Where a person goes to work for the European Patent Office and wishes to transfer their existing pension contributions from the Italian national system to that run by the European Patent Office, are EU Charter rights infringed when the body administering the Italian system simply refuses to conclude an agreement with the European Patent Office that would allow the transfer of those rights to take place?
The claimant, Mr Gardella, is Italian. For a decade, he worked in Italy before taking up a position in Germany at the European Patent Office (EPO). He worked at the EPO for a decade and, five years ago, whilst working at the EPO, decided to transfer the contributions that he had already paid towards his Italian pension into the EPO’s pension system. To initiate the transfer, he applied to the major agency concerned with social security in Italy, the Istituto nazionale della previdenza sociale (INPS). However, INPS turned down his application.
Mr Gardella commenced legal proceedings in Italy. He requested the District Court in the Italian town of La Spezia to issue a judicial declaration that Mr Gardella had the right to transfer his Italian pension contributions to the EPO’s pension system. To support his request, he pointed to what he believed were the effects of INPS’ refusal: discrimination against workers who exercised their rights to free movement; infringement of his EU citizenship rights contrary to Article 20 TFEU; and an infringement of Article 45 TFEU since he was exercising his profession in a Member State other than in his Member State of origin.
He bolstered his submissions by depicting the unequal treatment which Italians were experiencing whilst working for the EPO. Namely, nationals from other contracting states who went to work for the EPO could indeed transfer their pension contributions from their national systems to the EPO’s pension system. And since Italians could not transfer their pension contributions, Italians wishing to work for the EPO experienced a barrier to exercising their rights to free movement.
Equally, INPS’ discriminatory treatment had to be seen in the context of the fact that, as an employee of an international organisation with an independent pension, his pension provision was not protected by the scope of Article 48 TFEU.
Parallel to this, he referred the national court to the wording of the Employment Chapter in Title IX of the TFEU, and in particular to Articles 145-147 that provide:
Article 145 (ex Article 125 TEC)
Member States and the Union shall, in accordance with this Title, work towards developing a coordinated strategy for employment and particularly for promoting a skilled, trained and adaptable workforce and labour markets responsive to economic change with a view to achieving the objectives defined in Article 3 of the Treaty on European Union.
Article 146 (ex Article 126 TEC)
1. Member States, through their employment policies, shall contribute to the achievement of the objectives referred to in Article 145 in a way consistent with the broad guidelines of the economic policies of the Member States and of the Union adopted pursuant to Article 121(2).
2. Member States, having regard to national practices related to the responsibilities of management and labour, shall regard promoting employment as a matter of common concern and shall coordinate
their action in this respect within the Council, in accordance with the provisions of Article 148.
Article 147 (ex Article 127 TEC)
1. The Union shall contribute to a high level of employment by encouraging cooperation between Member States and by supporting and, if necessary, complementing their action. In doing so, the competences of the Member States shall be respected.
2. The objective of a high level of employment shall be taken into consideration in the formulation and implementation of Union policies and activities.
Accompanying his submissions that INPS was acting in a way that contravened the policies underpinning the Employment Chapter above, he cited Article 15 of the EU Charter of the Fundamental Rights and he placed particular emphasis on the wording of Article 15(2):
Article 15 – Freedom to choose an occupation and right to engage in work
1. Everyone has the right to engage in work and to pursue a freely chosen or accepted occupation.
2. Every citizen of the Union has the freedom to seek employment, to work, to exercise the right of establishment and to provide services in any Member State.
3. Nationals of third countries who are authorised to work in the territories of the Member States are entitled to working conditions equivalent to those of citizens of the Union.
And by way of conclusion he submitted his situation was analogous to a civil servant working for an EU institution. EU civil servants were allowed to transfer their existing social security contributions to the EU’s pension fund by dint of Council Regulation No 723/2004 that amends the Staff Regulations of officials of the European Communities and the Conditions of Employment of other servants of the European Communities.
