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 – 6 August 2014
A version of the CJEU’s judgment in Case C-233/12, Gardella ECLI:EU:C:2013:449 is reproduced below. The reproduction is not authentic. Only the versions of the document published in the ‘Reports of Cases’ or the ‘Official Journal of the European Union’ are authentic. The source of the reproduction is the Eur-Lex Europa web site. The information on that site is subject to a disclaimer and a copyright notice.
JUDGMENT OF THE COURT (Fifth Chamber)
4 July 2013 ()
(Transfer of pension rights acquired in a Member State – Articles 45 TFEU and 48 TFEU – National rules not allowing for the right to transfer to an international organisation having its head office in another Member State the capital value representing the retirement contributions paid to a national social security body – Aggregation rule)
In Case C‑233/12,
REQUEST for a preliminary ruling under Article 267 TFEU from the Tribunale di La Spezia (Italy), made by decision of 16 April 2012, received at the Court on 14 May 2012, in the proceedings
Istituto nazionale della previdenza sociale (INPS),
THE COURT (Fifth Chamber),
composed of T. von Danwitz, President of the Chamber, A. Rosas, E. Juhász (Rapporteur), D. Šváby and C. Vajda, Judges,
Advocate General: P. Cruz Villalón,
Registrar: A. Impellizzeri, Administrator,
having regard to the written procedure and further to the hearing on 11 April 2013,
after considering the observations submitted on behalf of:
– Mr Gardella, by T. Truppa, R. Ciancaglini and M. Rossi, avvocati,
– the Istituto nazionale della previdenza sociale (INPS), by A. Sgroi, avvocato,
– the Italian Government, by G. Palmieri, acting as Agent, assisted by G. De Socio, avvocato dello Stato,
– the Czech Government, by M. Smolek, acting as Agent,
– the German Government, by T. Henze and J. Möller, acting as Agents,
– the European Commission, by C. Cattabriga and V. Kreuschitz, acting as Agents,
having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,
gives the following
1 This request for a preliminary ruling concerns the interpretation of Articles 20 TFEU, 45 TFEU, 48 TFEU and 145 TFEU to 147 TFEU and of Article 15 of the Charter of Fundamental Rights of the European Union (‘the Charter’).
2 The request has been made in proceedings between Mr Gardella, working at the European Patent Office (EPO), in Munich (Germany) and the Istituto nazionale della previdenza sociale (INPS) (the National Social Security Institute) concerning the INPS’s refusal to transfer to the EPO’s social security scheme the capital value representing the pension rights he acquired during his periods of employment in Italy.
European Union legislation
3 Article 11(2) of Annex VIII to the Staff Regulations of European Union officials, established by Council Regulation (EEC, Euratom, ECSC) No 259/68 of 29 February 1968 laying down the Staff Regulations of officials and the conditions of employment of other servants of the European Communities and instituting special measures temporarily applicable to officials of the Commission (OJ, English Special Edition II, 1968(I), p. 30), as amended by Council Regulation (EC, Euratom) No 723/2004 of 22 March 2004 (OJ 2004 L 124, p. 1) (‘the Staff Regulations’), states:
‘An official who enters the service of the Communities after:
– leaving the service of a government administration or of a national or international organisation;
– pursuing an activity in an employed or self-employed capacity;
shall be entitled, after establishment but before becoming eligible for payment of a retirement pension within the meaning of Article 77 of the Staff Regulations, to have paid to the Communities the capital value, updated to the date of the actual transfer, of pension rights acquired by virtue of such service or activities.
In such case the institution in which the official serves shall, taking into account the official’s basic salary, age and exchange rate at the date of application for a transfer, determine by means of general implementing provisions the number of years of pensionable service with which he shall be credited under the Community pension scheme in respect of the former period of service, on the basis of the capital transferred, after deducting an amount representing capital appreciation between the date of the application for a transfer and the actual date of the transfer.
