1.

This reference by the Court of Appeal (Civil Division) for a preliminary ruling raises questions concerning the equal treatment of men and women in the field of social security. It involves the interpretation of Article 7(1 )(a) of Directive 79/7/EEC, ( 1 ) which is necessary in order to be able to adjudicate, by means of that provision, on the compatibility with that provision of national rules on the granting of invalidity pensions or, as the case may be, invalidity allowances.

2.

In the proceedings before the national court, the Secretary of State for Social Security and the Chief Adjudication Officer are appealing against decisions in favour of three claimants ( 2 ) whose situation is essentially comparable as regards their claim for invalidity pension.

3.

A factor common to the three claimants is that they each became entitled to an invalidity pension equivalent to the full basic retirement pension before reaching the age of 60, which is the statutory pensionable age for women within the context of the contributory scheme established by section 33 of the Social Security Contributions and Benefits Act 1992 ( 3 ) (hereinafter ‘the 1992 Act’).

4.

On reaching pensionable age, that is to say, on completion of their sixtieth year, they availed themselves of their statutory entitlement to defer receipt of retirement pension and to continue drawing invalidity benefit for a further five years. The period of five years corresponds to the period in which working women, engaged in gainful employment, remain entitled, under both Community law ( 4 ) and national law, to continue that employment whilst deferring receipt of retirement pension.

5.

Where an invalidity pension is granted in circumstances such as these, the level of benefit is limited by the amount which would be payable if retirement pension were claimed. In cases such as that of the claimants, where the contribution period ( 5 ) for the purposes of a full retirement pension is — for whatever reason — incomplete, this means that the invalidity pension is in part considerably reduced. ( 6 ) In the circumstances, the only incentive to opt for an invalidity pension and defer the retirement pension arises from the fact that retirement pensions are subject to tax whereas invalidity pensions are tax-free.

6.

Since men cannot claim their statutory retirement pension until they reach the age of 65, any restriction of the invalidity pension to the level of the retirement pension earned would not take effect until the person concerned reaches the age of 65. This objective difference in treatment as regards the level of the invalidity pension payable during the period between the recipient's sixtieth and sixty-fifth birthdays, which arises by virtue of the difference in age, forms part of the subject-matter of the proceedings.

7.

The provisions concerning benefits payable by way of assistance in cases of invalidity entail further inequality of treatment as regards the criteria for claiming invalidity allowances pursuant to section 34 of the 1992 Act, ( 7 ) which likewise form part of the subject-matter of the national proceedings, and thus of the reference for a preliminary ruling.

8.

Invalidity allowances are a benefit payable in addition to the invalidity pension to persons who are more than five years below pensionable age on the first day of incapacity for work, that is to say, to women up to the age of 55 and to men up to the age of 60. The lower the age of the person entitled to them on first becoming incapacitated, the higher the amount of the invalidity allowances.

9.

One of the claimants — Mrs Graham — was 58 years old when she became incapacitated for work, with the result that she has at no time been entitled to receive invalidity allowances. Had she, in otherwise similar circumstances, been a man, she would have been able to claim invalidity allowances.

10.

Save as regards pensionable age, the conditions governing the eligibility of men and women for an invalidity pension are identical. It is necessary to assume that, where a person becomes incapacitated before reaching pensionable age, that person is in principle entitled to an invalidity pension ( 8 ) if he or she has previously been entitled, for a period of 168 days' interruption of employment due to incapacity for work, ( 9 ) to sickness benefit ( 10 ) or maternity allowance, ( 11 ) or has received statutory sick pay whilst satisfying the contribution conditions for sickness benefit. ( 12 )

11.

The contribution conditions for sickness benefit require, for their part, without distinction, the completion of a specified, statutorily defined period of employment. ( 13 )

12.

Once pensionable age is reached, continued entitlement to an invalidity pension is conditional on the person concerned being not more than five years over pensionable age and being entitled in principle to a contributory retirement pension in his or her own right or by virtue of the contributions of his or her deceased spouse, provided, however, that that retirement pension is not claimed, a deferral or election having been made pursuant to section 54(1).

13.

The national court has made the following findings, inter alia, in relation to the relevant Community law:

‘There are differences in treatment between men and women concerning

(...) Those differences in treatment amount to sex discrimination contrary to Article 4(1) of Directive 79/7 unless the case falls within the exceptions listed in Article 7(1) of the Directive.’ ( 14 )

14.

