C-408/92

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OPINION OF MR VAN GERVEN — CASE C-408/92

they can also transfer to the Pension Scheme policy will be calculated on the basis the value of pension rights accrued in previ­ that her 65th birthday is the normal ous employment. pensionable date;

'c) if a woman retires at the age of 60, the pension benefits earned in previous employment on the basis that she would Until ljuly 1991 the Pension Scheme pro­ retire at the age of 60 will be subject to vided that the normal pensionable age was 65 an actuarial reduction of 4 % for each years for men and 60 for women. The Pen­ year that she retires before the age of sion Scheme was amended with effect 65. However, the total amount of these from 1 July 1991 to provide for a normal pension payments cannot fall below the pensionable age of 65 for both men and level of a monetary guarantee given at women. According to the order for refer­ the time of transfer of rights into the ence, the amendment applies both to benefits Pension Scheme. This may have the earned in respect of years of service effect of limiting the net overall reduc­ after 1 July 1991 and to benefits earned in tion in those pension benefits. respect of years of service prior to 1 July 1991. More specifically, the consequences of the amendment are as follows:

(a) if a woman retires at the age of 60, her 3. 78 female employees challenged the new pension will be subject to an actuarial rules of the Pension Scheme before the Bed­ reduction of 4% per annum for each year by which her retirement preceded ford Industrial Tribunal ('the Tribunal')· the age of 65. Under the previous rule Their complaint is based in particular on she would have received a full pension; Article 119 of the EC Treaty. It was agreed between the parties that five individual cases would be selected for a test case. These cases may be divided into three categories as fol­ lows:

4. By decision of 2 November 1992 the Industrial Tribunal decided to stay the pro­ (ii) in respect of occupational pension ben­ efits received by employees which are based on years of service on or 2 — The order for reference also mentions a fourth category of female employees who were affiliated to the Pension Scheme after 17 May 1990, but before the date but who have since died. Since none of the cases in the main of equalization, when the date of equal­ proceedings concerns this category, I will not consider it fur­ ther. ization was 1 July 1991;

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OPINION OF MR VAN GERVEN — CASE C-408/92

(iii) in respect of occupational pension ben­ Background to Case C-28/93 Van den efits received by employees which are Akker and Others v Stichting Shell Pensioen- based on years of service prior fonds to 17 May 1990, when the date of equal­ ization was 1 July 1991?

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ADVEL SYSTEMS

accepting the raising of the pensionable age It appears from the order for reference that from 55 to 60 years, or of taking part in the the Pension Fund agreed to reconsider the scheme but maintaining the pensionable age amendment if it were to prove that non- of 55 years. The election had to be made implementation of the amendment would by 31 December 1986. In the absence of an not give rise to a risk of a breach of Arti­ express election for a pensionable age of 60, cle 119 of the EC Treaty. The Pension Fund it was provided that the person concerned fears that if the amendment were held to be would be deemed to have opted for a pen­ in breach, male employees in the same posi­ sionable age of 55. All the applicants in the tion would, if it were not implemented, main proceedings elected expressly or by claim entitlement to the same rights as those implication to maintain the pensionable age conferred on their female colleagues by the of 55. transitional arrangements adopted in 1985 and that they would in particular opt for a pensionable age of 55 years.

6. Following the Barber judgment the Pen­ sion Fund considered it necessary to amend 7. The applicants in the main proceedings the scheme rules by abolishing, as take the view that Article 119 and the Barber from 1 June 1991, the possibility afforded to judgment do not make the abovementioned female employees by the rule changes made amendment necessary and that for that rea­ in 1985 of maintaining the pensionable age son the amendment must be removed. They of 55 after 1 January 1985. are seeking an appropriate declaration from the Kantongerecht (Cantonal Court), The Hague ('the Kantongerecht').

