat-rate contributions paid or credited to a claimant during the period between his entry into insurance and his attaining pensionable age being not less than 50, and, if that condition is not satisfied but the yearly average is not less than 13, provides for a reduced amount of retirement benefit determined solely by reference to the claimant's contribution average for that period?

2. If the answer to Question 1 is in the affirmative is the 'minimum benefit': (a) the smallest amount of benefit that may be paid to an insured person under the legislation of that State, that is to say, for a contribution average of 13; (b) the amount that would be payable to the claimant under the legislation of that State talcing account of all the insurance periods

BROWNING

completed under the legislations of all Member States to which he had been subject; or (c) some other (and if so what) amount?"

11 According to the information contained in the case-file and that furnished by the Commission in the course of the proceedings the relevant provisions in

JUDGMENT OF 17. 12. 1981 — CASE 22/81

the Member States which have "minimum benefits" within the meaning of Article 50 are designed, in various forms, to guarantee to recipients of retirement pensions a minimum income in excess of the amount to which they would normally be entitled on the basis of the periods of insurance completed by them and the contributions which they have paid. The purpose of such provisions is, in general, to provide the recipients with a guaranteed minimum income.

12 That was the objective in view of which the Court made reference in its decision of 30 November 1977, cited above, where in paragraph 5 it is stated that "Article 50 covers cases where the periods of employment of the worker under the legislation of the State 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".

16 In view of the foregoing the second question raised by the national court has no purpose.

Costs

1 7 The costs incurred by the Commission of the European Communities which has submitted observations to the Court are not recoverable. As the proceedings are, in so far as the parties to the main action are concerned, in the nature of a step in the proceedings before the national court, the decision as to costs is a matter for that court.

On those grounds,

T H E COURT (Second Chamber),

in answer to the questions referred to it by the High Court of Justice, Queen's Bench Division, Divisional Court, by order of 18 December 1980, hereby rules :

OPINION OF THE ADVOCATE GENERAL SIR GORDON SLYNN DELIVERED ON 19 NOVEMBER 1981

My Lords, Kingdom. The Insurance Officer calculated his entitlement to a pension by Mr Robert Stanley is an Irish national applying Article 46 of Regulation No resident in the United Kingdom. He was 1408/71 (OJ L 149/2 of 5 July 1971) born on 8 May 1908 and from and awarded the amount due under September 1935 to January 1955, he was Article 46 (1) because it was higher than employed in Ireland and covered by the that calculated under Article 46 (2). Mr national insurance scheme for employed Stanley was also awarded a graduated persons then in force. He then went to retirement benefit under Section 36 of the United Kingdom and worked there the National Insurance Act 1965 and a for a further period of about seventeen pension supplement equal to the years subject to the relevant national difference between the total amount of insurance provisions. On 8 May 1973 he the pensions to which he was entitled reached pensionable age and claimed a under English and Irish law and the flat- retirement pension from the Department rate pension which would have been paid of Health and Social Security, the under the former had all his periods of competent institution in the United insurance been completed in the United