SECOND SECTION

DECISION

Application no . 34929/11 E.B. against Hungary

The European Court of Human Rights (Second Section), sitting on 15 January 2013 as a Chamber composed of:

Guido Raimondi , President, Danutė Jočienė , Peer Lorenzen , András Sajó , Işıl Karakaş , Nebojša Vučinić , Helen Keller , judges and Françoise Elens-Passos , Deputy Section Registrar ,

Having regard to the above application lodged on 30 May 2011,

Having deliberated, decides as follows:

THE FACTS

The applicant, Ms E.B., is a Hungarian and Serbian dual citizen who was born in 1983 in Serbia and currently lives in Budapest . She is represented before the court by Mr J. Fiala , a lawyer practising in Budapest .

A. The circumstances of the case

The facts of the case, as submitted by the applicant, may be summarised as follows.

On 1 January 1998 a new pension system was introduced in Hungary . This system included two mandatory pillars and supplementary voluntary funds. The first mandatory pillar was a mandatory State pension scheme financed on a pay-as-you-go basis, and the second one was a mandatory private pension fund scheme financed on a pay-as-you-earn basis.

After completing her legal studies in Serbia in 2008, the applicant moved to Hungary to seek employment. Since she started to work, in her first employment, under the two-pillar mandatory pension system, it was obligatory for her to join a private pension fund. Hence, as an entrant to employment, she established membership in the private pension fund of a private insurance company on 25 February 2008.

Under the two-pillar mandatory pension scheme, the applicant was under the obligation to contribute both to her private pension fund and to the State pension fund, in accordance with the provisions of Act no. LXXXI of 1997 on Social Security Pension Benefits (“Pension Act”). She had to pay 8 p er cent of her monthly gross salary to her individual private pension fund account and 1.5 per cent to the State pension fund, while the equivalent of 24 per cent of her gross salary was paid by her employer to the State pension fund. As a consequence, upon retirement she was to become entitled to both a private pension on the basis of her private pension contributions invested by the private pension fund, and 75 per cent of the regular State pension on the basis of the years (“service time”) during which she paid contributions.

By contrast, those whose employment had commenced before 1998 had the option to remain entirely in the State pension scheme. Within this scheme, their whole contributions went to the State pension fund and they were entitled to a full State pension.

The pension system was changed by the adoption of a series of laws at the end of 2010. In particular, Act no. CLIV of 2010 amended the Pension Act by providing that all pension contributions paid by employees (that is, 9.5 per cent, which was raised to 10 per cent as of 1 January 2011) between 1 November 2010 (that is, in respect of service time acquired after 30 September 2010) and 31 December 2011 were to be directed to the State pension fund in order to reduce its deficit. For this period, no contributions at all were allocated to private pension funds.

Furthermore, this amendment abolished the two-pillar mandatory pension system altogether. Private pension fund members had until 31 January 2011 to decide if they accepted being automatically returned to the State pension scheme or preferred to make a declaration to the effect that they intended to remain members of a private pension fund. Those who had not made such a declaration by 1 February 2011 lost their private pension fund membership and were automatically returned to the State pension scheme by 1 March 2011. They recovered the yields of their private pension contributions, while the capital thereof was directed to the State pension fund (renamed Pension Reform and Debt Reduction Fund). The returnees became entitled to the full State pension upon retirement.

For those who decided to remain private pension fund members, different rules were introduced. Their entire contributions (10 per cent) paid after 31 December 2011 were to be directed to their private pension fund account, while the employers ’ contribution (24 per cent, renamed “employers pension fee”) continued to be paid to the State pension fund. Moreover, private pension fund members were no longer able to acquire additional service time or entitled to a State pension on the basis of their employer ’ s pension fee paid after 1 December 2011.

As a result of this reform, 98 per cent of private pension fund members left those funds and returned to the State pension scheme. However, the applicant decided to remain in her private pension fund. She submitted a declaration to this effect to the Central Administration of National Pension Insurance on 30 December 2010, confirming that she was aware of the relevant provisions of the law.

On 30 December 2011 a further amendment to the Pension Act, Act no. CXCIV of 2011, was adopted. It provided that the 10 per cent contribution payable by private pension fund members should be directed to the State fund instead of their private funds. Moreover, this amendment reopened the opportunity for the private pension fund members to return to the State pension scheme until 31 March 2012.

On 2 July 2012 yet another amendment to the Pension Act, Act no. CXII of 2012, was adopted. According to these rules, which will be applicable from 1 January 2013 and therefore relevant to the applicant ’ s future retirement (see below), private pension fund members regain their rights to acquire additional service time in the State pension scheme and will receive the State pension. The latter will be calculated by adjusting the amount of the regular State pension using a multiplier specified in chapter 1 of Annex 1 of the Pension Act (see below).

According to the applicant ’ s understanding, she – as a member of a private pension fund – will be entitled to receive a full State pension in respect of service acquired after 1 November 2010, that is, the date from which the entirety of the employees ’ contributions commenced to be directed to the State pension fund. As regards prior to that date, she will be entitled to 75 per cent of the regular State pension, the residual 25 per cent being disbursed by the private pension fund.