The national court further observes that the Court of Justice of the European Communities considered the scope and application of Article 7(1)(a) of Directive 79/7 in its judgments in Case C-9/91 Equal Opportunities Commission ( 15 ) and in Case C-328/91 Thomas and Others. ( 16 ) It states that it is necessary to decide which of the two lines of authority emerging from those judgments is applicable in the present case for the purposes of the decision in the national proceedings.

15.

Accordingly, the following questions have been referred to the Court of Justice for a preliminary ruling:

‘Under the relevant provisions of the Social Security Contributions and Benefits Act 1992:

In those circumstances,

16.

Article 7(1 )(a) of Directive 79/7, the decisive provision in this case, reads as follows:

‘This Directive shall be without prejudice to the right of Member States to exclude from its scope:

17.

The national court's problems of interpretation arise in essence from the judgments on the construction of Article 7(l)(a) of Directive 79/7 delivered by the Court of Justice on 7 July 1992 in Case C-9/91 Equal Opportunities Commission ( 18 ) and on 30 March 1993 in Case C-328/91 Thomas and Others. ( 19 ) The first of those judgments concerned the question whether Article 7(l)(a) permits a Member State which preserves different pensionable ages for men and women, and in which pension payments are funded from contributions, to maintain further instances of unequal treatment, first, by requiring men to pay social security contributions for five years longer than women in order to be entitled to the same basic pension and, second, by requiring men who continue in gainful employment up to the age of 65 to continue to pay social security contributions up to that age, when women over the age of 60 are not required to pay social security contributions whether or not they remain in gainful employment after that age. ( 20 )

The Court ultimately answered that question in the affirmative, ruling that the difference in treatment must be regarded as necessarily linked to the difference in the statutory pensionable age. ( 21 ) The Court gave inter alia the following reasons for that ruling:

In a system whose financial equilibrium is based on men contributing for a longer period than women, a different pensionable age for men and women cannot be maintained without altering the existing financial equilibrium, unless such inequality with respect to the length of contribution periods is also maintained. ( 22 ) Any other interpretation would ‘lead to the financial disequilibrium of the pension schemes’, ( 23 ) obliging the Member States, before the expiry of the period laid down for the transposition of the directive, to undertake a general restructuring of the system of contributions and benefits, rendering nugatory the derogation laid down in Article 7(l)(a). ( 24 )

18.

In the case of Thomas and Others, ( 25 ) the Court was called upon to rule on the nature of non-contributory invalidity benefits, ( 26 ) having regard to the question whether the different entitlement criteria for men and women were such as to have ‘possible consequences ... for other benefits’ for the purposes of prescribing different pensionable ages within the meaning of Article 7(1 )(a) of Directive 79/7.

The Social Security Act 1975, as amended, provided for the grant of SDA ( 27 ) to people who are incapacitated for work and of ICA ( 28 ) to people engaged in caring for a severely disabled person. People who had attained pensionable age were not entitled to those benefits. ( 29 ) The Court held that the permitted derogation provided for by the words ‘possible consequences thereof for other benefits’ was ‘limited to the forms of discrimination existing under the other benefit schemes which are necessarily and objectively linked to the difference in retirement age’. ( 30 )

19.

In stating its reasons for its decision, the Court recalled its judgment in Equal Opportunities Commission, ( 31 ) Although that judgment was concerned not with the ‘possible consequences ... for other benefits’ of setting different pensionable ages for men and women but with discrimination regarding contribution periods, the Court had nevertheless held that the only forms of discrimination which were permitted were those which were necessarily linked to the difference in statutory pensionable age according to sex. ( 32 ) The Court extended the need for such a link to discriminatory consequences for other benefits. ( 33 ) It held that such consequences could be justified ‘only if such discrimination is objectively necessary in order to avoid disrupting the complex financial equilibrium of the social security system or to ensure consistency between retirement pension schemes and other benefit schemes’. ( 34 ) In the context of the guidance given by it to the national court regarding the question of assessing whether such a necessity exists, it stated that the grant of benefits under non-contributory schemes has no direct influence on the financial equilibrium of contributory pension schemes. ( 35 )

20.

