C-212/81

on the interpretation of Article 11 (2) of Annex VIII to the Staff Regulations of Officials of the European Communities on the transfer to the pension scheme of the European Communities of pension rights acquired under the pension funds of a Member State,

T H E C O U R T (Second Chamber)

composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse, Judges, Advocate General: F. Capotorti Registrar: H. A. Rühi, Principal Administrator

gives the following

JUDGMENT

Facts and Issues

request to the Caisse de Pension des Subsequently, by decision of 17 July Employés Privés (hereinafter referred to 1979, the Fund's Management as "the Fund"), Luxembourg, for the Committee determined the amount of payment to the pension scheme of the the acquired pension rights to be Communities of the actuarial equivalent transferred by Mr Bodson in accordance of the pension rights corresponding to with Article 18 of the Law of 16 the periods of insurance which he had December 1963 on the coordination of completed under the pension scheme for pension schemes, as amended by the law employees in the private sector in the of 14 March 1979. Grand Duchy of Luxembourg. Mr Bodson brought the matter before By decision of 22 February 1977 the the Conseil Arbitral des Assurances Fund's Management Committee refused Sociales which, by a judgment of 28 to comply with that request. November 1979, quashed the decision of the Fund's Management Committee on An action brought against that decision the ground that it was contrary to the before the Conseil Arbitral des judgment of the Conseil Supérieur des Assurances Sociales [Arbitral Council of Assurances Sociales of 1 December 1977, Social Insurance] was in turn rejected on which required the transfer of the 1 July 1977 on the grounds that the actuarial equivalent of the pension rights Luxembourg Law of 29 August 1951 acquired in accordance with the election (Articles 10 and 64 to 68) did not made by the person concerned. The provide for the payment of an actuarial appeal lodged by the Fund was dismissed equivalent and that the provisions of on points of substance by the Conseil Annex VIII to the Staff Regulations of Supérieur des Assurances Sociales by a Officials of the European Communities judgment of 17 July 1980. were not relevant to the matter because they governed solely the pension arrangements for European officials, Against that judgment the Fund lodged without prejudice to those relating to an appeal in cassation. national pension schemes to which officials were previously subject. By judgment of 25 June 1981 the Cour de Cassation, Luxembourg, declared the On 1 July 1977 Mr Bodson appealed to appeal to be admissible and, reserving the Conseil Supérieur des Assurances judgment, referred to the Court of Sociales [Supreme Council of Social Justice for a preliminary ruling on the Insurance] which, by decision of 1 following question: December 1977, held that he was entitled to the requested transfer, the "Is Article 11 (2) of Annex VIII to the, effecting of which was a matter solely Staff Regulations of Officials of the for the choice of the person concerned, European Communities to be interpreted and remitted the matter to the Fund for as meaning that either the actuarial a calculation of the actuarial equivalent equivalent of retirement pension rights of his rights. acquired or the sums repaid from the pension fund may be made up of the On 23 Februar)' 1978 the Fund lodged amount of the contributions (partly those an appeal in cassation against that of the employer and partly those of the judgment, but by a judgment of 23 insured person) actually paid to a November 1978 it was declared that the national pension scheme (contributory Fund had "forfeited its right of appeal". scheme) and/or notionally calculated

By order of 9 December 1981 the Court, finding that no Member Sute or He maintains in that regard that the institution which was a party to the Cour de Cassation should have expanded proceedings had requested that the case its question by whether, if necessary, a be decided in plenary session, assigned compromise between two concepts of the case to the Second Chamber special sums repaid and of normal sums pursuant to Article 95 (1) and (2) of the repaid might be permissible. However, in Rules of Procedure. the absence of a -question which he describes as "intermediate", he makes his Pursuant to Article 20 of the Protocol on observations taking account of the two the Statute of the Court of Justice of alternatives contained in the question the EEC, written observations were referred to the Court. submitted by Mr Bodson, represented by V. Biel of the Luxembourg Bar, the Luxembourg Government, represented by J. Weyland, Director of International If it is a 'question of sums repaid, he Economic Relations at the Ministry of accepts the Fund's argument that the Foreign Affairs, and by the Commission transfer of the whole of the contributions of the European Communities, of the employer and of the person represented by R. Baeyens, Principal affiliated does not constitute the sums Legal Adviser, acting as Agent. repaid, as the term has been defined and applied previously by social insurance Upon hearing the report of the Judge- institutions. Rapporteur and the views of the Advocate General, the Court (Second Chamber) decided to open the oral procedure without any preparatory If it is a question of the actuarial inquiry. equivalent, he maintains that the subject- matter and definition of that concept are well-known to Luxembourg social security legislation. The Fund's claim to II — W r i t t e n o b s e r v a t i o n s s u b - the contrary cannot be accepted. mitted pursuant to Article 20 of the P r o t o c o l on the Statute of the Court of Justice of the EEC Mr Bodson observes, moreover, that a definition of the "actuarial equivalent" is given by Anicie 8 of Annex VIII to the 1. Mr Bodson observes first that since Staff Regulations of Officials and that, the judgment of 1 December 1977 of the consequently, the calculation thereof as