B. Relevant domestic law

The Pension Act, as amended by Act nos. CLIV of 2010, CXCIV of 2011 and CXII of 2012, provides, as of 1 January 2013, as follows:

Section 20

“(1) The amount of old age pension depends on the recognised service time and the amount of the average monthly income serving as a basis of pension.

(2) The amount of old age pension is expressed as a percentage of the amount of the average monthly income serving as a basis of pension [section 22(10)]; this percentage is specified in Annex 2 in accordance with the acquired service time.”

Section 21/A

“(1) If an insured person or a person who used to be insured is a member of a private pension fund, the amount of old age pension shall be established by multiplying the amount of the pension calculated according to sections 20 and 21 using a multiplier specified in Annex 1.

(2) If a private pension fund member transfers ... the balance – reduced in certain cases specified by law – of their individual account to the state budget after their old age pension has been established, the amount of the old age pension shall be modified in accordance with sections 20 and 21, with retroactive effect to the date of establishment.”

Annex 1

Calculation of the multiplier applicable to the establishment of state pension of private pension fund members

“1. The multiplier applicable to the establishment of state pension of private pension fund members shall be calculated as follows:

Sz = h + (1–h) * 0.75,

where “ Sz ” means the applicable multiplier, and “h” means the service time acquired after 30 September 2010 divided by the whole recognised insurance period.

2. In calculating “h”, the time-periods appearing in the numerator and the denominator shall be specified in days and the quotient shall be rounded off to two decimal digits.”

COMPLAINT

In essence, the applicant complained under Article 1 of Protocol No. 1 that the rules introduced in the last two years resulted in expropriating her private pension contributions without adequate compensation.

THE LAW

The applicant complained under Article 1 of Protocol No. 1 that the new legislation concerning private pensions meant nothing less than confiscating her private pension contributions to the benefit of the State budget.

In her view, even if she is entitled to a full State pension by virtue of Act no. CXII of 2012 (see above), this falls short of the guarantees of a private pension scheme, being based only on the State ’ s promise, while a private pension is directly related to her contributions and investment strategy. Furthermore, as she intends to spend part of her career abroad, it is uncertain whether she will ever accumulate the sufficient number of years of service for her to be entitled to a State pension. In that case, she will receive no pension corresponding to her State pension fund contributions, whereas if her contributions had not been expropriated, she would receive a private pension for the period she worked in Hungary . The State ’ s financial difficulties cannot justify such an arbitrary, radical, sudden and disproportionate encroachment on her pension entitlements.

Article 1 of Protocol No. 1 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 Court considers that at the outset it needs to ascertain whether there has been an interference with the applicant ’ s rights under Article 1 of Protocol No. 1. It recalls in this connection that this provision does not guarantee any right to a particular amount of pension (see, among many other authorities, Maggio and Others v. Italy , nos. 46286/09, 52851/08, 53727/08, 54486/08 and 56001/08 , § 55, 31 May 2011).

Assuming that the pension entitlements as such fall under this provision, the Court notes that until 1 November 2010 the applicant was under the obligation to make payments into her private pension fund, while also contributing to the State pension scheme, together with her employer. It appears that after several changes to the relevant legislation, it is now obligatory for the employee contribution of 10 per cent to be paid to the State fund, while the applicant remains free to make contributions to the private one.

The Court observes that the applicant has not been deprived of her previous contributions to the private fund which continue to be held in her account – or else she is entitled to channel those amounts to the State fund if she so wishes.

Moreover, it transpires from the impugned legislation that her service time will be recognised in respect of the periods both prior and subsequent to the key date of 30 September 201 0 . It is true that if the applicant opts to keep her contributions in the private fund, her State pension will be adjusted accordingly. However, the Court finds nothing in the case file indicating that the authorities applying this adjustment – which is calculated with a formula, whose result is dependent on the applicant ’ s eventual service time – disregarded the fact that the applicant was making majority contributions to a private pension fund, rather than only to the State fund, for part of her career.

Furthermore, her contributions made to the private funds before 1 November 2010 remain intact under the new legislation, whereas the ones made afterwards have been transformed into an entitlement under the State scheme.

The Court thus observes that throughout the entire period of her employment, the contributions which the applicant has made to either the private pension fund or the State fund have conferred on her an entitlement to pension payments in the future, so that it cannot be said that the various arrangements have deprived her of any rights in that respect.

In these circumstances, the Court considers that there has been no interference with the applicant ’ s rights under Article 1 of Protocol No. 1 including her legitimate expectations of receiving a pension in the future. The applicant ’ s speculations about her accumulating service years domestically or abroad are, for the Court, immaterial in this respect.

Furthermore and quite apart from the above considerations, the Court cannot overlook the fact that the situation complained of resulted from a choice made by the applicant herself.

It follows that the application is manifestly ill-founded within the meaning of Article 35 § 3 (a) and must be rejected, pursuant to Article 35 § 4 of the Convention.

For these reasons, the Court unanimously

Declares the application inadmissible.

Françoise Elens-Passos Guido Raimondi Deputy Registrar President