OPINION OF ADVOCATE GENERAL

JACOBS

delivered on 4 May 2005 (1)

Case C-30/04

Ursel Koschitzki

v

Istituto nazionale della previdenza sociale (INPS)

1.     In the present case, the Tribunale di Bolzano (Bolzano District Court), Italy, has referred to the Court a question on Article 46(2)(a) of Regulation No 1408/71. (2)

2.     A similar question has already been considered by the Court in Stinco and Panfilo. (3)  In the present case, the Court is essentially asked to clarify its ruling in that case.

 

 Community legislation

3.     Article 46 of Regulation No 1408/71 lays down the conditions for the award of old-age and death benefits where a worker has been subject to the legislation of two or more Member States. The system provided for by Article 46(2) is intended to remedy situations in which the laws of one Member State deny benefits in whole or in part to such a worker because insufficient periods of insurance or residence have been completed in that State, despite the fact that other periods of insurance or residence were completed in another Member State. Article 46(2) provides as follows:

‘(a)      the competent institution shall calculate the theoretical amount of the benefit to which the persons concerned could lay claim [if] all periods of insurance and/or of residence, which have been completed under the legislations of the Member States to which the employed person or self-employed person was subject, [had] been completed in the State in question under the legislation which it administers on the date of the award of the benefit. If, under this legislation, the amount of the benefit is independent of the duration of the periods completed, the amount shall be regarded as being the theoretical amount referred to in this paragraph;

(b)      the competent institution shall subsequently determine the actual amount of the benefit on the basis of the theoretical amount referred to in the preceding paragraph in accordance with the ratio of the duration of the periods of insurance or of residence completed before the materialisation of the risk under the legislation which it administers to the total duration of the periods of insurance and of residence completed before the materialisation of the risk under the legislations of all the Member States concerned.’

4.     Thus if a person worked in Member State A for 10 years and in Member State B for 20 years, then even if under the legislation of Member State A he would not be entitled to a pension for an insurance period of 10 years (for example because that State required applicants to have worked there for 15 years), by virtue of Article 46(2) he would be entitled in Member State A to one third of the benefit he could claim if he had worked there for 30 years. The first step of the procedure thus described (i.e. the calculation of the theoretical amount under Article 46(2)(a)) is known as aggregation and the second step (i.e. the calculation of the pro rata benefit under Article 46(2)(b)) as the pro rata calculation or apportionment.

 

 The decision in Stinco and Panfilo

5.     Italian law (4) provides for a minimum level of pension. Where the total pension payable (including any pension payable by another Member State) falls below that level, a supplement is payable to bridge the difference.

6.     In Stinco the applicants had each applied to the Istituto nazionale della previdenza sociale (the Italian national social security institute, ‘INPS’) for an old-age pension. Each applicant was also entitled as from the same date to an old-age pension from another Member State. The INPS awarded pro rata pensions in accordance with Article 46(2) calculated by reference to the notional pensions (or ‘theoretical amounts’) which the applicants would have received if they had worked in Italy throughout their working life. It appears that the amount of the notional pension taken for the calculation was such that, had the applicants in fact been entitled to domestic pensions of that amount, the pension would have been topped up by the Italian statutory pension supplement so as to reach the statutory minimum pension level.

7.     The applicants each claimed that the notional pension used as a starting point for the calculation of their pro rata pensions should have included the supplement and should therefore have been equal to the statutory minimum. The Court was asked whether, in order to determine the amount of an Italian pro rata pension, the INPS should base its calculations on the notional or theoretical pension alone or on the notional or theoretical pension supplemented where relevant to meet the statutory minimum. The Court ruled that Article 46(2)(a) of Regulation No 1408/71 required the competent institution, in determining the theoretical amount of the pension on which the calculation of the pro rata pension was based, to take into account a supplement intended to bring the pension to the level of the statutory minimum.

 

 The facts and the national proceedings

8.     Mrs Koschitzki, the applicant in the present case, is the holder of a retirement pension with effect from October 1996. She accrued 262 weeks of contributions in Italy and 533 weeks in another Member State, totalling 795 weeks of contributions.

9.     The theoretical amount of the pension to which Mrs Koschitzki would have been entitled had she worked in Italy throughout her working life was, as in the case of Stinco, less than the Italian minimum pension. However, it appears that a further condition for entitlement to the supplement payable to bring the pension to the level of the statutory minimum, which was not directly at issue in Stinco, is that the applicant’s family income is less than a ceiling specified by Italian law. (5)  In October 1996 Mrs Koschitzki had a family income (including her husband’s) greater than that limit.

