Legal summary

February 2023

Žegarac v. Serbia (dec.) - 54805/15, 56814/15, 7204/16 et al.

Decision 17.1.2023 [Section IV]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Temporary reduction in applicants’ State pension payments as part of austerity measures to ease budgetary crisis: inadmissible

Facts – The applicants were all in receipt of payments from the State’s public sector pension scheme, the payments from which were reduced between November 2014 and September 2018 by the legislative adoption of the Act on the Temporary Regulation of the Manner of Paying Pensions (Pension Reduction Act) – a measure introduced to reduce the budget deficit and to preserve the financial sustainability of the pension system. The effective pension reduction ranged from 0% for pensions not exceeding the minimum of around EUR 200 to 19.4% for the highest pensions.

The applicants pursued different legal avenues in seeking a review of the adverse financial impact of the measures introduced; all those avenues were ultimately unsuccessful, including a review of the constitutionality of the legislation by the Constitutional Court, which held it to be proportionate.

Law – Article 1 of Protocol No.1:

(i) Applicability of Article 1 of Protocol No. 1 and the existence of interference

The applicant’s existing pension entitlements had generated a proprietary interest within the meaning of Article 1 of Protocol No. 1 to the Convention and their subsequent temporary reduction through legislative amendment had constituted an interference with the applicants’ right to the peaceful enjoyment of their possessions.

(ii) Whether the interference was lawful

The interference in question had had a legal basis in the Pension Reduction Act, the constitutionality of whose provisions had been upheld by the Constitutional Court. The applicants had been able to foresee the ramifications for their pensions of the application of that Act.

(iii) Whether the interference served a legitimate public interest

The national authorities had been facing the need to reduce the high central budget expenditure by 2014 owing to the ever-growing deficit in the pension system and the measures had been prompted by budgetary shortfalls and rising public debt. Therefore, in deciding to temporarily reduce the payment in respect of State pensions, the legislature had pursued a legitimate public interest to preserve the financial sustainability of the pension system and to balance State expenditure, and its judgment in that respect did not appear to be manifestly without reasonable foundation.

(iv) Whether the respondent States respected the principle of a “fair balance”

Admittedly, the State had not, at the time in question, been facing a major economic crisis such as that being faced by Greece or Portugal. Nor had the State been overseeing the comprehensive reforms and/or transformation or merging of different pension schemes. Nevertheless, the temporary and progressive pension reduction during the impugned period formed part of a wider set of general austerity measures which had been prompted by an objective reason (see above).

The applicants had received reduced pension payments from November 2014, which had been calculated in line with the mathematical formula, a method of calculation which did not appear to have been unreasonable or disproportionate. Regarding alternative solutions to the budgetary crisis, it was not for the Court to say, provided that the legislature remained within the bounds of its margin of appreciation, whether the legislature’s discretion should have been exercised in another way. The applicant had been obliged to endure only temporarily what had been a reasonable and commensurate reduction in their pensions, rather than a total suspension of their pensions or the permanent reduction of their pensions by a significant amount. None of the applicants had proved that the reduction in their own pension payments had been such as to place them at risk of having insufficient means to live or that their living conditions had deteriorated to the extent that they risked falling below the subsistence threshold. Therefore, the applicants had not been made to bear an excessive individual burden and the interference complained of had not impaired the essence of their pension rights.

Conclusion : inadmissible (manifestly ill-founded).

The Court also rejected as manifestly ill-founded three applicants’ complaints in relation to Article 14 of the Convention, read in conjunction with Article 1 of Protocol No. 1 and/or Article 1 of Protocol No. 12.

© Council of Europe/European Court of Human Rights This summary by the Registry does not bind the Court.

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