In order to be able to reply, in the light of the judgments in Equal Opportunities Commission ( 36 ) and Thomas, ( 37 ) to the questions referred for a preliminary ruling in the present case, the findings and main features which form the common basis of both judgments must be identified:

Although the preamble to the directive does not state the reasons for the derogations which it lays down, ‘it can be deduced from the nature of the exceptions contained in Article 7(l)(a) of the Directive that the Community legislature intended to allow Member States to maintain temporarily the advantages accorded to women with respect to retirement in order to enable them progressively to adapt their pension systems in this respect without disrupting the complex financial equilibrium of those systems, the importance of which could not be ignored. Those advantages include the possibility for female workers of qualifying for a pension earlier than male workers, as envisaged by Article 7(l)(a) of the Directive’. ( 38 )

21.

A further common aspect of both judgments is the ‘necessity’ for a link between possible discrimination and the difference in pensionable age for men and women, which must exist in order to justify such discrimination within the ambit of the derogation. ( 39 ) Although, according to the judgment in Equal Opportunities Commission, that necessity is to be found in the preservation of the financial equilibrium of the social security systems involved, that criterion is extended by the judgment in Thomas to include consistency between benefit schemes.

22.

Although it is for the national court to establish whether such a necessity exists in the specific case before it, the task of the Court of Justice is to provide the national court with helpful answers and guidance, enabling it to give judgment. ( 40 )

23.

It is necessary to examine, therefore, whether the rules reducing an invalidity pension to the level of a retirement pension by virtue of the difference in statutory pensionable age, and rendering eligibility for invalidity allowance dependent on pensionable age, are ‘necessary’ within the meaning of the Court's decisions.

24.

The participants in the proceedings before the Court have adopted different positions as regards the answers to be given to these questions.

25.

The claimants submit that the elimination of the objective discrimination complained of would neither disrupt the financial equilibrium of the schemes nor threaten the cohesion of the scheme.

26. (a)

As regards financial equilibrium, the claimants' arguments are based on the primary contention that the National Insurance Fund ( 41 ) — from which the invalidity benefits at issue, as well as retirement pensions and a number of other social security benefits, are paid — has never been funded, either in the past or in the present, solely by contribution payments; it is dependent, to a varying degree, on subsidies from the exchequer. In so far as the Fund is not self-supporting, ( 42 ) there is no difference in principle, as regards invalidity benefits payable in place of income, between contributory and non-contributory schemes; consequently, the present case is comparable with that of Thomas. ( 43 ) In order to substantiate this appraisal of the financial context of the N. I. Fund, the claimants rely on the affidavit of Mr Tony Lynes put in evidence in the proceedings before the national court. According to the claimants, his testimony ( 44 ) shows that the additional annual expenditure which would be necessary in order to eliminate the discrimination at issue would probably make no difference to contribution rates. That testimony has not been challenged. The claimants maintain that the opposing parties have adduced no evidence conclusively showing that the financial equilibrium of the scheme would be disturbed. In contrast with the Equal Opportunities Commission ( 45 ) case, in which the United Kingdom produced estimates to demonstrate the threat to the financial equilibrium of the system, the circumstances put forward in the present proceedings are not, according to the claimants, such as to satisfy the test of ‘necessity’ required by the Court of Justice.

27.

It was stated in the judgment in Thomas, ( 46 ) and in the Opinion of the Advocate General in that case, ( 47 ) that such discrimination is not necessary for the preservation of the financial equilibrium of the entire social security system, in so far as there are national rules which in particular contain provisions to prevent overlapping between retirement pensions and the benefits at issue, and because those benefits are in fact granted in place of other benefits. Those considerations, according to the claimants, are equally applicable, without qualification, to the present case.

28. (b)

As regards consistency between benefit schemes, the claimants submit that the elimination of the discrimination would even strengthen the cohesion of the system in several respects. Not only would men and women be subject to the same conditions of entitlement and the same contribution periods, thus receiving equal benefits; protection against the risk of invalidity would be assimilated in the context of contributory and non-contributory schemes.

29.