10.   Mrs Koschitzki claimed that, in accordance with the judgment in Stinco, the Italian pro rata pension should be calculated taking as a basis the notional pension made up to the statutory minimum amount.

11.   The INPS contended that since Mrs Koschitzki’s family income exceeded the income ceiling, the notional pension should not be supplemented to bring it up to the statutory minimum amount for the purpose of the calculation under Article 46(2)(a).

12.   Mrs Koschitzki brought proceedings before the Tribunale di Bolzano, which considers that the literal wording of the judgment in Stinco appears to support the method of calculation put forward by the applicant: the basis of calculation for the Italian pro rata pension is the supplemented notional pension. However, it also notes that that judgment does not appear to have specified whether the supplement is to be taken into account even where the family income exceeds the ceiling laid down by Italian law. The Tribunale di Bolzano has accordingly stayed the proceedings and referred to the Court for a preliminary ruling essentially the question whether Article 46(2)(a) of Regulation No 1408/71 should be interpreted as meaning that the basis of calculation of the Italian pro rata pension must always be the notional pension, supplemented to bring it up to the statutory minimum pension, even if the income limits laid down by Italian law for bringing the pension up to the statutory minimum have been exceeded.

13.   Written observations have been submitted by Mrs Koschitzki, the INPS and the Commission, all of whom were represented at the hearing.

 

 Assessment

14.   Mrs Koschitzki submits that the basis of the Italian pro rata pension should be the supplemented notional pension. The INPS and the Commission take the contrary view, albeit for different reasons.

15.   In my view the answer to the question referred follows from the wording and purpose of Article 46(2)(a) and the rationale underlying the Court’s interpretation of that provision.

16.   Article 46(2)(a) requires the competent institution to calculate ‘the theoretical amount of the benefit to which the person concerned could lay claim’ (6) if he had completed all periods of insurance and/or residence in the Member State concerned. In both Stinco and the present case the reference point for calculating the notional amount of the benefit is Italian legislation, including therefore the income thresholds which give rise to entitlement to the supplement. In Stinco, if the applicants had completed all such periods in Italy, they would have been entitled under the Italian legislation to the pension supplement in question. In the present case in contrast it is common ground that if Mrs Koschitzki had completed all such periods in Italy she would not have been so entitled since at the relevant time her family income exceeded the ceiling laid down by Italian law for such entitlement. It would therefore to my mind be contrary to the wording and objective of Article 46(2)(a) for the theoretical amount of the benefit to include the pension supplement.

17.   In my view, the answer to the question referred in the present case follows from the reasoning in the preceding paragraph. I will none the less deal with a number of arguments advanced by Mrs Koschitzki and a point raised by the INPS.

 The correct interpretation of Stinco

18.   Counsel for Mrs Koschitzki referred at the hearing to paragraph 9 of the judgment in Stinco, which she appears to take to mean that the applicants in that case, if they had completed all periods of insurance in Italy, would not have been entitled to the pension supplement. On that view, her position is the same as theirs, and there would therefore be no reason to distinguish the present case from Stinco.

19.   In that paragraph the Court in Stinco referred to the national court’s statement that the pensions actually received by the applicants were not supplemented to meet the statutory minimum because the total pension received by each of them after taking into consideration the pensions paid in France and the United Kingdom was above the level triggering payment of the supplement under Italian law.

20.   That statement however, as the Commission observed, does not mean that the applicants in Stinco would not have been entitled to the pension supplement had they completed all relevant periods of insurance in Italy. The Court had already stated in the preceding paragraph of the judgment that the amount of the notional pensions which the applicants would have received if they had worked in Italy throughout their working life was such that, had they in fact been entitled to domestic pensions of that amount, they would have been awarded the statutory Italian pension supplement so as to reach the minimum pension level. Paragraph 9 concerned the separate issue whether the pension which the applicants in fact received, after the aggregation and apportionment exercise laid down by Article 46(2) had been carried out, was of an amount such that they were entitled to the supplement.

21.   Accordingly I am not persuaded by Mrs Koschitzki’s interpretation of the Stinco judgment.

22.   Counsel for Mrs Koschitzki also referred at the hearing to a number of points in my Opinion in Stinco which in her view support her interpretation. (7)  Those references express the view that ‘the theoretical amount of the pension to be calculated should include the supplement’. (8)  In the context of Stinco, however, that was indeed the case: as I made clear in the following sentence, if the applicants in that case ‘had completed in Italy the total number of weeks worked, it appears that they would have been able to lay claim to derisory pensions supplemented in each case to the level of the minimum pension’. (9)  That is not the situation of Mrs Koschitzki.