(b) the transitional provisions are solely applicable to female members (prospective members) who on both 31 December 1984 and 1 January 1985 were employed by an employer affiliated to the defendant 8. Despite the points of difference between ("the persons aggrieved"), and the two cases, the central question for the Court is the same, namely whether, and, if so, to what extent, an occupational pension scheme can, in order to take account of the consequences flowing from the Barber judg­ ment, equalize the age at which a person becomes entitled to a pension by raising the pensionable age for female employees rather (c) the transitional provisions also pro­ than by lowering the pensionable age for vided that the persons aggrieved male employees. It appears in particular from could elect for a pensionable age of the Smith case that such a step is disadvanta­ either 55 or 60 years, which election geous for female employees since they must had to be made during a period in future remain longer at work in order to which had already expired by become entitled to a full occupational pen­ 31 December 1986? sion.

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I shall first examine this central question to increase the level of benefits of the disad­ from the point of view of principle and then vantaged sex so as to bring it up to that of give a reply to the questions referred to the the advantaged sex. In cases involving sex Court in the two cases. discrimination the Court has consistently held that the more favourable rules must be applied to the less favoured sex, those rules forming 'the only valid frame of reference' for immediate implementation of the princi­ 5 ple of equal treatment.

5 — The Court first developed this criterion in its judgment in Joined Cases 75/82 and 117/82 Razzouk and Beydoun v Commission [1984] ECR 1509 {paragraph 19) in the context of the right to equal treatment of male and female European Community officials. The Court subsequently applied it to ensure the application of the principle of equal treatment 10. As regards benefits based on periods of confirmed in Article 4(1) of Directive 79/7/EEC (full refer­ ence in footnote 11) for so long as that directive is not (fully) service completed in the past to which dis­ complied with by national legislative bodies (see, inter alia, criminatory rules applied, it is necessary, the Court's judgment in Case 384/85 Borne Clarke v Chief Adjudication Officer [1987] ECR 2865, paragraph 12, and, pending rules to abolish such discrimination, recently, its judgment of 24 February 1994 in Case C-343/92 De Weerd (née Roks) and Others v Bestuur van de Bedrijfs- vereniging voor de Gezondheid, Geestelijke en Maatschap- pelijke Belangen and Others (paragraph 18). In its judgments in Kowalska and Numz, the Court extended that criterion to Article 119 of the EC Treaty (judgments in Case C-33/89 3 — Question 1 (2)(iii) in the Coloroll case. Kowalska v Freie und Hansestadt Hamburg [1990] ECR 4 — Opinion in Cases C-109/91, C-110/91, C-152/91 and I-2591, paragraph 20, and in Casc C-184/89 Nimz v freie C-200/91, [1993] ECR I-4932 and 1-4933, point 60. und Hansestadt Hamburg [1991] ECR I-297, paragraph 18).

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Contrary to the arguments of the applicants in both cases, the judgment in Defrenne II does not detract from that conclusion. It is true that in that judgment the Court held 11. The situation is fundamentally different that, given the social objective underlying so far as concerns benefits based on new Article 119 — as expressed in the improve­ rules adapted to the principle of equal treat­ ment in workers' standard of living and ment and relating to future periods of ser­ working conditions provided for in Arti- vice, that is to say periods completed after the entry into force of the rules. I share the view taken by Avdel Systems Limited, the 7 — Judgment in Case 184/83 Hofmann v Banner Ersatzkasse United Kingdom, the German Government [1984] ECR 3047, paragraph 27; judgment in Case C-229/89 and the Commission that Community law Commission v Belgium [1991] ECR 1-2205, paragraph 22; judgment in Case C-226/91 Molenbroek v Bestuur van de Sociale Verzekeringsbank [1992] ECR 1-5943, paragraph 15. See also the recent judgment of 24 February 1994 in Case C-343/92 De Weerd (ne'e Roks) (cited in footnote 5), in which the Court ruled, with regard to Directive 79/7, that 6 — Judgment in Case C-109/91 Ten Oever v Stichting Bedrijf- that directive 'leaves intact ... the powers reserved by Arti­ spensioenfonds voor het Glazenwassers- en Schoonmaak- cles 117 and 118 of the Treaty to the Member States to define bedrijf [1993] ECR I-4879, paragraph 20 and point 2 of the their social policy within the framework of close cooperation operative part; judgment of 14 December 1993 in Case organized by the Commission, and consequently the nature C-110/91 Moroni v Firma Collo, paragraph 31 and point 3 of and extent of measures of social protection, including those the operative part; judgment of 22 December 1993 in Case relating to social security, and the way in which they are C-152/91 Neath v Hugh Steeper, paragraph 18 and point 1 implemented' (paragraph 28). In my view, the same applies of the operative part. to Article 119 of the EC Treaty as well.