The claimants therefore submit that the Court should give the following answer to the question referred by the national court:

The exception contained in Article 7(1 )(a) does not permit a Member State to prescribe invalidity benefits of differing amounts főimen and women over 60 in so far as entitlement to those invalidity benefits is based on contribution criteria which are the same for men and women and which are met by contribution payments made before the claimant reaches the age of 60. Nor does that exception permit the payment of invalidity benefits of differing amounts for men and women of the same age in respect of periods before they reach the age of 60.

30.

The United Kingdom takes a contrary view. It contends that the ‘advantages temporarily accorded’ ( 48 ) to women do not permit the creation of any new discrimination in favour of women or any aggravation of discrimination which already exists against men.

31.

In the present case, according to the United Kingdom, a new discrimination in favour of women would be created if the claimants' demands were accepted.

In the United Kingdom's view, the relevant criteria for the application of Article 7(l)(a) are as follows: ‘whether a judicial decision to remove the difference in treatment of which the respondents complain would jeopardize the coherence or the financial equilibrium of the national social security scheme, in particular by prohibiting a difference in treatment which is based on and linked to existing lawful differences in treatment between men and women as to pension age and contribution conditions, so that equality of treatment would create arbitrary discrimination in favour of one sex’. ( 49 )

The United Kingdom considers that those criteria are fulfilled in the present proceedings. In its written observations, it advances four grounds in support of that contention, increasing the number of those grounds to six in the oral argument presented by it at the hearing. The grounds in question are as follows:

32. (a)

As regards the potential disruption of the financial equilibrium, the United Kingdom refers almost exclusively to the affidavit of John Francis Palmer annexed to in its written observations. ( 50 )

33. (b)

The United Kingdom's main arguments against the claimants' demands are founded on the possible threat to the cohesion of the system. Those arguments amount in part to a recapitulation of grounds (1) to (6) above.

34.

The United Kingdom observes that the obligation to contribute ceases on commencement of the right to a retirement pension. The receipt of an invalidity pension does not jeopardize future entitlement to a retirement pension, since the person concerned is entitled to credits in respect of those periods. The limitation of an invalidity pension to the amount of a retirement pension is based on the premiss that an incapacitated person should not be better off than a person in receipt of a retirement pension. Where a woman does not have a full contribution record — possibly because of the exercise by her of the option to make reduced rate contributions as a married woman — it would be unfair to allow her to receive a full invalidity pension. Income-replacement benefits could not in any event continue for more than five years after the statutory pensionable age is reached. That applies equally to men and women alike.

35.

The United Kingdom submits that the Court should give the following answers to the questions referred by the national court:

36.

The Commission likewise submits that the consistency of the schemes could be disturbed if the discrimination at issue were remedied.

37. (a)

The Commission considers the potential threat to the financial equilibrium of the social security system. Its remarks concerning the correlation between the income and the outgoings of the N. I. Fund are couched in highly reticent terms. However, it states that, whilst there is a correlation between income from contributions and outgoings in the provision of contributory benefits, the situation could not exactly be described as one of equilibrium. ( 51 ) The financial impact of a ruling in favour of the claimants would no doubt be significant, and any possible restriction of the effects of such a ruling might be a contributing factor in that regard. However, it cannot necessarily be assumed that the financial equilibrium of the system would be jeopardized.

38. (b)

The Commission submits, on the other hand, that the discrimination at issue is inextricably tied to the rules on contributions, which have themselves already been accepted by the Court as being necessarily linked to pensionable age. The criterion ( 52 ) to be applied must deal with the question whether the elimination of the discrimination would create unjustifiable anomalies and thereby frustrate the Member State's right to avail itself of the derogation provided for by Article 7(1 )(a). Although women would have the right to continue working until the age of 65, the deferral option would be more or less illusory for those who were unable to work because of invalidity.

39.

As regards the structure of the benefits, the Commission submits that, in so far as those benefits concern an invalidity pension, no necessary connection exists between the differing pensionable age and the age up to which invalidity benefits may be claimed.

40.

The Commission observes, as regards consistency with the rules on contributions, that there are two points of distinction between the present case and that of Thomas. First, Thomas was a case concerning non-contributory benefits; second, entitlement to the invalidity benefits at issue in Thomas subsisted beyond pensionable age, whereas entitlement to the benefits at issue in the present case is effectively extinguished on reaching pensionable age.

41.