 The correct interpretation of Regulation No 1408/71

23.   Mrs Koschitzki also puts forward a number of objections based on other provisions of Regulation No 1408/71.

 Article 1(t) – definition of ‘benefit’

24.   First, Mrs Koschitzki submits that account must be taken of the definition in Regulation No 1408/71 of ‘benefit’, namely ‘all benefits … including all elements thereof payable out of public funds’. (10)  Since it is an element of the basic benefit, the supplement cannot be excluded from the determination of the theoretical pension.

25.   I am not persuaded by that argument. It amounts to asserting that ‘benefit’ includes benefits to which the person concerned is not in fact entitled, which cannot have been the intention of the legislature.

 Article 46a – reduction of benefits

26.   Second, Mrs Koschitzki submits that, to the extent that it subjects entitlement to the supplemented pension to the condition that family income does not exceed a certain ceiling, the Italian legislation at issue is an anti-overlapping provision within the meaning of Article 46a of Regulation No 1408/71. That article together with Article 46c must therefore be applied.

27.   As a general rule, Regulation No 1408/71 permits Member States to provide for the reduction, suspension or withdrawal of benefits in cases of overlapping of benefits with other social security benefits or any other form of income, even where such benefits were acquired under the legislation of another Member State or where such income was acquired in the territory of another Member State. (11)  Such provisions are generically known as provisions for the prevention of overlapping of benefits, or anti-overlapping provisions. Articles 46a to 46c, however, qualify that principle in the case of national legislation relating to the overlapping of, inter alia, old-age pensions.

28.   It is settled case-law that a national rule must be regarded as a provision on reduction of benefit for the purposes of Regulation No 1408/71 if the calculation which it requires to be made has the effect of reducing the amount of the pension which the person concerned may claim, because he receives a benefit from another Member State. (12)  The national rule at issue in the present case, however, is manifestly not a provision on reduction of benefit: it simply denies entitlement to a means-tested benefit where the applicant’s means exceed a specified threshold.

29.   Even, however, if the national measure were, with some effort of imagination, to be construed as reducing the pension payable (by providing for payment of the unaugmented rather than the supplemented pension in Mrs Koschitzki’s circumstances), that ‘reduction’ arises not because Mrs Koschitzki receives a benefit from another Member State but because her family income is above a certain threshold.

30.   The wording of Article 46a confirms that the anti-overlapping provisions with which it is concerned do not include provisions regulating the overlapping of a pension and other income where both arise in the same Member State. Article 46a is headed ‘General provisions relating to reduction, suspension or withdrawal applicable to benefits in respect of invalidity, old age or survivors under the legislations of the Member States’. Its first two paragraphs set out certain definitions. The substance of the general anti-overlapping provisions is laid down in the third paragraph. Article 46a(3)(a) and (d) deal with the overlapping of benefits with other income, and it is clear from both provisions that the rules apply only where the ‘other income’ concerned is ‘acquired in another Member State’ (Article 46a(3)(a)) or ‘acquired within the territory of other Member States’ (Article 46a(3)(d)).

31.   It seems clear to me therefore that the national rule at issue in the present case is not an anti-overlapping provision for the purpose of Article 46a.

 Article 46(3) – comparison of autonomous and pro rata pensions

32.   Next, Mrs Koschitzki argues that in accordance with Article 46(3) the first stage of the calculation of her pension entitlement in accordance with Article 46(2) must be carried out without taking account of national provisions relating to reduction. Reduction provisions are relevant only at the second stage of the calculation, where a comparison is made between the amount payable under national legislation alone, including its anti-overlapping provisions, and the amount due under Community law, including its anti-overlapping provisions. In support of her argument Mrs Koschitzki referred at the hearing to Di Crescenzo and Casagrande, (13) citing in particular paragraph 27 of the judgment. The Court there stated:

‘It should finally be pointed out that, pursuant to Article 12(2) of Regulation No 1408/71, the competent institution, when determining the theoretical amount [in accordance with Article 46(2)(a)], must disregard any national provision for reduction of benefit. It follows that in cases such as those before the court of reference the theoretical amount of the pension is to be equal to the amount of the full pension due in the Member State in question.’

33.   I do not consider Article 46(3) to be relevant to Mrs Koschitzki’s situation. According to the first paragraph of that provision, the person concerned is to be entitled to the highest amount calculated in accordance with Article 46(1) and (2) from the competent institution of each Member State without prejudice to any application of the provisions concerning reduction, suspension or withdrawal provided for by the legislation under which that benefit is due. The second paragraph provides that, where that is the case, the comparison to be carried out is to relate to the amounts determined after the application of the said provisions.