12. Incidentally, for the view advocated here I find support in the recent judgment in De Weerd (née Roks). In that case the Court was asked whether Community law precluded the introduction of national rules which, by making entitlement to benefits for incapacity for work dependent on conditions as to This also applies to the application of Arti­ income applicable in future to men and cle 119 of the EC Treaty to occupational pension schemes: while that provision requires that men and women should receive equal pay, it does not require a specific level 8 — The Court has pointed out many times that, although this provision may be relevant to the interpretation of other of future occupational pension benefits. Community provisions, it is essentially in the nature of a programme and the attainment of the objectives must be the result of a social policy to be defined by the competent authorities (see the judgment in Case 126/86 Giménez Zaera v Instituto Nacional de la Seguridad Social y 11 — Council Directive 79/7/EEC of 19 December 1978 on the Tesoreria General de la Segundad Social [1987] ECR 3697, paragraphs 13 and 14). The Court has more recently con­ progressive implementation of the principle of equal treat­ firmed this view at paragraphs 25 and 26 of its judgment in ment for men and women in matters of social security Joined Cases C-72/91 and C-73/91 Sloman Neptun Scbiff- (OJ 1979 L 6, p. 24). ahrts v Seebetriebsrat Bodo Ziesemer der Sloman Neptun 12 — Paragraph 29 of the judgment in De Weerd (née Roks) Scbiffahrts [1993] ECR I-887, in which it added (at para­ (empnasis added), with reference to the judgment in graph 27) that Article 117 does not allow any judicial Case 30/85 Teuling v Bedrijfsvereniging voor de Cbeintscbe review of the social policy pursued by Member States. Industrie [1987] ECR 2497 and the judgment in Case C-229/89 Commission v Belgium, cited in footnote 7. This 9 — Judgment in Case 43/75 Defrenne v Sabena (Defrenne IĪ) principle had already been expressed in paragraph 22 of the [1976] ECR 455, paragraph 15. Teuhng judgment and in paragraph 24 of the second judg­ 10 — Point 60 of the Opinion. ment, but without the phrase in italics.

I shall begin with the last situation, where there is a common pensionable age of 65 for male and female employees for pension ben­ efits based on periods of service prior to 17 May 1990. From the point of view of Community law, the matter is clear: such a situation is not affected by Article 119 of the EC Treaty since that article has — at any rate as regards discrimination arising from differ­ ences in pensionable age — no direct effect as far as those benefits are concerned and no 14. Next, there is levelling-up of pensionable other rule or principle of Community law ages of male and female employees as regards requiring occupational pension schemes to pension benefits acquired by virtue of be adapted to the principle of equal treat­ periods of service completed between ment through the introduction of a general 17 May 1990 and the date of levelling-up, (higher or lower) pensionable age can be which in this case was 1 July 1991. Since pointed to. While I sympathize with the these periods of service are posterior to the position taken by the applicants in the main judgment in Barber, full application must be proceedings and by the German Govern­ ment, who say that an increase in the pen­ sionable age for women may amount to an impairment of acquired rights comprised in 13 — At points 14 and 15 of its written observations the German Government refers in particular to the 'Widows' Pension' the occupational pension scheme as subse­ judgment of the Bundesarbeitsgericht of 5 September 1989 (3 AZR 575/88, also published in Betriebs-Berater, 1989, quently modified, this problem can be p. 2400, and in Der Betrieb, 1989, p . 2615), in which a resolved only by reference to national law, 'three-level theory' was applied in the context of the protec­ tion of acquired rights in the implementation of the princi­ given the absence of Community rules dur­ ple of equal treatment in the case of private widows' pen­ sion insurance schemes. According to that theory, an ing the relevant period. Actually, the obser­ employer will be able to introduce retroactive levelling-up vations submitted by the intervening Gov­ of pensionable ages only if he can specifically demonstrate compelling reasons ('zwingende Gründe'), such as the exist­ ernments show that a number of possibilities ence of an economic crisis, the reduction of an unplanned over-provision of benefits and a serious breach of fiduciary are available under national law; the United duty.

