CASE OF BARROW v. THE UNITED KINGDOM
No violation of Art. 14+P1-1
Josep Casadevall;Nicolas Bratza
8. The applicant was born in 1943 and lives in Wrexham. 9. In August 2003 the applicant turned 60 years of age. Prior to that date she was in receipt of long-term incapacity benefit (IB), a benefit payable to people incapable of work who satisfy the eligibility criteria. She had qualified for the rate of 81.85 pounds sterling (GBP) per week. She was also paid GBP 39.95 per week in disability living allowance (DLA) and GBP 15.15 in DLA care. At age 60, which is the date of entitlement to the State pension for women, she ceased to be eligible for IB. In its place she became entitled to draw her state retirement pension which, based upon her contribution record, entitled her to GBP 57.81 per week (about 62% of the maximum rate as she had only contributed for 24 years out of 39). She continued to draw DLA. As a result, the applicant claimed that she was some GBP 24.04 per week worse off as a result of her transition from IB to the State pension. 10. The applicant complained to the Department of Work and Pensions concerning the differential treatment but was informed that nothing could be done. 11. The National Insurance Act 1946, which first established the basis for the national social security scheme in the United Kingdom, set out a system of funding under which all employers and the majority of the working population, whether employed or self-employed, are liable to pay compulsory national insurance (“NI”) contributions into the National Insurance Fund (NIF). This legislation has since been replaced, most recently, by the consolidating provisions of the Social Security Contributions and Benefits Act 1992 (“SSCBA 1992”) and the Social Security Administration Act 1992. 12. Section 1(2) of the SSCBA sets out the various classes of NI contribution. Of these, the largest category is Class 1 contributions which consist of earnings-related contributions paid by employers and employees. Such contributions are levied as a percentage of earnings which varies according to the employee’s earnings band. The NI scheme is financed on a “pay as you go” basis, that is, current NI contributions fund current benefits: thus an individual’s contributions fund not his or her own benefits but those of others (R. (Carson) v. Secretary of State for Work and Pensions [2002] 3 All ER paras. 25-26). 13. Primary Class 1 contributions to NI cease to be payable on attainment of the State retirement age (section 6(3) of the SSCBA). 14. The NIF is currently the sole source of funding for payment of state retirement pensions as well as a number of other benefits, including IB. Topping up into the fund by way of Treasury Grant is possible in times of shortfall but has not occurred since 1997/1998. 15. The Social Security (Incapacity for work) Act 1994 amended the 1992 Act so as to include provision for the payment of IB from April 1995. Section 1 provides, as relevant: “... (1) Subject to the following provisions of this section, a person who satisfies either of the following conditions is entitled to short-term incapacity benefit in respect of any day of incapacity for work which forms part of a period of incapacity for work. (2) The conditions are that - (a) he is under pensionable age on the day in question and satisfies the contribution conditions specified for short-term incapacity benefit in Schedule 3, Part 1, paragraph 2; ... (4) In any period of incapacity for work a person is not entitled to short-term incapacity benefit for more than 364 days. (5) Where a person ceases by virtue of subsection (4) above to be entitled to short-term incapacity benefit, he is entitled to long-term incapacity benefit in respect of any subsequent day of incapacity for work in the same period of incapacity for work on which he is not over pensionable age.” 16. IB is a contributory benefit funded out of NI contributions, designed to compensate a person for financial loss as a result of their inability to work due to ill-health or disability. It is therefore available throughout the assumed working life. As a result the period of entitlement is directly linked, for men and women, to the period of entitlement (if any) to receive the State retirement pension. When an individual reaches State pension age any entitlement to such a pension takes the place of IB. A full basic retirement pension pays GBP 77.45 per week, while the standard rate of IB is GBP 72.15. 17. At the relevant time, section 122 of the Social Security Contributions and Benefits Act 1992 defined “pensionable age” as: “(a) the age of 65, in the case of a man; and (b) the age of 60, in the case of a woman”. 18. Women in the United Kingdom therefore become eligible for a State pension at the age of 60, whereas men are not eligible until 65. 19. Section 126 of the Pensions Act 1995 provides for the equalisation of State pension ages for men and women to the age of 65. The State pension age for women will increase gradually from 2010 and the equalisation will be complete in 2020. At the same time, the age until which women are liable to pay national insurance contributions will gradually increase in line with the increase in the State pension age. 20. Council Directive 79/7/EEC of 19 December 1978 provides for the progressive implementation of the principle of equal treatment for men and women in matters of social security. However, in Article 7(1)(a) the Directive provides for derogation in the matter of “the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits”. 21. In its judgment in Case C-328/91 Thomas and Others [1993] ECR I-1247, the European Court of Justice (ECJ) ruled that where, pursuant to Article 7(1)(a), a Member State prescribed different pensionable ages for men and women for the purpose of granting old-age and retirement pensions the scope of the permitted derogation defined by the words “possible consequences thereof for other benefits” was limited to the forms of discrimination existing under other benefits schemes which were necessarily and objectively linked to the difference in pensionable age. That was the position where such forms of discrimination were objectively necessary to avoid disturbing the financial equilibrium of the social security system or to ensure coherence between the retirement pension scheme and other benefit schemes. 22. In Case C-92/94 Secretary of State for Social Security v. Graham [1999] ECR I-2521, the ECJ considered the predecessor of IB, namely invalidity allowance and invalidity pension (both contributory benefits paid from NI contributions until pensionable age or until the cessation of any deferment in pension). It found that the measures were justified by both considerations of financial equilibrium and overall coherence and that the discrimination was necessarily linked to the difference in pensionable age for men and women, inter alia as invalidity benefit was designed to replace income from occupational activity and was replaced by a retirement pension at the age at which the recipients would in any event stop working. 23. The derogation was not however held to justify pension-aged linked discrimination in a number of benefits e.g. in R. v. Secretary of State for Social Security, ex parte Taylor [1999] ECR I-8955, the ECJ held that the provision of winter fuel allowances for the elderly was not necessarily linked to the difference in the statutory age of retirement for men and women and in R. v. Secretary of State for Health ex parte Richardson [1995] ECR I-3407, the ECJ found that the discrimination in age entitlement to free prescriptions was not objectively justified to ensure coherence between the retirement pension system and the regulations concerning prescriptions and was not necessarily linked to the difference between pensionable ages for men and women. 24. In Case C-9/91 The Queen v. Secretary of State for Social Security , ex parte Equal Opportunities Commission [1992] ECR1-4297 (“the EOC case” concerning a reference for a preliminary ruling from the High Court relating to the differing contribution periods applicable to men and women determined according to pensionable age), the ECJ found that: Article 7(1)(a) had to be interpreted as authorising the determination of a statutory pensionable age which differs according to sex for the purposes of granting old-age and retirement pensions and also forms of discrimination which are necessarily linked to that difference; Inequality between men and women with respect to the length of contribution periods required to obtain a pension constitutes such discrimination where, having regard to the financial equilibrium of the national pension system in the context in which it appears, it cannot be dissociated from a difference in pensionable age; In view of the advantages allowed to women by national pension systems, in particular as regards statutory pensionable age and length of contribution periods, and the disruption that would necessarily be caused to the equilibrium of those systems if the principle of equality between the sexes were to be applied from one day to the next in respect of those periods, the Community legislature intended to authorise the progressive implementation of that principle by the Member States and that progressive nature could not be ensured if the scope of the derogation authorised by Article 7(1)(a) were to be interpreted restrictively.