Suspending the pension of the persons employed in the public sphere is not contrary to the Fundamental Law

20 November 2017

From 1 July 2013, the payment of pension benefits was suspended regarding the employees who receive old-age pension and, at the same time, work in the public sphere. The commissioner for fundamental rights initiated at the Constitutional Court the annulment of the relevant provisions alleging that they are contrary to the right to property.

The State pension system is based on solidarity.

According to the Fundamental Law, Hungary shall contribute to ensuring a livelihood for the elderly by maintaining a unified state pension system based on social solidarity. The right to pension acquired by fulfilling the entitlement criteria is a right of pecuniary value protected by the Fundamental Law. Suspending the payment of old-age pension is a restriction of “property” according to the Fundamental Law that can only take place under an Act of the Parliament, in the public interest, to a proportionate extent. Therefore, in the present case, the Constitutional Court had to examine whether the challenged regulation created a due balance between the general interests of the community and the protection of the fundamental rights of the affected person.

The plenary session of the Constitutional Court established: it is up to the evaluation of the legislator whether the restriction of the right to property is necessary for the enforcement of public interest, but this shall require a reasonable ground. In the case concerned, the monthly payment of pension is suspended without finally losing the entitlement to pension, therefore the essence of the right is not violated. The restriction is of temporary nature, the payment of the pension shall continue when the person concerned leaves State employment. The function of State pension is to secure livelihood. As long as the person is employed, the purpose of pension payment – substituting lost income – is not valid. Upon taking force of the challenged regulation, the affected person himself/herself could decide whether to terminate his/her employment and receive pension or remain in employment and have the payment of pension suspended.

The challenged regulation is not against the prohibition of discrimination.

According to the Fundamental Law, everyone shall be equal before the law, Hungary shall guarantee the fundamental rights to everyone without any discrimination. However, providing different regulations on scopes of persons having different characteristics shall not be regarded as discrimination. According to the decision: persons employed in the public sphere cannot be regarded as being in a situation similar to those who are employed in the private sphere. The State typically performs public duties through budgetary agencies without pursuit for gain, while employers in private business operate under other organisational and financial conditions. Although the employees of both the public sphere and the private sphere connect to the statutory pension insurance scheme under social security and they contribute to this system to the same extent, but this fact alone does not mean that they are in a similar situation.

Based on the above arguments, the Constitutional Court rejected the petitions aimed at the establishment of the lack of conformity with the Fundamental Law and with an international treaty and at the annulment of the relevant provisions of the Act on Pension Benefits.

Judge Dr. Péter Szalay attached a concurring opinion and Judge Dr. István Stumpf attached a dissenting opinion to the decision. The full text of the decision of the Constitutional Court is available on the Constitutional Court’s website in Hungarian language.