What, then, about levelling for future peri­ ods of service (that is to say, the years after 14— At the hearing, counsel for the applicants in the Smith case the levelling date of 1 July 1991, which is the correctly pointed out that the Commission's argument failed to take account of the inherent characteristics of date laid down in the scheme rules)? Mrs occupational pension schemes. As the Court pointed out in Smith and her co-applicants submit that the its judgments, cited above in footnote 6, in Ten Oever (paragraph 17), Moroni (paragraph 29) and Neath (para­ employer is here bound by the Community graph 14), it is characteristic of occupational pension schemes 'that there is a time lag between the accrual of enti­ principle of proportionality. The method tlement to the pension, which occurs gradually throughout the employee's working life, and its actual payment, which selected for abolishing the prohibited dis­ is deferred until a particular age'. crimination should not be allowed to reduce

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18. Such a possibility, however, may be used only in exceptional situations, more specifi­ cally in order to take account of circum­ 17. The third question in the Smith case stances which are entirely unconnected with needs an answer only with regard to the sec­ discrimination on grounds of sex and which ond situation relating to pension benefits for meet an acute need concerning the very employees based on periods of service existence of the undertaking or the solvency from 17 May 1990 but prior to the levelling of its occupational pension scheme. So far as date of 1 July 1991: can the employer still raise the pensionable age for women as regards that period and thereby reduce their 16 — Judgment in Case 170/S4 Bilka-Kaufhaus v Weber von Hartz [1986] ECR 1607, at paragraph 36. Those criteria are that the measures should 'correspond to a real need on the part of the undertaking', be 'appropriate with a view to achieving the objectives pursued' and be 'necessary to that 15 — Paragraph 36 of the judgment in De Weerd (née Roks). end'.

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It is obviously for the national courts to assess and review these factors: in particular, it is for them to determine whether the 17 — Thus, in my view, no account can be taken of cost factors having general potential effects, such as the potential cost of grounds of justification relied on by an a limited rise in the price index and the prospects of an eco employer and/or an occupational pension nomic recession, referred to by Avdel Systems Limited. 18 — Point 7.4 of the order for reference. scheme are unrelated to any discrimination

reserves and so on), the difficulties arc capable of being sure taken by the employer and/or the occupational pen resolved, reference may be made by analogy to what the sion scheme is pertinent, that is to say that it must have a Court held in relation to statutory social-security measures logical connection with the objective pursued (for a case in in the judgment in De Weerd (née Roks) cited above in which the Court held that a measure was not pertinent, see footnote 5: '.

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OPINION OF MR VAN GERVEN — CASE C-408/92

Reply to the questions in the Van den Akker being called in question. In the present case case, according to the applicants, the effects of the legal situations in question were exhausted upon the last day on which it was still possible to opt for the transitional arrangements, which was 31 December 1986. Any other view would, they submit, fail to 19. Unlike in the Smith case, in the Van den take proper account of the fundamental prin­ Akker case pensionable ages of male and ciple of legal certainty. female employees were levelled on 1 Janu­ ary 1985 (before delivery of the Barber judg­ ment) and for a limited period of time (from the beginning of 1985 to the end of 1986) female members of the scheme could opt to retain the lower pensionable age. The key question, as formulated in point 8 above, thus shifts in its emphasis towards the According to the Pension Fund, on the other impact of the Barber judgment on transi­ hand, it follows from the Barber judgment tional arrangements agreed on before that that the transitional arrangements here in judgment — and even before the judgment question are now prohibited. In view of the 25 in Bilka: must such transitional arrange­ way in which the Court restricted the effect ments, which are limited ratione personae in time of its judgment in Barber, it is no and ratione temporis, be abolished? If such longer permissible, in the case of entitle­ transitional provisions are maintained, can ments accruing after 17 May 1990, to dis­ male employees claim entitlement to the criminate by maintaining pensionable ages same rights as those applying to female differing according to sex. employees who opted for a pensionable age of 55 years under the 1985 transitional arrangements?