Officials may make use of this arrangement once only for each Member State and pension fund concerned.’
4 Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ 2004 L 166, p. 1), which replaced Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community, as amended and updated by Council Regulation (EC) No 118/97 of 2 December 1996 (OJ 1997 L 28, p. 1), as amended by Regulation (EC) No 1992/2006 of the European Parliament and of the Council of 18 December 2006 (OJ 2006 L 392, p. 1) (‘Regulation No 1408/71’), contains provisions relating to the coordination of social security systems in the European Union.
‘1. This Regulation shall apply to nationals of a Member State, stateless persons and refugees residing in a Member State who are or have been subject to the legislation of one or more Member States, as well as to the members of their families and to their survivors.’
‘This Regulation shall apply to all legislation concerning the following branches of social security:
(d) old-age benefits;
‘Unless otherwise provided for by this Regulation, the competent institution of a Member State whose legislation makes:
– the acquisition, retention, duration or recovery of the right to benefits,
– the coverage by legislation, or
– the access to or the exemption from compulsory, optional continued or voluntary insurance,
conditional upon the completion of periods of insurance, employment, self‑employment or residence shall, to the extent necessary, take into account periods of insurance, employment, self-employment or residence completed under the legislation of any other Member State as though they were periods completed under the legislation which it applies.’
‘1. The competent institution shall calculate the amount of the benefit that would be due:
(a) under the legislation it applies, only where the conditions for entitlement to benefits have been satisfied exclusively under national law (independent benefit);
(b) by calculating a theoretical amount and subsequently an actual amount (pro rata benefit), as follows:
(i) the theoretical amount of the benefit is equal to the benefit which the person concerned could claim if all the periods of insurance and/or of residence which have been completed under the legislations of the other Member States had been completed under the legislation it applies on the date of the award of the benefit. If, under this legislation, the amount does not depend on the duration of the periods completed, that amount shall be regarded as being the theoretical amount;
(ii) the competent institution shall then establish the actual amount of the pro rata benefit by applying to the theoretical amount the ratio between the duration of the periods completed before materialisation of the risk under the legislation it applies and the total duration of the periods completed before materialisation of the risk under the legislations of all the Member States concerned.’
Relevant rules of the EPO
11 Under Article 12 of the European Patent Office rules on pensions, adopted by its Board of Directors pursuant to Article 33 of that convention, EPO staff may transfer the capital value representing the rights acquired previously under other retirement schemes, in so far as allowed under those schemes. When that is the case, the EPO determines, according to its own rules, the number of years of pensionable service acquired under the original scheme which may be credited to the person concerned and, consequently, for the retirement pension to which that person will be entitled.
12 It is apparent from the order for reference that the European Patent Office’s rules on pensions do not, however, provide for aggregation of contribution periods, that is to say, for the cumulation of years of pensionable service acquired with the EPO with the rights acquired under other retirement schemes.
The Italian rules
13 The order for reference indicates that, in Italy, the transfer or merger of pension rights as provided for by Law No 29 of 7 February 1979 on the merger of workers’ insurance periods for the purposes of social security (Legge n. 29 – Ricongiunzione dei periodi assicurativi dei lavoratori ai fini previdenziali) (GURI No 40 of 9 February 1979), as amended, applies only to employees in the public sector or private sector who have all been contributors to mandatory forms of social security with national institutions, funds and social security schemes. There is a cost attaching to the transfer, which it is for the person concerned to cover.
14 The referring court adds that, under the Staff Regulations, EU officials and servants as well as, under specific agreements, those of the European University Institute and the European Investment Bank, may make use of the mechanism for transferring the capital value representing the pension rights acquired previously in the territory of the Italian Republic.
15 By contrast, servants of the EPO may not avail themselves of that opportunity because there is no agreement between the EPO and the Italian Republic authorising the transfer to the EPO of the capital value representing the pension rights acquired by workers previously affiliated with the INPS.