performed by the Fund, that is to say the be paid in a particular form. In the contributions of the employer and of the absence of any provisions of the person affiliated, together with interest domestic law of the Member State thereon at 4%, does not correspond to permitting such a transfer, the right that definition and in fact constitutes conferred by Article 11 (2) of the Staff merely a reimbursement of contributions. Regulations cannot be exercised. The contributions are not updated, as would have to be the case if it had really been intended to apply a procedure involving the actuarial equivalent. However, by the law of 14 March 1979 the Luxembourg legislature created a legal atmosphere which would allow the persons concerned to exercise their In reply to the Fund's argument that the rights, although within the context of the law of 14 March 1979 had laid down a pension schemes concerned. Owing to solution based on standard amounts, he the systems of financing employed by the maintains that the necessary corollary of Luxembourg schemes, it is consequently that proposition is to conclude that that not possible to opt for a transfer based solution is based neither on sums repaid, on the actuarial equivalent. as previously defined in Luxembourg social insurance legislation, nor on the actuarial equivalent, but on a makeshift and hybrid compromise, that is to say a The Luxembourg Government maintains, special and ad hoc concept of sums moreover, that the concept of "actuarial repaid. values", to which reference is made in the judgment of 18 July 1980 of the Conseil Supérieur des Assurances Sociales, is used in a very restricted Consequently, Mr Bodson concludes that context concerning only the actuarial the Luxembourg law, as amended in value of the rights which are in the 1979, is incompatible with Article 11 (2) process of being acquired by the of Annex VIII to the Staff Regulations, recipient of a pension. Consequently, it in so far as it does not permit officials to cannot give rise to the general existence be given the actuarial equivalent for of the concept of "actuarial equivalent" which they are entitled to opt. in the Luxembourg legislation concern- ing the pension rights of an insured person who is still working.

It follows that only the transfer of sums "The sum of the contributions (partly repaid is possible under Luxembourg national and partly those of the insured legislation, which, following a re- person) actually paid to a national amendment, permits the transfer of e pension scheme (contributory scheme) whole of the contributions paid together together with interest calculated at the with interest thereon at 4 % ; previously rate of 4% from 31 December of each that was not the case. In conclusion, the year of affiliation, as provided for by Luxembourg Government states that the Article 7 (1) of the law of 14 March same arrangements also apply in the case 1979 supplementing Anicie 18 of the of non-contributory pension schemes. amended law of 16 December 1963, may constitute the sums repaid from the pension fund within the meaning of the second indent of the first subparagraph 3. The Commission first of all examines of Anicie 11 (2) of Annex VIII to the the provisions of the Staff Regulations of Staff Regulations of Officials of the Officials which employ the expression European Communities. "actuarial equivalent" of retirement pension rights. In the Commission's view, it emerges from the whole of those provisions that in the context of the On the other hand, the sum of the Community pension scheme all pension contributions notionally calculated under rights are calculated on an actuarial and a non-contributory scheme may not a distributive basis. constitute an actuarial equivalent of retirement pension rights acquired under a r. ional pension scheme within the mea; .ng of the first indent of the first With regard to the question raised, the subparagraph of Anicie 11 (2) of Annex Commission maintains that Anicie 11 (2) VIII, in so far as the calculation is of Annex VIII to the Staff Regulations actually performed on the basis of confers upon the official a choice as to actuarial tables, in panicular with whether or not to transfer pension rights reference to the age of the person acquired before entering the service of affiliated, and not on the basis of the Community, but that it is difficult to standard amounts which do not take interpret the provision as granting him a account of the personal circumstances of right to opt for one of the two methods that person." of calculation. The alternatives provided for by that article must be attributed to the diversity, between and within the Member States, of the social security schemes governed by their own particular laws. According to the Ill — Oral procedure Commission, it is the national system which ultimately determines whether an official has acquired pension rights and whether he is entitled to transfer either At the sitting on 21 January 1982 the sums repaid or the actuarial answers were given to questions put by equivalent. the Coun and oral argument was presented by the following: P. Beghin of the Luxembourg Bar, acting as Agent, In conclusion, it proposes that the for the Fund; V. Biel of the Luxembourg following reply should be given to the Bar, acting as Agent, for Mr Bodson; question raised: and P. Baeyens, Legal Adviser to the