'the directive does not provide for any dero­ gation from the principle of equal treatment laid down in Article 4(1) in order to autho­ rize the extension of the discriminatory effects of earlier provisions of national law. It follows that a Member State may not main­ tain beyond 22 December 1984 any inequal­ ities of treatment which have their origin in the fact that the conditions for entitlement to 21. Let us look immediately at the case-law benefit are those which applied before that referred to by the Commission. It comprises date. That is so notwithstanding the fact that 27 a number of judgments (Borrie Clarke, those inequalities are the result of transi­ 28 2 Dik and Johnson 9) in which the Court tional provisions adopted at the time of the 32 ruled on the compatibility with Direc­ introduction of a new benefit.' tive 79/7 of statutory transitional provisions — generally introduced in order to adapt national legislation to that directive — allow­ ing certain discriminatory rules to retain their effects even after the date by which Directive 79/7 had to be implemented 30 (23 December 1984). The Court emphati­ cally declared this contrary to Directive 79/7. 22. Must this case-law, which requires the principle of equal treatment to have immedi- ate effect in time, be applied without restric­ 27 — Judgment in Case 384/85 Barrit Clarke v Chief Adjudica- tion to the issues to be resolved in the tion Officer [1987] ECR 2865. 28 — Judgment cited in footnote 22. present case, as the Commission suggests? I 29 — Judgment in Case C-31/90 Johnson v Chief Adjudication Officer [1991] ECR I-3723. 30 — In the Borne Clarke case, the United Kingdom defended such transitional provisions relating to invalidity benefits with the argument that it was necessary to safeguard the 31 — Sec the judgments in Borne Clarke (paragraph 9) and in legitimate expectation of those receiving benefits under the Dik (paragraph 8). old rules that they would not lose benefits owing to the 32 — Paragraph 10 of the judgment in Borrie Clarke; sec also rule changes (sec paragraph 4 of the judgment in Borrie the judgments in Dik (paragraph 9) and in Johnson Clarke). (paragraph 32).

35 — See Article 3(1)(a) of Directive 79/7 and the second recital in the preamble thereto. Article 3(1)(b) provides that the directive also applies to social-assistance schemes in so far as they are intended to supplement or replace the schemes referred to in Article 3(1)(a). 36 — Paragraph 9 of the judgment in Ten Oever, cited above in footnote 6, with reference to paragraph 7 of the judgment 23. Why does Directive 79/7 not contain in Case 80/70 Defrenne v Belgium (Defrenne I) [1971] such a derogation while Directive 86/378 ECR 445. See also paragraph 14 of the judgment in Moroni, also cited above in footnote 6. Compare this with the defi­ does? In my view, the main reason is that nition given in the Court's established case-law of the term 'social security benefit' in Regulation No 1408/71, namely a benefit which 'is granted, without any individual and dis­ cretionary assessment of personal needs, to recipients on the basis of a legally defined position and provided that it concerns one of the risks expressly listed in Article 4(1) of 33 — Council Directive 86/378/EEC of 24 July 1986 on the Regulation No 1408/71'; see, inter alia, the judgments in implementation of the principle of equal treatment for men Case C-78/91 Hughes v Chief Adjudication Officer [1992] and women in occupational social security schemes ECR I-4839, paragraph 15, and in Case C-111/91 Commis- (OJ 1986 L 225, p . 40). sion v Luxembourg [1993] ECR I-817, paragraph 29. 34 — The original Commission proposal did not contain this 37 — For the rationale of this direct applicability, see the classic transitional provision. However, Article 10 of the proposal work by P. Roubier, Le droit transitoire, Paris, Dalloz, did contain a similar transitional provision regarding the 1960, p. 340 et seq. use of actuarial calculation factors differing according to sex. 38 — See Article 8(1) of Directive 79/7.