16 As to the aggregation of contribution periods, the information provided by the referring court indicates that under Regulation No 883/2004 that mechanism, in principle, works to the advantage of employed workers and the liberal professions. It does not, however, apply to employees of the EPO who are as servants of an international organisation and, according to Article 2 of Regulation No 883/2004, cannot be considered to be ‘subject to the legislation of one or more Member States’.
The dispute in the main proceedings and the questions referred for a preliminary ruling
18 Before holding that post he worked in Italy from 21 December 1992 to 30 April 2002, during which he paid to the INPS a total of 485 weekly insurance contributions (equivalent to 9 years and 17 weeks).
22 That court found that the absence of rules in the Italian legal order permitting the transfer to the EPO of the capital value representing the pension rights acquired previously in Italy, combined with the absence of provisions in the European Patent Office’s rules on pensions permitting the aggregation of contribution periods completed before recruitment, would appear to constitute a hindrance to the free movement of workers in the European Union. The prospect of being unable to utilise contributions paid and years of pensionable service acquired before commencing service at the EPO towards their pension would discourage workers having acquired pension rights in Italy from accepting offers of employment from the EPO. Such a situation would manifestly infringe the rights conferred on Union citizens by Articles 20 TFEU, 45 TFEU and 48 TFEU and would also be incompatible with Articles 145 TFEU to 147 TFEU and Article 15 of the Charter.
‘1. Must Articles 20 [TFEU], 45 [TFEU], 48 [TFEU] and 145 [TFEU] to 147 TFEU and Article 15 of the Charter … 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 …, 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?’
Consideration of the questions referred
24 By the questions it has referred, which it is appropriate to consider together, the referring court asks, in essence, whether Articles 20 TFEU, 45 TFEU, 48 TFEU and 145 TFEU to 147 TFEU and Article 15 of the Charter must be interpreted as precluding rules of a Member State which do not allow its nationals employed in an international organisation such as the EPO, 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.
25 It is settled case-law that any Community national who, irrespective of his place of residence and his nationality, has exercised the right to freedom of movement for workers and who has been employed in a Member State other than that of his origin falls within the scope of Article 45 TFEU. A Union national working in a Member State other than his State of origin and who has accepted a post in an international organisation also comes within the scope of that provision (see, to that effect, Case C‑185/04 Öberg  ECR I‑1453, paragraphs 11 and 12 and the case-law cited).
26 He does not lose his status as worker for the purposes of Article 45 TFEU because he holds employment with an international organisation (see, to that effect, Joined Cases 389/87 and 390/87 Echternach and Moritz  ECR 723, paragraph 11).
28 In examining the question whether the fact that Mr Gardella may not transfer the capital value representing his pension rights to the EPO’s pension scheme may constitute an impediment to the free movement of workers within the European Union, it should be noted as a preliminary point that the option granted under the Staff Regulations to EU officials and other EU servants to transfer to the EU pension scheme the capital value representing the pension rights acquired during previous employment cannot be extended to officials of the EPO or to relations between a Member State and an international organisation such as the EPO.
30 Whereas the Staff Regulations are mandatory in their entirety and directly applicable in all Member States, the European Patent Office’s rules on pensions, not being a legal act of the European Union, cannot produce such legal effects in the Member States under EU law. Moreover, those rules explicitly provide that the body which manages the pension scheme to which the official in question was a contributor must give its permission before any transfer of the capital value representing the pension rights may take place.
32 Mr Gardella’s situation thus falls to be assessed through a comparison with that of citizens who exercise their right to move freely within the European Union in pursuing paid employment with employers which are not EU institutions or international organisations such as the EPO, and with that of citizens pursuing self-employed activities, which are by far the largest segment for which citizens exercise their right of free movement.
33 As regards the coordination of social security systems as between Member States, neither the FEU Treaty nor Regulations Nos 1408/71 and 883/2004 have provided or provide for rules on the transfer of the capital value representing previously‑acquired pension rights. Rather, they are based on the principle of aggregation of periods, as evidenced by Article 48 TFEU, as implemented by those regulations.
