Why the private pensions law was declared unconstitutional: discrimination based on illness and the threat to Pillar 3

The Constitutional Court considers the project on the payment of private pensions in installments unconstitutional. The analysts consulted by “Adevărul” explain the main issues of unconstitutionality and propose how the document could be amended to receive a favorable opinion.

The project on the payment of private pensions in installments was considered unconstitutional by the CCR

“Ithe introduction of the exception regarding oncological diseases in the payment of private pensions was expected to raise constitutional issues.

It seems that those who constructed and approved this law have no basic notions of constitutional rights, for example regarding the establishment of legislation that discriminates on the basis of illness. The law was expected to fall to the CCR and I hope that the parliamentarians will subsequently redo it.

I also have doubts about the regulations on pillar 3, where there is no obligation regarding people's participation and, nevertheless, the state comes and introduces rules, as it were, during the game.

Tight regulation of Pillar 3 will do nothing but turn it into a useless investment vehicle when there are plenty of other types of investments that are much more profitable in the long term,” said analyst Adrian Negrescu for “Adevărul”.

Codîrlașu: The role of a pension system is to give flexibility

For his part, the analyst Adrian Codîrlașu explained for “Adevărul” that “the role of a pension system is to give flexibility, and private pensions fulfill this role” and by the draft law declared unconstitutional by the CCR.

“Our private pension system is flexible in that 30% of income is paid at retirement and the rest in instalments. We should contribute more to Pillar 2, increase contributions to over 6%, because Pillar 1 with state pensions is becoming unsustainable”, Codîrlașu explained.

Asked how the project on the staggered payment of private pensions should be constructed in order to pass the CCR, the economic analyst explained that the project was declared unconstitutional because of the provisions on the exemption of sick people. “The role of the pension is to be collected during life, and people with cancer should have been able to take them all at once, as was provided for in the draft law declared unconstitutional by the CCR. All the more so as in Pillar 2 the contribution is below 5%, but in health it is more than double. This means that the state has an inefficient monopoly. A system similar to private pensions should also be made for health contributions, something similar to Pillar 2 that complements Pillar 1″Codîrlașu declared for “Adevărul”.

Marius Stanciu: The freedom to dispose of money on the spot is restricted

Lawyers consulted by “Adevărul” recently explained that the draft law regulating the payment of private pensions in installments has some gaps, especially since the changes were made on the fly.

“What is restricted is the immediate freedom of disposition, justified by the state through the general interest of ensuring a constant long-term income. The model is not isolated, but is also found in other European states, where full withdrawal is not allowed.

However, the sudden nature of the change, which modifies “on the fly” the rules for those who have contributed for decades under other premises, remains criticizable. Although the application will only be for the future, many approach retirement with financial plans based on the possibility of full withdrawal or shorter payment periods. This adjustment can be perceived as a limitation of legitimate expectations and can generate discussions regarding the fairness and predictability of the legislative framework”explained lawyer Marius Stanciu.

Oana Dinu, lawyer: The principle of non-retroactivity must be applied

The proposed changes regarding the payment of private pensions – either through a scheduled payment over 8 years, or through the lifetime pension option – must be analyzed including from the perspective of constitutional law principles and the jurisprudence of the European Court of Human Rights, explained Oana Dinu, partner lawyer of the Demsorean Popescu Dinu and Associates Law Firm

“The discussion is not about the political expediency of these measures, but their compatibility with the individual rights established by the Constitution and the European Convention.

A first legal landmark is the principle of non-retroactivity of the civil law, provided by art. 15 para. (2) of the Constitution. Any change that affects legal situations already formed – such as contributions made to a private pension system based on a previous legal framework – must be carefully analyzed, as it may affect earned rights.

Also relevant is the concept of “legitimate expectation”, provided by art. 1 of Protocol no. 1 to the European Convention. Participants who have contributed based on clear rules can have a legitimate expectation that they will benefit from the accumulated amounts under the known conditions”said lawyer Oana Dinu for “Adevărul”.

On the other hand, she added, it should be borne in mind that, in the field of fiscal and social policies, states have a wide margin of appreciation, recognized even by the Strasbourg Court.

“In this context, the state has both the role of regulator and the responsibility to ensure that the participants actually get to benefit from the private pension for life.

Public policies, however necessary, must be compatible with constitutional and international commitments, to ensure the balance between the general interest and the protection of individual rights”concluded the lawyer.

The CCR admitted the exceptions formulated by the AUR and the judges of the High Court

We remind you that the judges of the Constitutional Court of Romania (CCR) decided on Tuesday, November 25, on the referrals made by the AUR and the ÎCCJ regarding the unconstitutionality of the law on the payment of private pensions.

According to the law, beneficiaries of private pensions can collect a maximum of 30% of the money accumulated in pillar II in a single installment, and the rest in monthly payments for 8 years. A major exception concerns oncology patients, who can withdraw the money in full.

CCR judges would have decided that even the provisions that include exceptions for patients with oncological conditions are unconstitutional. The decision would have been taken by majority vote.

More precisely, the judges referred to the provisions of Article 55, paragraph 2, which allows the withdrawal of the full amount by oncology patients.