34.   The purpose of Article 46(3) is to set an upper limit on the amount of cumulative pensions payable to a migrant worker entitled both to a so-called ‘autonomous pension’ under Article 46(1), entitlement to which arises without its being necessary to have recourse to periods completed in other Member States, and to a ‘pro rata’ pension calculated after aggregation and apportionment in accordance with Article 46(2). That limit is the highest theoretical amount, namely the amount to which the person concerned would have been entitled had he completed his whole insurance history in the Member State with the most advantageous legislation of those where he has been insured. (14)  In order to determine the highest amount, the two (15) pensions must be compared. The second paragraph of Article 46(3) provides that that comparison is to be made after application of national rules concerning reduction, suspension or withdrawal.

35.   In the present case, however, it has not been suggested that Mrs Koschitzki is entitled to an autonomous pension; I do not therefore see how Article 46(1), and hence Article 46(3), can apply. In any event, I have explained above why I consider that the national rule at issue in the present case is manifestly not a provision concerning reduction of benefit within the meaning of Regulation No 1408/71.

36.   Nor in my view does the Court’s statement in Di Crescenzo and Casagrande support Mrs Koschitzki. That case concerned a situation which, because there was entitlement both to an autonomous pension and to a pro rata pension, clearly fell within the scope of Article 46(3). Moreover at issue was a genuine anti-overlapping rule within the meaning of Regulation No 1408/71: Belgian legislation provided that miners’ pensions were to be increased by reference to a number of notional years but reduced the number of such notional years where the applicant was also entitled to a pension from another Member State. Such legislation clearly has the effect of reducing the amount of the pension which the person concerned may claim, because he receives a benefit from another Member State, and hence falls within the definition of a provision on reduction of benefit for the purposes of Regulation No 1408/71.

 Article 46c(2) – apportionment of ‘other income’

37.   Finally, Mrs Koschitzki refers to Article 46c(2). She notes that under the Italian legislation her income and that of her spouse are relevant to determining whether the pension is supplemented and submits that the effect of Article 46c(2) is that income which affects the amount of the supplement must be taken into account not in total but only pro rata in accordance with the apportionment determined in accordance with Article 46(2).

38.   Article 46c(2) provides that, where a benefit is calculated under Article 46(2), ‘the benefit or benefits of a different kind from other Member States or other income and all other elements provided for by the legislation of the Member State for the application of the provisions in respect of reduction, suspension or withdrawal shall be taken into account in proportion to the periods of insurance and/or residence referred to in Article 46(2)(b), and shall be used for the calculation of the said benefit’.

39.   It is clear from the wording of that provision that, like Article 46a, it concerns national rules on the reduction, suspension or withdrawal of benefits. I have already explained the meaning of national provisions on reduction for the purpose of Regulation No 1408/71. For the reason given above, I do not consider that Italian legislation which denies the pension supplement to an applicant whose family income exceeds a certain threshold is such a provision.

40.   Moreover in my view Article 46c would not in any event be relevant to the present case because, like Article 46a, it clearly concerns the overlapping of benefits with other income arising in another Member State. That follows from the scheme of Articles 46a to 46c. Article 46a lays down general provisions concerning overlapping of benefits; as discussed above, (16) that article does not cover the overlapping of pensions and income arising in the same Member State. It would be surprising if the scope of Articles 46b and 46c, which lay down specific provisions concerning overlapping, were different. That interpretation is furthermore corroborated in the case of Article 46c, the heading of which is ‘Special provisions applicable in the case of overlapping of one or more benefits referred to in Article 46a(1) with one or more benefits of a different kind or with other income, where two or more Member States are concerned’.

41.   Mrs Koschitzki cites Stefanutti (17) in support of her argument relating to Article 46c, apparently on the basis that that provision was inserted into Regulation No 1408/71 by Regulation No 1248/92 (18) in effect to replace Article 7(1)(b) of Regulation No 574/72, (19) at issue in Stefanutti. At the hearing counsel for Mrs Koschitzki added that it follows from that judgment that income which affects the benefit payable is to be subject to the same coefficient of reduction as that used for the apportionment calculation.