34 It should be noted that Article 48 TFEU, on which the applicant in the main proceedings relies before the referring court in support of his action and which the questions referred also mention, provides that the European Parliament and the Council of the European Union are to adopt ‘such measures in the field of social security as are necessary to provide freedom of movement for workers’ inter alia by making arrangements to secure for migrant workers the ‘aggregation … of all periods taken into account under the laws of the several countries’. Such an aggregation system of periods was introduced by Regulation No 1408/71 then by Regulation No 883/2004.
35 It is thus not apparent from Article 45 TFEU, read in the light of Article 48 TFEU, that there is an obligation for a Member State to provide for the option for an official of an international organisation, such as the EPO, of transferring the capital value representing previously-acquired pension rights to the pension scheme of that international organisation, or that there is an obligation to conclude an international agreement to that effect.
36 Consequently, the absence of such an option for officials of an international organisation such as the EPO cannot be considered to be an impediment to the free movement of workers for the purposes of Article 45 TFEU.
38 According to settled case-law, Article 20 TFEU, which sets out generally the right of every citizen of the Union to move and reside freely within the territory of the Member States, finds specific expression in Article 45 TFEU in relation to freedom of movement for workers (see Case C‑3/08 Leyman  ECR I‑9085, paragraph 20 and the case-law cited).
39 As regards Article 15(2) of the Charter, it must be borne in mind that Article 52(2) thereof, which provides that rights recognised by the Charter for which provision is made in the treaties are to be exercised under the conditions and within the limits defined therein. In that vein, Article 15(2) of the Charter reiterates inter alia the free movement of workers guaranteed by Article 45 TFEU, as confirmed by the explanations relating to that provision.
40 Articles 145 TFEU to 147 TFEU lay down the objectives of and general measures for EU employment policy. The right asserted by the applicant in the main proceedings or the obligation for a Member State to guarantee such a right cannot be inferred from those provisions.
42 The applicant in the main proceedings alleges that, if his action before the referring court is dismissed, he risks losing his acquired pension rights, because, firstly, the EPO does not apply the aggregation mechanism and, secondly, in Italy his employment or contribution periods may not amount to the minimum period required under national legislation for vesting entitlement to a pension.
44 It is true that Article 48 TFEU provides for the introduction of arrangements to secure for migrant workers the aggregation of periods ‘taken into account under the laws of the several countries’ and that Article 18 of Regulation No 1408/71, just like Article 6 of Regulation No 883/2004 subsequently, provides that the periods completed under the legislation ‘of any other Member State’ are to be aggregated; these do not encompass periods relating to employment with the EPO.
45 Nevertheless, if the 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, depriving a worker of the right to aggregate periods completed under the legislation of several Member States, a right which all employed workers generally have with all employers in a Member State, apart from international organisations such as the EPO, constitutes, in principle, an impediment to the free movement of workers for the purposes of Article 45 TFEU.
46 Such rules give rise to a situation where persons who have exercised their right of free movement, including employment or contribution periods which do not amount to the minimum period required under national legislation for vesting entitlement to a pension, risk losing the opportunity of receiving old-age benefits to which they would have been entitled had they not accepted employment in another Member State with an international organisation and is, therefore, liable to impede their exercise of their right to free movement. It is for the national court to ascertain whether or not the Italian rules on old-age benefits have such an effect.
48 Consequently, a worker such as Mr Gardella, upon reaching retirement age, must be able to request aggregation of his employment periods in Italy with his employment periods with the EPO in order to confer entitlement to an old-age pension.
49 In the light of the foregoing, the answer to the questions referred is that 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 EPO, 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. However, 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 EPO, established in the territory of another Member State, for the purposes of conferring entitlement to an old-age pension.
50 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Fifth Chamber) hereby rules:
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.
Language of the case: Italian.