Case No. 2009-43-01 On Compliance of the First Part of Section 3 of State Pensions and State Allowance Disbursement in 2009 2012) insofar as it Applies to State Old-Age Pension with Article 1, Article 91, Article 105 and Article 109 of the Satversme (C
Petition brought by pensioners to challenge the constitutionality of the state pension law, which temporarily restricted payment of pension funds; Right to social security; Domestic application of international law; Older person's rights.
Petitioners, pensioners of the Latvian State, challenged the constitutionality of the Law on State Pension and State Allowance Disbursement in the period from 2009 to 2012 (hereinafter the "Disbursement Law"), which had been passed in an effort to reduce the State's budget deficit. The overall economy was rapidly declining in 2009, and the Latvian Parliament argued that it had to act quickly to respond to the country's economic crisis. The law decreased the amount received by current pensioners by 10% and decreased the pensions of future pensioners (individuals currently employed) by 70%. Although temporary, the law did not provide for repayment of the reduced amounts once the economy stabilized. In defending the law, Parliament pointed to the liabilities it had under loan agreements with international creditors, including the IMF and the EU.
The Court found the law unconstitutional and in violation of an individual's right to a pension because Parliament had not considered other less restrictive alternatives, it had not provided an adequate transition period before the new scheme took effect, and it had not included a plan for future compensation of the reduced pensions. The Court relied on Article 109 of the Latvian Constitution and noted that Article 9 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) to find that an individuals' right to a pension is part of the fundamental right to social security. Relying on the Limburg Principles, it also noted the minimum essential levels must be guaranteed irrespective of resources and vulnerable groups such as pensioners must be particularly protected. Finally, the Court determined that the international creditors had not explicitly stipulated reductions in pension funds, and that these conditions had been proposed by Cabinet Ministers, but even if the conditions had been imposed by the creditors, the Court stated that conditions "cannot replace the rights established by the Constitution," and refused to recognize loan conditions as a valid argument in support of the law's reduction of pensions.
Keywords: Case No. 2009-43-01 On Compliance of the First Part of Section 3 of State Pensions and State Allowance Disbursement in 2009 2012) insofar as it Applies to State Old-Age Pension with Article 1, Article 91, Article 105 and Article 109 of the Satversme, Older Person, Rights
Finding the law to be unconstitutional, the Court ordered the Parliament to draft a plan for the repayment of the reduced pension funds by March 2010. Since this decision, the IMF has increased pressure on the government of Latvia to reduce "early" retirement, which they define as retirement before the age of 65. Currently, the actual average retirement age is just under 61 compared with a statutory retirement age of 62, which the IMF is requiring Latvia to incrementally increase to 65 by 2021.
Austerity measures have provoked civil unrest in many countries since the 2009 financial crisis. In this case, the Latvian Constitutional Court asserted the primacy of constitutional and human rights law in making public policy decisions on fiscal allocations. Further, the Court's declaration that international loan provisions could not trump human rights obligations was a major victory for those seeking greater accountability from multilateral institutions to universal human rights principles.