In response to Mr Gardella’s submissions, INPS explained that there was no rule in Italian legislation that allowed contributions paid into the Italian system to be transferred to foreign institutions. Equally, no specific bilateral agreement had been concluded with the EPO. Admittedly, there was a legal framework for the transfer of pension contributions but that mechanism only existed between the Italian social security institutions and agencies which belonged to the Italian government, or internally between the funds which were administered by them.
The INPS pointed out that the analogy raised by Mr Gardella (whereby his legal position was allegedly comparable to that of an EU civil servant) was a false one. Provisions of international treaties and conventions could not be interpreted by way of analogy. Further, the pension rule which existed in the system of international law was one of aggregation and not one of transfer – and the principle of aggregation did not entail costs, whereas the principle of transfer did.
Besides the principle of aggregation existing in international law, it also underpinned EU Treaty law. Article 48 TFEU (ex Article 42 TEC) stated expressly:
The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, adopt such measures in the field of social security as are necessary to provide freedom of movement for workers; to this end, they shall make arrangements to secure for employed and self-employed migrant workers and their dependants:
(a) aggregation, for the purpose of acquiring and retaining the right to benefit and of calculating the amount of benefit, of all periods taken into account under the laws of the several countries;
(b) payment of benefits to persons resident in the territories of Member States.
Where a member of the Council declares that a draft legislative act referred to in the first subparagraph would affect important aspects of its social security system, including its scope, cost or financial structure, or would affect the financial balance of that system, it may request that the matter be referred to the European Council. In that case, the ordinary legislative procedure shall be suspended. After discussion, the European Council shall, within four months of this suspension, either:
(a) refer the draft back to the Council, which shall terminate the suspension of the ordinary legislative procedure; or
(b) take no action or request the Commission to submit a new proposal; in that case, the act originally proposed shall be deemed not to have been adopted.
INPS added that the principle of aggregation was also expressed in the EU’s Regulations (574/72 and 1408/71) that govern the situation of workers in free movement. And since Mr Gardella was still entitled to benefit from the principle of aggregation, he had no ground to complain about any infringement to his right to free movement as enshrined in Article 45 TFEU (ex Article 39 TEC).
According to the Curia website, the Tribunale della Spezia has asked:
1. Must Articles 20, 45, 48 and 145 to 147 of the Treaty on the Functioning of the European Union (TFEU) and Article 15 of the Charter of Fundamental Rights of the European Union (CFEU) be interpreted as precluding national legislation or national administrative practice which do not permit a worker who is a national of a Member State to transfer to the pension scheme of an international body situated in the territory of another Member State of the European Union, where he works and is insured, the pension contributions credited to the social security scheme of his own State, where he was previously insured?
2. As a consequence of the circumstances set out in Question 1, should it be possible to exercise the right to transfer contributions even in the absence of any specific agreement between the Member State of which the worker is a national or the worker’s pension institution, on the one hand, and the international body on the other?
The Fifth Chamber is due to hear this case on 11 April 2013.
Update – 26 March 2014
According to the OJ  C245/4, the operative part of the judgment reads:
Articles 45 TFEU and 48 TFEU must be interpreted as not precluding rules of a Member State which do not allow its nationals employed in an international organisation such as the European Patent Office, established in the territory of another Member State, to transfer to the social security scheme of that organisation the capital value representing the pension rights they have acquired previously in the territory of their Member State of origin, where there is no arrangement between that Member State and the international organisation providing for the possibility of such a transfer.
Where a mechanism for transferring the capital value representing the pension rights acquired previously in a Member State to the pension scheme of a new employer in another Member State cannot apply, Article 45 TFEU must be interpreted as precluding rules of a Member State which do not allow account to be taken of employment periods which a European Union national completed with an international organisation such as the European Patent Office, established in the territory of another Member State, for the purposes of conferring entitlement to an old-age pension.