Why the law that changes the rules for private pensions could be rejected at the CCR. The explanations of a former constitutional judge
The project that changes the rules for withdrawing money from private pension funds reaches the Constitutional Court, after referrals submitted by the AUR and the High Court of Cassation and Justice. According to former CCR judge Petre Lăzăroiu, the initiative has little chance of passing the constitutional review, as it changes the rules during the game.
PHOTO Inquam / Octav Ganea
The two referrals to CRR, submitted by the AUR party and the High Court of Cassation and Justice (ÎCCJ), on the draft of the Private Pensions Law will be debated by CCR in a meeting convened on November 5.
The initiative adopted by the Parliament on October 15 significantly changes the rules regarding the withdrawal of money from private pension funds, eliminating the option of full withdrawal in a single installment. Although for 17 years politicians have avoided clear regulation of this point, the current legislative intervention already raises questions about constitutionality.
The normative act provides that, after retirement, Romanians will initially be able to withdraw 30% of the amounts accumulated in private pension funds. The rest of the money can be returned monthly for a maximum of 8 years.
The bill came from the Government, and MPs included an exception for cancer patients, who will still be able to withdraw all their money. “(2) By way of exception from para. (1), the patient with oncological conditions, under the conditions provided by Law no. 293/2022 for the prevention and fight against cancer, with subsequent amendments and additions, may receive, upon request, 100% of the value of his personal asset in the form of a single payment”, stipulates the amendment submitted by PNL senator Nicoleta Pauliuc.
Beyond the controversies generated by this regulation, the exception added in Parliament was also intensely criticized, especially by the other parties, who accused it of introducing a form of discrimination – both against other sick people and against all those who contributed to private pension funds. Other proposed amendments aimed at extending the exception to other conditions or allowing the full withdrawal of the amounts for all pensioners were rejected by the Legislature.
People who have less than 12 monthly social allowances can also receive the entire amount as a single payment.
The objections of the ÚCCJ and AUR
In essence, the ÎCCJ accuses “violation of the right to private property, guaranteed by the provisions of Article 44 of the Constitution, of the principle of proportionality provided for by Article 53 of the Constitution and of the principle of equality of rights provided for by Article 16 paragraph (2) of the Constitution.
Violation of the principle of legality, security of legal relations and legitimate trust, provided by art. 1 paragraph (3) and (5) of the Constitution”.
The Supreme Court argues on the one hand that, “In the absence of a clearly defined purpose and adequate compensation, the interference becomes an unjustified deprivation of property, equivalent to an indirect expropriation. In addition, the Constitutional Court of Romania established, by Decision no. 871/2010, that “the right of private property, once acquired, cannot be limited by arbitrary interventions of the legislator, regardless of the form of the property on which it is carried”.
At the same time, “The adopted law, due to the unpredictable character of the normative solutions and retroactive in effect, contravenes the principle of legal security and affects the legitimate trust of citizens in the legal order”.
AUR accuses that the money from pillar II and III is taken illegitimately. “The pension system has operated for almost two decades with clear rules, and Romanians have confidently contributed to it to ensure a peaceful retirement. Now, what we are seeing is a clear violation of both the Romanians' trust and an illegitimate takeover of control over sums of money and a punishment of those who worked honestly and put money aside.
Instead of providing security, the adopted law reduces the control that Romanians have over their own money and creates a dangerous precedent: the rules can be changed at any time, even before you receive the rights for which you have contributed a lifetime. Basically, the Government is telling you that, in fact, your money is no longer yours”.
Former CCR judge: “The law is unconstitutional as a whole”
The former CCR judge, Petre Lăzăroiu, does not believe that the magistrates could notice discrimination regarding the introduction of the amendment that creates an exception in the case of cancer patients.
“It doesn't compare. The law is unconstitutional because it doesn't return the money at once. (…) The Law will fail in its entirety, because it is not constitutional in its entirety”, he explains, supporting the arguments brought by the High Court. According to the former constitutional judge, the regulation should not apply, in the context in which those who have contributed to private pension funds, initially knew that they would be able to withdraw all their money at once at the time of retirement.