Social security contributions are payable only by those under pensionable age. It is only to those persons that invalidity pension at the full rate is available. Persons who have reached pensionable age are entitled to receive benefit at the rate of their retirement pension, even if it is still called invalidity pension. It may be concluded from this that invalidity pension at the full rate should be available only to those liable to contribute.

42.

The Commission further draws attention to the fact that a ruling in favour of the claimants would mean that a person could become eligible for invalidity pension for the first time when already over pensionable age. A difficulty would then arise as to the nature of the contribution requirement. Entitlement to sickness benefit, which may trigger entitlement to invalidity pension, depends on a previous contribution record which a woman over 60 cannot fulfil. Consequently, either women would have to become liable to pay contributions until 65, or the contribution record required for women over 60 would have to be waived. However, the latter option would constitute discrimination against men, since a man of 60 may claim sickness benefit and invalidity pension only if he satisfies the contribution requirement. If, by contrast, there is no necessary connection, then the case is not covered by Article 7(1)(a) and the obligation of equal treatment is absolute.

43.

The Commission submits that the Court should give the following answers to the questions referred by the national court:

Where, as a necessary consequence of maintaining different pensionable ages for men and women, a Member State requires different contribution records from men and women, then where entitlement to other benefits depends on the payment of contributions, Article 7(l)(a) of Directive 79/7 is to be interpreted as authorizing a refusal of such other benefits where a failure to satisfy the contribution requirement is a consequence of the different contribution periods laid down by that Member State.

44.

The question of eligibility for an invalidity pension beyond pensionable age, referred to in the immediately preceding paragraphs, was addressed at the hearing by the claimants' representative, who pointed out that that question was not material to the issues in the present case. However, one possible coherent solution to that problem might be to impose an employment requirement in place of the contribution requirement.

45.

For the purposes of deciding the present case, it may properly be considered that it falls not only within the scope of Directive 79/7 ratione personae, as defined in Article 2, since the claimants are members of the ‘working population’ within the meaning of that article, but also within the scope of the directive ratione materiae, as defined in Article 3, since it concerns statutory schemes which provide protection against the risks of sickness, invalidity and old age.

46.

There undoubtedly exists objective discrimination of a type conflicting, in principle, with Article 4 of the directive. Inequality of treatment exists in relation to eligibility for, and the amount of, invalidity benefits with regard to the ages of male and female claimants. Apart from the age requirement, which is laid down in the statutory rules on pensionable age, the conditions of entitlement to the invalidity benefits in question are identical. Those conditions are that, at the time of becoming incapacitated for work, the worker must have been gainfully employed and thus liable to pay contributions to the statutory social security scheme. A person who is incapacitated for work is entitled to receive sickness benefit, provided that he or she has completed a contribution record of at least two calendar years' duration immediately before becoming incapacitated. Where sickness benefit is paid in respect of a period of 168 days, the recipient is automatically entitled, as a direct consequence, to invalidity benefits. The criteria governing eligibility for an invalidity pension are wholly independent, therefore, of those governing eligibility for a retirement pension. Until a person reaches the statutory pensionable age, the conditions of entitlement to a retirement pension have no effect whatever on the receipt of an invalidity pension. Even upon reaching pensionable age, the conditions of entitlement to an invalidity pension remain unaltered; the only difference is that the amount of the invalidity pension is simply limited to the level of the existing entitlement to a retirement pension. Consequently, the only connection between invalidity pensions and retirement pensions lies in the upper limit of invalidity benefit laid down by statute.

47.

Before examining the specific question whether the discrimination outlined above is covered by any derogation, I should like to point out that the principle of equal treatment for men and women at work and in related fields ( 53 ) constitutes an elementary principle of Community law and is in the nature of a fundamental right. This consideration runs like a thread through the case-law on Article 119 of the EC Treaty and Directives 75/117/EEC, ( 54 ) 76/207/EEC, ( 55 ) 79/7/EEC, ( 56 ) 86/378/EEC ( 57 ) and 92/85/EEC. ( 58 ) It should be noted, therefore, that exceptions must be interpreted strictly, as was expressly stated in a comparable context in the judgment in Thomas. ( 59 )

48.

Both the case of Thomas and the present dispute concern income-replacing invalidity benefits granted by statute on differing bases to men and women; the difference in treatment relates to the statutory pensionable age. It is necessary, therefore, to ascertain whether the differences between the benefits forming the subject-matter at issue in the two cases may possibly be such as to require a different assessment in the present case from that in Thomas.