42.   At the time of the facts in Stefanutti, the overlapping of benefits was governed in Regulation No 1408/71 only by the general rule set out in Article 12; Article 7 of Regulation No 574/72 contained general rules for the implementation of that article. Article 7(1) applied where a person entitled to a benefit due under the legislation of one Member State was ‘also entitled to benefits under the legislation of one or more of the other Member States’. Since that is not the situation in the present case, where the benefit (to which Mrs Koschitzki is in any event not entitled) does not arise under the legislation of a Member State other than Italy, I do not see how the interpretation of that provision in Stefanutti can be relevant.

 Article 50 and Annex IIa – independent entitlement to and non-exportability of supplement

43.   The INPS notes that the supplement, as a special non-contributory benefit mentioned in Annex IIa to Regulation No 1408/71, is not exportable to other Member States in accordance with Article 10a of that regulation, which provides that such benefits are to be granted exclusively in the Member State where the recipient resides. It reasons that if therefore the supplement were regarded as part of the theoretical amount within the meaning of Article 46(2)(a), that condition would be circumvented if the recipient resided in another Member State. As for residents of Italy, the interpretation urged by Mrs Koschitzki would mean that the supplement would be granted twice: first on the pro rata Italian pension based on a notional pension already supplemented and second pursuant to Article 50 of Regulation No 1408/71, which provides for the award of a supplement where the total payable after aggregation and apportionment is less than any minimum laid down by the law of the Member State where the recipient resides.

44.   On the basis of that analysis the INPS concludes that in the present case the correct method of calculation is (i) to determine the notional pension which would be payable if all the contributions had been paid under Italian legislation; (ii) to apportion the notional pension by reference to the ratio between the periods of contribution in Italy and the total periods of contributions abroad; (iii) to determine the pro rata Italian pension which, where all the conditions provided for by Italian and Community legislation are met, must be supplemented to the minimum provided for by Italian law.

45.   As I have indicated, I agree with that proposal as to the correct method of calculation in the present case, with the rider that as a matter of Community law the applicant’s entitlement to the supplement is to be determined by reference to the total pension payable after aggregation and apportionment. (20)  To the extent however that the INPS’s submissions are intended to be of more general effect, and thus to put in doubt the result in Stinco, I would refer to paragraphs 17 and 20 of the judgment in that case which refutes the argument.

46.   For the reasons I have given, I consider that in a case such as the present the theoretical amount of the benefit within the meaning of Article 46(2)(a) should not include the pension supplement.

 

 Conclusion

47.   I accordingly consider that the question referred by the Tribunale di Bolzano should be answered as follows:

In determining in accordance with Article 46(2)(a) of 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 the theoretical amount of the pension on which the calculation of the pro rata pension is based, the competent institution is required to take into account a supplement intended to bring the pension to the level of the statutory minimum only if the person concerned would, if he had completed in the Member State concerned all periods of insurance and/or residence completed in the European Union, in fact have been entitled to that supplement in accordance with the relevant national legislation.

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1 – Original language: English.

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2  – 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 (OJ, English Special Edition 1971 (II), p. 416).  The text of the regulation relevant at the material time may be found in Part I of Annex A to Council Regulation (EC) No 118/97 of 2 December 1996 amending and updating Regulation No 1408/71 (OJ 1997 L 28, p. 1).

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3  – Case C-132/96 [1998] ECR I-5225.

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4  – See points 8 to 11 of my Opinion, and paragraph 7 of the judgment, in Stinco.

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5  – Article 6 of Law No 638/83, as amended by Article 4 of Legislative Decree No 503/92.

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6  – Emphasis added.

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7  – In particular points 19, 30, 32, 35, 46 and 51.

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8  – Point 46.

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9  – Point 46.

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10  – Article 1(t).

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11  – Article 12(2).

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12  – See Case C-107/00 Insalaca [2002] ECR I-2403, paragraph 16 and the cases there cited.

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13  – Joined Cases C-90/91 and C-91/91 [1992] ECR I-3851.

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14  – For a helpful discussion of the operation of Article 46, see the Explanatory Memorandum of the Proposal for a Council Regulation amending Regulation (EEC) No 1408/71 and Regulation (EEC) No 574/72 (COM(89) 370 final).

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15  – There may of course be more than two pensions;  I am using the example of two in the interests of (relative) simplicity.

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16  – Point 30.

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17  – Case 197/85 [1987] ECR 3855.

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18  – Council Regulation (EEC) No 1248/92 of 30 April 1992 amending Regulation No 1408/71 and Regulation No 574/72 (OJ 1992 L 136, p. 7).

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19  – Regulation (EEC) No 574/72 of the Council of 21 March 1972 fixing the procedure for implementing Regulation No 1408/71 (OJ, English Special Edition 1972 (I), p. 159).

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20 – See Article 50, summarised in point 43 above.