ACKERMANN AND FUHRMANN v. GERMANY
Inadmissible
David Thór Björgvinsson
The applicants, Norbert Ackermann and Ingo Fuhrmann, are German nationals who were born in 1963 and 1942 respectively and live in Mannheim and Düsseldorf in Germany. The first applicant works as a commercial clerk (kaufmännischer Angestellter) in a private enterprise. He is unmarried and his yearly contributions to the statutory old-age insurance for employees amounted in 2002 to EUR 10,314 and in 2003 to EUR 11,934. On 24 April 1995 the first applicant filed a request to be exempted from his obligation to contribute to the statutory old-age insurance for employees (gesetzliche Rentenversicherung). He argued that the compulsory insurance violated his right to equal treatment as guaranteed by Article 3 of the German Basic Law. On 5 September 1996 the National Health Insurance for Employees (Deutsche Angestellten Krankenkasse, DAK) rejected the applicant’s request, finding that the applicant, as an employee, was subject to the obligatory old-age insurance under section 1 of the sixth book of the Social Law Code (SGB VI, see relevant domestic law below), and that he did not meet the requirements to be exempted under sections 5 or 6 of that same law. On 11 February 1997 the National Health Insurance rejected the applicant’s objection. On 28 February 1997 the applicant lodged a motion with the Mannheim Social Court (Sozialgericht) with a view to being exempted from the obligatory insurance and to being reimbursed his contributions since 1995, alternatively to reduce his monthly contributions to an acceptable degree and to reimburse the exceeding part. He submitted a statement on political, economic and legal aspects of the compulsory insurance scheme. He argued that the obligatory old-age insurance deprived him of the possibility to provide for old age under a private pension scheme, which would yield considerably higher returns on his investments. The pension which he was likely to receive under the statutory old-age insurance was totally disproportionate when compared to his own contributions. This was partly due to the fact that the contributions under the compulsory insurance were not exclusively used to finance contribution-based pensions, but also to finance so called “extrinsic benefits” (versicherungsfremde Leistungen, see relevant domestic law below), including costs incurred by the German reunification. He further alleged that he was discriminated against when compared to the older generation who currently profited from higher pensions than those which he himself would receive on reaching pension age. Moreover, he complained about discrimination when compared to the group of earners who were not subject to the obligatory insurance system such as self-employed persons and civil servants. On 10 July 1998 the Mannheim Social Court rejected the applicant’s motion. It noted, first, that the legal provisions for exemption did not apply to the applicant. Secondly, the Social Court found that the compulsory insurance did not violate the applicant’s rights under the Basic Law. It noted that the legislator had been granted a wide margin of appreciation when taking measures in the social-political area. The Welfare State was obliged to provide for every citizen’s basic needs. Accordingly, the legislator was entitled to limit the risk of social neediness by introducing a compulsory insurance scheme. It followed that the compulsory insurance as such did not violate the applicant’s rights under the Basic Law. The Social Court finally found that the selection of the group of people who were subject to the compulsory insurance scheme was not arbitrary and thus did not violate the applicant’s right to equal treatment. On 12 May 2000 the Baden-Württemberg Social Court of Appeal (Landessozialgericht) rejected the applicant’s appeal. Confirming the Social Court’s reasoning, that court emphasised that the applicant’s arguments did not sufficiently take into account the concept of solidarity. Furthermore, the Court of Appeal referred to the decisions of the Federal Social Court (Bundessozialgericht) of 29 January 1998 and of the Federal Constitutional Court (Bundesverfassungsgericht) of 29 December 1999, according to which the financing of so-called extrinsic benefits did not violate the applicant’s rights. The old-age insurance scheme was based on the idea of solidarity and of social compensation (sozialer Ausgleich) which traditionally included an element of social welfare. Even though pension claims had a personal character, they also had to be seen in a distinctly social context. It followed that the legislator was allowed to limit pension claims and to modify benefits as long as these measures served the public welfare and respected the principle of proportionality. The Social Court of Appeal further found that the applicant advocated a position which was focused on the interests of an insured person who did not become unfit for work, who did not need rehabilitation measures and whose contributions did not benefit a surviving spouse. This line of argument neglected the principles of insurance and of solidarity in an unacceptable way. It finally noted that, during proceedings, the legislator had raised the tax-based financing of the extrinsic benefits and had stabilised the rates of contribution. With his appeal on points of law before the Federal Social Court, the applicant argued that the insurance system amounted to an expropriation for the following reasons: for the applicant, as a single male, the returns would be lower than his contributions. This was due to four factors: the fact that the contributions also covered so-called “extrinsic benefits”, including the costs incurred by the German reunification, the principle of social compensation, the fact that the impact of the negative growth of population was not compensated by a capital reserve, and the additional costs incurred by women’s higher life expectancy. He alleged that the legislator had overstepped his competencies under the Basic Law, and that his obligation to contribute to the insurance scheme violated his right to freedom of action and to equal treatment under the Basic Law. On 11 October 2001 the Federal Social Court rejected the applicant’s appeal on points of law. It found, inter alia, that it was acceptable to subject all employees to an obligatory insurance with a view to their typically higher social vulnerability. Accordingly, the obligation did not depend on the individual persons’ ability to provide for themselves. The insurance system was justified by the principle of the Social Welfare State, which obliged the State to provide for the risks of life. Obligatory adherence and contributions were necessary to reach this aim, in particular in order to protect the weaker groups of society. The Federal Social Court did not examine if the assessment of the applicant’s