49.

The case of Thomas concerned non-contributory schemes, whereas the present case relates to contributory schemes. The Commission contends that there is a further difference between the two cases, in that the benefits in Thomas continued to be payable beyond pensionable age, whilst entitlement to the invalidity benefits at issue in the present case is extinguished when pensionable age is reached.

50.

That appraisal is not entirely correct. As has already been stated, payment of the invalidity benefits at issue in the present case may continue, as a result of deferral or election, for up to five years beyond pensionable age, which means that in such cases the eligibility criteria are not basically altered.

51.

The essential distinction between the benefits in Thomas and those in the present case thus lies in the contributory nature of the benefits in the present case. Consequently, it is necessary to examine whether the elimination of the inequality of treatment as regards the contributory benefits would disturb the financial equilibrium of the social security schemes concerned.

52.

If increased outgoings for which there was no financial cover were occasioned, that could give rise to a threat to the financial equilibrium. Invalidity benefits are paid from the N. I. Fund, from which a number of other social security benefits, such as retirement pensions, sickness benefit and unemployment benefit, are also paid. The National Insurance Fund is essentially funded by the payment of social security contributions by employees and employers. However, in addition to those contributions, the N. I. Fund has at its disposal certain other sizeable sources of income, such as investments and refunds. ( 60 ) It was further submitted in the course of the proceedings that the National Insurance Fund has for some years past been dependent on subsidies from the exchequer. The claimants' submissions, evidenced in the proceedings before the national court by the affidavit of Tony Lynes, indicate that under the Social Security Act 1973 18% of receipts were provided by the ‘Treasury supplement’. Those subsidies were reduced by new rules introduced in 1975 and were to be phased out by the Social Security Act 1979. The reduction of the relevant percentage in each year took place over several years up until the end of the 1980s. The subsidies were reintroduced in that form by the Social Security Act 1993. ( 61 )

53.

The size of the financial expenditure needed to eliminate the differences in treatment may be estimated from the affidavit of John Francis Palmer submitted by the United Kingdom.

The cost would amount to:

54.

It is not possible, in the proceedings before the Court of Justice, to arrive at any definite assessment of the financial expenditure required. However, the evaluation of the size of the sums at stake is highly relevant for the purposes of determining whether the financial equilibrium is likely to be disturbed. The estimated expenditure is broken down into fractions of the receipts of the National Insurance Fund from its various sources of income. The claimants have suggested, without being challenged, that an increase in contributions would not be necessary in order to implement the equalization sought by them. In the light of the calculations provided by way of illustration, I tend towards the view that it must be possible to manage the outgoings of the National Insurance Fund without disrupting its financial equilibrium.

55.

Support for the contention that the financial equilibrium of the benefits schemes would not be enduringly jeopardized is in my view to be found in the fact that it is necessary, in calculating the finances of a public institution of the size of the National Insurance Fund, to include certain imponderables in the calculation. For example, it is apparent from the statement of account for the year 1990/91 submitted to the Court that increased benefit payments of approximately £2689 million were needed by comparison with the previous year. The figures relating to the breakdown of expenditure comprise 11 different items. These cover inter alia an increase of nearly £600 million in outgoings in respect of invalidity benefit. The explanatory notes to the accounts state that the increase in outgoings was due to higher rates of benefit and a rise in the number of recipients, in particular those entitled to receive unemployment benefit. In actual fact, the increase in expenditure on unemployment benefit in 1990/91, compared with the previous year, amounts to approximately £136 million. The financial equilibrium of a fund which must be capable of absorbing fluctuations of that size cannot be enduringly disrupted by an estimated expenditure of £90 million.

56.

Nor do I exclude the possibility that subsidies from the exchequer should be taken into account where appropriate, since they form part of the existing structures for the financing of the National Insurance Fund. In so stating, I am not overlooking the point that budgetary resources must also be provided. However, the situation in that connection is no different from the position with regard to the funding of non-contributory benefits, as in the case of Thomas, since those benefits also have to be funded from tax receipts.

57.