In the Barber judgment, as also in the judg­ ment in Defrenne II, however, the Court restricted such immediate application by lim­ iting the effect of the judgment in time, thereby conferring on the provision non­ retroactive effect. It seems to me, therefore, 24. The principle that a new law should that the Court, by establishing a transitional respect pre-existing contractual situations rule in its judgments, has itself undertaken which continue into the future seems to me the balancing of interests underlying the quite appropriate. However, I take the view principle of respecting pre-existing situations that the principle must not be applied here in and weighed the general Community interest view of the Court's case-law, more particu­ (in having, in particular, uniform and general larly the judgments in Defrenne II and Bar- application of Community law) against the ber. In the first of those judgments the Court interest of individuals (in having, in particu­ ruled that since Article 119 lar, legal certainty and protection of legal relations established in good faith). Conse­ quently, it is this transitional rule laid down in the Barber judgment which must be 39 — See the judgment in Case C-9/91 Equal Opportunities Commission, cited in footnote 20, confirmed in the judg­ ment in Case C-328/91 Thomas and Others, cited in foot­ note 24, paragraph 9. 40 — See, among others, H Chabas in Mazeaud, Mazeaud and Chabas, Leçons de droit civil, I, introduction à l'étude du 41 — Paragraph 39 of the judgment in Defrenne 11, cited above in droit, Paris, Montchrcstien, 1991, No 147, pages 197 footnote 9, subsequently confirmed by the Court in settled and 198; J. Ghestin and G. Goubeaux, Traité de droit civil, case-law, inter alia in its judgments, cited above in foot­ introduction générale, Paris, L. G. D. J., 1990, No 373, note 5, in Case C-33/89 Kowalska, paragraph 12, and in pages 333 and 334; P. Roubier, Le droit transitoire, p. 380 Case C-184/89 Nimz, paragraph 17 (in the latter judgment et seq. solely in relation to collective labour agreements).

27. Therefore, as the Pension Fund correctly considered, the transitional arrangements had to be adapted in order to take account of the 43 consequences of the Barber judgment. Periods of service between 17 May 1990 'overriding considerations of legal certainty and 1 June 1991, the date on which the pen- preclude legal situations which have exhausted all their effects in the past from being called in question'. 42 — When explaining the effect in time of Barber in its judg­ ments in Ten Oever (paragraph 19), Moroni (paragraph 31) and Neath (paragraph 16), the Court expressly referred to the reasoning in paragraph 44 of its judgment in Barber. 43 — In this connection the Pension Fund also relies on a further argument, namely that in paragraph 32 of the judgment in Barber the Court ruled that 'Article 119 prohibits any dis­ crimination with regard to pay as between men and women, whatever the system which gives rise to such ine- 26. Unlike the applicants in the main pro­ ceedings, however, I consider that the situa­ quality' (paragraph 32, emphasis added). I will leave aside thequestion whether that passage should be interpreted in the manner suggested by the Pension Fund. It must, in any tion of female employees who opted under case, be read in conjunction with the second sentence of the same paragraph, which makes it clear that the Court does the transitional arrangements for a pension­ not regard the fact that a pensionable age differing accord­ ing to sex provided for in contracted-out occupational pen­ able age of 55 years but who had not yet sion schemes is based on the statutory pension scheme as reached that age by the date on which the any justification for discrimination of that kind.

It is not contrary to Article 119 of the EC Treaty for an employer, following the judgment of the Court in Case C-262/88 Barber v Guardian Royal Exchange Assur- ance Group [1990] ECR I-1889, to raise, in an occupational pension scheme, the pensionable age of female employees for future periods of service to the pensionable age of male employees, provided at least that the principle of equal pay for men and women laid down in that provision is fully respected. Given the limitation in time of the effects of the Barber judgment, Community law likewise does not preclude such a step in relation to periods of service completed prior to 17 May 1990. Com­ munity law does, however, preclude such a step in relation to periods of service completed between 17 May 1990 and the date on which pensionable ages are lev­ elled. In the case of the lastmentioned periods of service, the principle of equal treatment must be implemented by applying the rules enjoyed by the members of the more favoured sex to members of the less favoured sex.

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in Case C-408/92, Smith and Others:

1. In none of the three situations mentioned above does Article 119 of the EC Treaty entail the obligation referred to by the Industrial Tribunal in its second question.

2. In the third situation described by the Industrial Tribunal, it is only in excep­ tional circumstances that account may be taken, when the principle of equal treatment is implemented, of circumstances which are entirely unconnected with discrimination on grounds of sex and which meet an acute need concerning the very existence of the undertaking or the solvency of its occupational pension scheme. It is for the national court to examine these factors and to ensure that the principle of equal treatment is not limited more than is strictly necessary.