future benefits could violate his property rights, as this could only be examined at the time the applicant actually touched his benefits. With respect to the applicant’s complaint about unequal treatment, the Federal Social Court found that it was justified to limit the obligatory adherence to the group of employees, because these were typically more in need of security. This followed from the fact that employees were typically dependant on exploiting their own capacity to work in order to earn their living. The Federal Social Court noted that the legislator had applied similar principles to define the group of self-employed persons who were subject to the obligatory insurance (section 2 of the sixth book of the Social Code, see relevant domestic law below). It further found that the rate of the obligatory contributions did not put an excessive burden on the applicant, which might amount to a violation of his property right. The fact that the contributions also covered the so-called “extrinsic benefits” did not lead to a violation of the principle of equality, taking into account that these other responsibilities were related to those of the old-age insurance. In April 2002 the Federal Constitutional Court refused to entertain the applicant’s constitutional complaint. The second applicant works as an executive employee in a private insurance company. On 11 April 1993 the second applicant filed a request to be exempted from his obligation to contribute to the statutory old-age insurance for employees and requested to be reimbursed his contributions. On 29 April 1993 the National Insurance for Employees (Bundesversicherungsanstalt für Angestellte, BfA) rejected the applicant’s request. On 25 June 1993 that same authority rejected the applicant’s objection. On 26 July 1993 the applicant lodged a motion with the Düsseldorf Social Court. He alleged that the obligatory adherence to the insurance scheme amounted to an expropriation and complained about unequal treatment when compared to self-employed persons. On 3 December 1993 the Social Court rejected the applicant’s motion, finding that the differentiation between employees and self-employed persons was not arbitrary, but was justified by the different social vulnerability of these groups. The Social Court further noted that also self-employed persons were increasingly subject to obligatory insurance schemes, for example to the lawyer’s insurance. The current rate of contribution was not excessive and thus did not violate the applicant’s property rights. The applicant had not established a violation of his future pension claims. The mere apprehension that his pension claims might be reduced in the future did not lead to a violation of the applicant’s present property rights. On 7 December 1994 the North Rhine-Westphalia Social Court of Appeal rejected the applicant’s appeal, referring mainly to the Social Court’s decision. On 25 October 1995 the Federal Social Court rejected the applicant’s complaint against the denial of leave to appeal (Nichtzulassungsbeschwerde) as inadmissible. It found that the applicant had failed to establish that the subject matter of his motion was of fundamental importance or that the lower court had committed a procedural error. On 17 December 1998 the Federal Constitutional Court refused to entertain the applicant’s complaint. The German Social Code is divided into ten books, namely Book One and then Books Three to Eleven. The Sixth Book of the Social Code (SGB VI) deals with the public old-age insurance scheme (Gesetzliche Rentenversicherung). Section 1 (1) provides that all employees are subject to the obligatory insurance. Section 2 stipulates that certain groups of self-employed persons are also subject to the obligatory insurance, such as teachers, nursing staff and midwifes, artisans who do not have their own business and persons who mainly work for one single customer. According to section 5 the following groups of persons are not subject to the obligatory insurance: (1) civil servants and judges; (2) employees of public or clerical entities insofar as they have pension claims under the civil servant’s pension scheme or under comparable church regulations; (3) members of religious orders insofar as their maintenance according to the rules of that order is assured. Section 6 defines certain groups of persons who are exempt from the obligatory insurance, in particular those who are subject to another obligatory insurance scheme or who have claims which are comparable to those of civil servants. The amount of the pension paid under the insurance scheme mainly depends on the amount of the insured person’s income and the time of contribution. Besides the pensions and survivor’s pensions which are based on the insured person’s contributions, the insurance also grants benefits which are not based on contributions. These payments, which are also referred to as “extrinsic benefits” (versicherungsfremde Leistungen), include pension claims based on times devoted to the raising of children (Kindererziehungszeiten), pensions compensating the effects of war and injustice (Kriegsfolge- und Wiedergutmachungslasten) and payments relating to the conversion of pensions following the German reunification. The general retirement age is 65 (section 35 SGB V). From 1957 until 1992, women were entitled to a pension by the age of 60. In 1992 the legislator gradually adapted women’s retirement age to 65 years. The financing of the benefits under the statutory insurance is organised in a revolving system under which payments made over a certain year are financed from contributions received in that year (Umlageverfahren, see section 153 (1) SGB VI). The financing is based on the contributions of the insured persons (a), which are complemented by a tax-financed federal state subsidy (b). (a) The contributions are calculated according to the insured person’s gross wages, which are taken into account up to a certain limit (Beitragsbemessungsgrenze). This limit is calculated on a yearly basis. In 2005, the limit was set at a yearly income of EUR 62,400. The contribution rates are also fixed on a yearly basis and developed as follows: 1993: 17.5 %, 1994: 19.2 %; 1995: 18.6 %; 1996: 19.2 %; 1997: 20.3 %; 1999 19.5 %, 2000: 19.3 %, 2001: 19.1 %; 2003 – 2005: 19.5 % of the gross income. The contributions have to be paid in equal shares by the employed person and by the employer (section 168 (1) no. 1 SGB VI). (b) The Federal State contributes to the expenses by tax-financed subsidies (section 213 SGB VI). On 1 April 1998 the legislator introduced an additional state subsidy which was aimed at financing those expenses under the insurance scheme, which were not covered by contributions (see no. 2 above). These additional payments amounted in 1998 to DEM 9.6 billion. In 2001, the overall subsidies covered 23.2 % and in 2003 25.6 % of the overall spending.