Provided that the figures provided accurately reflect the actual size of the sums at stake (it is for the national court to make the relevant determinations), I am of the view that the contributory nature of the benefits in issue is not in principle such that they should be regarded differently from those in the case of Thomas.

58.

Even if the financial equilibrium of the social security schemes is not jeopardized by the elimination of the differences in treatment, a Member State is nevertheless entitled, in the context of Article 7(l)(a) of Directive 79/7, to maintain inequality of treatment based on a difference in pensionable age where the consistency of the schemes would otherwise be disrupted. Both the United Kingdom and the Commission consider that the cohesion of the system is in jeopardy. They refer repeatedly in their arguments to the different contribution records needing to be completed in order to qualify for benefit. In particular, the submissions of the United Kingdom tend to give rise, in a number of respects, to some confusion.

59.

The contribution requirements governing eligibility for invalidity benefit are the same for men and women. The criteria for entitlement to an invalidity pension have nothing in common with those for a retirement pension. It is only after pensionable age has been reached that an invalidity pension is reduced to the level of an existing entitlement to a retirement pension. Since the statutory pensionable age is fixed at 60 for women and 65 for men, men aged between 60 and 65 are entitled to claim a full invalidity pension, whereas the entitlement of women of that age to an invalidity pension is subject to the rules on potential reduction.

60.

The United Kingdom's argument that only those liable to contribute can be eligible may also give rise to misunderstandings. Indeed, from the point of view of a person entitled to claim an invalidity pension, that contention is plainly wrong, for the simple reason that a recipient of invalidity benefits is not liable to pay contributions. With a view to the subsequent receipt of a retirement pension, ‘credits’ are attributed to recipients of invalidity benefits, with the result that the period of incapacity for work is treated purely arithmetically — albeit in terms of an increased expectancy — for accounting purposes, but no contributions are actually transferred. ( 62 ) From the point of view of the person concerned, therefore, it cannot be maintained that it is only those liable to contribute who are eligible. Nor can such a contention be valid as regards working women as a whole, since contributions cease upon entitlement to an invalidity pension, regardless of whether women in the abstract remain liable to contribute until they reach the age of 60, whereas working women aged between 60 and 65 cease to be so liable.

61.

The United Kingdom's argument that the removal of the difference in treatment would create a new form of discrimination in favour of women is also misleading. That assessment presupposes the choice of a different frame of reference for the discrimination alleged. The starting-point for the claimants' arguments is the age of the person concerned. The submissions of the United Kingdom, by contrast, are founded on statutory pensionable age, which forms the uniform basis of its arguments. On the basis of that line of argument, there can be no difference in the treatment of men and women aged between 60 and 65. This also explains the United Kingdom's position that men and women are treated equally, since, in the case of either sex, the grant of income-replacement benefits cannot continue for more than five years beyond pensionable age. Any divergence from that principle would allegedly discriminate in favour of one sex or against the other.

62.

For the purposes of deciding the present case, it is necessary, in my view, to avoid straying from the frame of reference of age difference, since otherwise unequal treatment ceases to be comprehensible in conceptual terms. On that premiss, it would be necessary to construe the removal of the differences in treatment complained of as placing men and women on a uniform level of protection against the risk of invalidity, and not as necessarily placing men in a worse position.

63.

Assimilation may be regarded as a stage in the progressive implementation of the principle of equal treatment for men and women in the field of social security, within the meaning of Directive 79/7. It falls within the objectives pursued by the directive. ( 63 )

64.

The cost of such progressive implementation of the principle of equal treatment would admittedly give rise to a temporary increase in expenditure. In the long term, the assimilation of pensionable age for men and women will lead to considerable savings. That is apparent from the calculations published in the White Paper on Equality in State Pension Age. ( 64 )

65.

In considering this point, it should also be borne in mind that the risk of invalidity, within the meaning applied to that term by social security law, is a fundamentally different risk from that of old age. Invalidity means the cessation of earning capacity, which is why invalidity benefits are of an income-replacement nature and why they take the place, at least in part, of gainful employment within the meaning applied to that term by social security law. An example of this is the grant of ‘credits’ in circumstances where the recipient is not actually working or even paying contributions. Consequently, the invalidity benefits at issue in the present case are also linked to that part of a person's life in which he or she may potentially be gainfully employed. However, that criterion is not inconsistent with the grant of invalidity benefits to women aged between 60 and 65, since those women are entitled to continue in gainful employment during that period. It appears to me legitimate for a woman to seek, during that period of her life, comparable protection with men against the risk of invalidity.

