West Law Report

Pensioners abroad fail to establish discrimination

Posted in European Court of Human Rights (case), Times Law Report by mrkooenglish on November 21, 2008

From The Times
November 20, 2008
Pensioners abroad fail to establish discrimination

European Court of Human Rights

Published November 20, 2008

Carson and Others v United Kingdom (Application No 42184/05)

Before L. Garlicki, President, and Judges Sir Nicolas Bratza, G. Bonello, L. Mijovic, D. Thór Björgvinsson, L. Buanku and M. Poalelungi Deputy Section Registrar F. Araci

Judgment November 4, 2008

The exclusion of pensioners living abroad from an index-linked uprating scheme applicable to all pensioners in the United Kingdom was not in breach of the European Convention on Human Rights.

The European Court of Human Rights so held, by six votes to one, when finding no violation of article 14, prohibiting discrimination, in conjunction with article 1 of Protocol No 1, protecting property.

The applicants were 13 British nationals: Annette Carson, Bernard Jackson, Venice Stewart, Ethel Kendall, Kenneth Dean, Robert Buchanan, Terrance Doyle, John Gould, Geoff Dancer, Penelope Hill, Bernard Shrubsole, Lothar Markiewicz and Rosemary Godfrey, born between 1913 and 1937. They had spent most of their working lives in the United Kingdom, paying National Insurance contributions in full, before emigrating or returning to South Africa, Australia or Canada.

The case concerned their complaint about the United Kingdom authorities’ refusal to uprate their pensions in line with inflation.

In 2002, Ms Carson, who lived in South Africa, brought judicial review proceedings to challenge the failure to index-link her pension. She claimed that she had been the victim of discrimination as British pensioners were treated differently depending on their country of residence.

In particular, despite having spent the same amount of time working in the United Kingdom, having made the same contributions towards the National Insurance fund and having the same need for a reasonable standard of living in her old age as British pensioners who were living in the United Kingdom or in other countries where uprating was available through reciprocal agreements, her basic state pension was frozen at the rate payable on the date she left the UK.

Her application for judicial review was dismissed in the Queen’s Bench Division (The Times May 24, 2002), the Court of Appeal (The Times June 28, 2003) and the House of Lords (The Times May 27, 2005; [2006] 1 AC 173).

The domestic courts held that Ms Carson and those in her position had chosen to live in societies, or more pointedly economies, outside the United Kingdom; to accept her arguments would be to lead to judicial interference in the political decision as to the redeployment of public funds.

Ms Carson received a basic state pension of £67.50 a week. It has been frozen at that rate since 2000. Had that basic pension been uprated in line with inflation, it would now be worth £82.05 a week. Ms Carson, now retired, was almost entirely dependent on her British pension to support her.

In its judgment, the European Court of Human Rights held:

I Article 14 in conjunction with article 1 of Protocol No 1 The Court had established in its case-law that only differences in treatment based on an identifiable characteristic, or status, were capable of amounting to discrimination within the meaning of article 14.

Such a difference of treatment was discriminatory if it had no objective and reasonable justification; in other words, if it did not pursue a legitimate aim or if there was not a reasonable relationship of proportionality between the means employed and the aim sought to be realised.

The contracting state enjoyed a margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justified a different treatment: see Burden v United Kingdom (Application No 13378/05) The Times May 7, 2008; [2008] ECHR paragraph 60).

The scope of that margin varied according to the circumstances, the subject-matter and the background. A wide margin was usually allowed to the state when it came to general measures of economic or social strategy.

Because of their direct knowledge of their society and its needs, the national authorities were in principle better placed than the international judge to appreciate what was in the public interest on social or economic grounds, and the Court would generally respect the legislature’s policy choice unless it was “manifestly without reasonable foundation”: see Stec and Others v United Kingdom (Application Nos 65731/01 and 65900/01) (The Times April 12, 2006; [2006] ECHR paragraph 52).

First, as to whether the applicants were in an analogous situation to British pensioners who had chosen to remain in the United Kingdom, the Court noted that the contracting state’s social security system was intended to provide a minimum standard of living for those resident within its territory.

In so far as concerned the operation of pension or social security systems, individuals ordinarily resident within the contracting state were not therefore in a relevantly analogous situation to those residing outside the territory.

Furthermore, the Court was hesitant to find an analogy between applicants who lived in a frozen-pension country and British pensioners resident in countries outside the United Kingdom where uprating was available through a reciprocal agreement.

National Insurance contributions were only one part of the United Kingdom’s complex system of taxation and the National Insurance fund was just one of a number of sources of revenue used to pay for the United Kingdom’s social security system and National Health Service.

The applicants’ payment of National Insurance contributions during their working lives in the United Kingdom was not therefore any more significant than the fact that they might have paid income tax or other taxes while domiciled there.

Nor was it easy to compare the respective positions of residents of states in close geographical proximity with similar economic conditions, such as the United States of America and Canada, South Africa and Mauritius, or Jamaica and Trinidad and Tobago, due to differences in social security provision, taxation, rates of inflation, interest and currency exchange.

As emphasised by the British domestic courts, the pattern of reciprocal agreements was the result of history and perceptions in each country as to perceived costs and benefits of such an arrangement.

They represented whatever the contracting state had from time to time been able to negotiate without placing itself at an undue economic disadvantage and to apply to provide reciprocity of social security cover across the board, not just in relation to pension uprating.

In the Court’s view, the state did not therefore exceed its very broad discretion to decide on matters of macro-economic policy by entering into such reciprocal arrangements with certain countries but not others.

At any rate, the Court concluded that the difference in treatment had been objectively and reasonably justified. While there was some force in the applicants’ argument, echoed by Age Concern, in a third-party intervention, that an elderly person’s decision to move abroad might be driven by a number of factors, including the desire to be close to family members, place of residence was none the less a matter of choice.

The Court therefore agreed with the Government and the national courts that, in that context, the same high level of protection against differences of treatment was not needed as in differences based on gender or racial or ethnic origin.

Moreover, the state had taken steps, in a series of leaflets which had referred to the Social Security Benefits Uprating Regulations (SI 2001 No 910) to inform United Kingdom residents moving abroad about the absence of index-linking for pensions in certain countries.

The Court therefore held, with Judge Garlicki dissenting, that there had been no violation of article 14 taken in conjunction with article 1 of Protocol No 1.

II Article 14 in conjunction with article 8 The Court held unanimously that it was not necessary to consider separately the applicants’ complaint under article 14 in conjunction with article 8.


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