State can reduce pensions 'in pursuit of social justice'

The Constitutional Court yesterday confirmed a judgment of the First Hall of the Civil Court that dismissed a constitutional application filed by Emanuel Debono against the Director of Social Security and the Attorney General.

Mr Debono claimed that he used to work with Lloyds Shipping Registry in Malta.

The company had a system in terms of which its employees used to invest in the company. Upon retirement the employees would receive a return on this investment.

As Mr Debono worked in Malta he used to regularly pay Social Security (National Insurance) contributions.

However, upon retirement Mr Debono discovered that the return on his investment in Lloyds' funds was to be deducted from his national insurance pension.

He had requested a judicial declaration that what he received from Lloyds was not a service pension, but the Court of Appeal had dismissed his writ.

As a result, Mr Debono was receiving only the difference between his national insurance pension after deducting his return from Lloyds' funds, and he claimed that the application of the Social Security law to his case was depriving him of his right to a full pension, which was a right to property.

Mr Debono further claimed that the law was discriminating between persons who had invested in banks or in shares or bonds, and persons such as himself who invested in schemes that were managed and founded by his employer.

He claimed that his fundamental human rights had been violated and he requested the Court to grant him a remedy.

The Director of Social Security and the Attorney General pleaded that the scheme to which Mr Debono had contributed was not a private investment, but a fund aimed at providing a service pension to company employees.

As a result, this fund constituted a service pension, and Mr Debono's rights were not infringed.

The first court found that no discrimination had resulted in Mr Debono's case.

Each state was entitled to control the use of property in the general interest.

The Social Security Act did not create any form of discrimination, but aimed at establishing principles on the applicable rates of pensions and social security contributions.

The fact that one did not agree with the provisions of this law did not render it in violation of one's human rights. A person who paid contributions was entitled to receive benefits, but not necessarily of a certain amount.

Mr Debono then appealed to the Constitutional Court composed of Chief Justice Vincent Degaetano, Mr Justice Joseph A Filletti and Mr Justice Anton Depasquale.

On appeal the Constitutional Court referred to case law of the European Court of Human Rights which established as a principle that a person who contributed to a social insurance system was guaranteed benefits, but was not entitled to a pension of a particular amount.

The court added that the state had a wide margin in regulating social policy, and was entitled to reduce pensions in pursuit of social justice.

The Constitutional Court, therefore, dismissed Mr Debono's appeal and confirmed the judgment of the First Hall of the Civil Court.