1 By judgment of 25 June 1981, received at the Court on 20 July 1981 the Cour de Cassation of the Grand Duchy of Luxembourg referred to the Court for a preliminary ruling in pursuance of Anicie 177 of the EEC Treaty a question relating to the interpretation of Article 11 (2) of Annex VIII to the Staff Regulations of Officials of the European Communities asking whether the amount of the contributions (those of the employer and those of the insured person) actually paid to a national pension scheme (contributory scheme) or notionally calculated (non-contributory scheme) or both, together with interest calculated at the rate of 4 % per annum from 31 December of each year of affiliation can constitute, within the meaning of the above-mentioned provision, either the actuarial equivalent of retirement pension rights acquired in the organization to which he belonged or the sums to be repaid by the pension fund of that organization at the date of his departure.

: That question was raised in the course of a dispute between the Caisse de Pension des Employés Privés [Pension Fund for Clerical Staff in the Private Sector], Luxembourg, hereinafter referred to as "the Fund", and Léon Bodson who, after being engaged in the private sector as a clerk in Luxem- bourg, became an official of the European Parliament and requested the

JUDGMENT OF 18. 3. 1982 — CASE 212/81

Fund to transfer to the Community pension scheme the actuarial equivalent of his retirement pension rights acquired under the national insurance scheme.

3 The Fund refused and Mr Bodson then brought the matter before the Conseil Arbitral des Assurances Sociales [Arbitral Council of Social Insurance], hereinafter referred to as "the Arbitral Council", which also rejected his application. Mr Bodson thereupon appealed to the Conseil Supérieur des Assurances Sociales [Supreme Council of Social Insurance], hereinafter referred to as'"the Supreme Council", which, by a decision of 1 December 1977, recognized his right to the transfer of the actuarial equivalent which he had requested, on the ground that it was for the person concerned to exercise the choice made available to him by Article 11 (2) of Annex VIII to the Staff Regulations of Officials.

7 The purpose of calculating the actuarial equivalent in pursuance of Article 11 (2) of Annex VIII to the Staff Regulations of Officials for the transfer of pension rights acquired under national schemes is to capitalize the value of a future contingent periodic benefit. The calculation is therefore based on a calculation of the capital corresponding to the pension to which the person concerned will be entitled at national level by the application of a discount rate by reason of the anticipated nature of the payment as compared with the due date, together with a reduction coefficient proportionate to the risk of the death of the recipient before the due date, determined as a function of the age of the insured and of death rates, both factors being calculated on the basis of the time due to elapse between the date of the award of the actuarial equivalent and that of the grant of the pension.

s The calculation of the sums repaid on the other hand may be effected in contributory insurance schemes by adding up the contributions paid by the insured person, together, where appropriate, with those paid by his employer; interest may be added to these contributions.

9 It follows that the national scheme described in the question put by the court of reference, which is characterized by the lack of any provision for calcu- lating the pension to be paid when it falls legally due or by the lack of any provision for capitalizing the pension itself in the circumstances described above, cannot constitute a system for calculating the actuarial equivalent of the rights to retirement pension acquired by the person concerned under the national scheme.

On those grounds,

THE COURT (Second Chamber),

in answer to the questions referred to it by the Cour de Cassation of the Grand Duchy of Luxembourg by judgment of 25 June 1981, hereby rules:

The sum of the contributions paid by an insured worker and by his employer to a national pension scheme, together with interest calculated at the rate of 4°/o per annum, does not constitute the actuarial equivalent of the retirement pension rights acquired by that worker within the meaning of Article 11 (2) of Annex VIII to the Staff Regulations of

CAISSE DE PENSION DES EMPLOYES PRIVES v BODSON

Officials of the European Communities. That amount may constitute the sums repaid for the purposes of that provision.

I — Translated from the luiian.