66.

In my view, the objection that women of that age are not liable to pay social security contributions does not carry any weight. It is true that a working woman aged between 60 and 65 is exempt from the obligation to pay social security contributions. However, her employer remains liable to pay contributions. The submissions advanced are invariably focussed on the employee's contributions, thereby overlooking, in my view, the fact that a substantial proportion of social security contributions is paid by employers.

67.

In my view, the cohesion of the system would be strengthened if women of the same age as men were to enjoy, during periods of potential gainful employment, an equal degree of protection against the risk of invalidity, subject to the same entitlement criteria.

68.

The Commission considers that the cohesion of the system would be jeopardized if women were to become eligible for invalidity benefits for the first time when already over pensionable age, because women in that position do not fulfil the contribution criteria constituting, according to the rules currently in force, a mandatory condition of entitlement to invalidity benefit.

69.

I would like, first of all, to emphasize that this point does not fall within the subject-matter of the questions referred for a preliminary ruling. The proceedings before the national court have without exception been concerned with the continued payment of invalidity benefits following a decision by the claimant concerned to opt for an invalidity pension rather than a retirement pension. Consequently, any considerations relating to such questions must be of a purely hypothetical nature.

70.

The arguments advanced at the hearing by the claimants' representative are not without merit. If it were desired to protect working women aged between 60 and 65 against the risk of invalidity, then it would be consistent to safeguard against any initial incapacity for work, and thus any interruption of gainful employment between the ages of 60 and 65, by allowing them to claim invalidity benefits. I concede that the requirement of a complete contribution record as a condition of entitlement cannot be brushed aside.

71.

The exemption of working women from liability to pay contributions between the ages of 60 and 65 is a consequence of the difference in the pensionable ages prescribed, and thus of the difference in the rules regarding contribution records, which were held to be permissible in the judgment in Equal Opportunities Commission. That exemption, intended as it is to allow the temporary maintenance of advantages accorded to women, is consistent with Community law. ( 65 )

72.

I have already indicated that social security contributions are in fact paid in respect of working women aged over 60 by their employers. In my view, that reduces the problem. As the claimants' representative has suggested, it should indeed be possible to fasten on to the aspect of gainful employment without which there can be no employer's liability to pay contributions.

73.

Lastly, I would like to make the point that women receiving an income from employment do not, to that extent, claim State benefits, and thus help to relieve the burden on the State budget. Nor is the easing of that burden offset by any subsequent increased burden, since women of the age in question do not increase any pension expectancies which they may have by continuing in gainful employment.

74.

Finally, I would like to address the question of invalidity allowances. Those allowances are granted only where the claimant, upon becoming incapacitated, is at least five years below statutory pensionable age. The amount of benefit payable is in inverse proportion to the claimant's age, that is to say, the earlier the person concerned becomes incapacitated, the higher the level of benefit. In my view, all of the basic considerations regarding invalidity benefits apply both to invalidity pensions and to invalidity allowances. They apply a fortiori to invalidity allowances, since, in the first place, receipt of them is not linked to any more stringent conditions regarding previous contribution records and, secondly, their connection with the difference in pensionable age, which is the only justification for the exception, is not a direct link but subsists merely for a period of five years.

75.

In the light of the sources of information available to the Court in the present proceedings, I am of the view that the removal of the contested discrimination jeopardizes neither the financial equilibrium of the system nor its coherence. Consequently, the difference in treatment is not necessarily and objectively linked to the difference in statutory pensionable age.

76.

In the light of the foregoing, I propose that the Court give the following answer to the questions submitted by the national court:

Where, pursuant to Article 7(1 )(a) of Council Directive 79/7/EEC on the progressive implementation of the principle of equal treatment for men and women in the field of social security, a Member State prescribes different pensionable ages for the grant of old-age and retirement pensions, the scope of the derogations permitted by the use in that provision of the words ‘possible consequences thereof for other benefits’ is limited to forms of discrimination in the rules on other benefits which are necessarily and objectively linked to the difference in pensionable age. Such necessity may arise from a threat to the financial equilibrium or consistency of the social security schemes.