Pensions-Sicherungs-Verein (Protection of employees in the event of the insolvency of their employer - Abstract) [2019] EUECJ C-168/18 (19 December 2019)

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	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Pensions-Sicherungs-Verein (Protection of employees in the event of the insolvency of their employer - Abstract) [2019] EUECJ C-168/18 (19 December 2019) URL: http://www.bailii.org/eu/cases/EUECJ/2019/C16818.html Cite as: [2020] 2 CMLR 26, [2019] EUECJ C-168/18, EU:C:2019:1128, [2019] WLR(D) 693, [2020] CEC 1119, [2020] ICR 985, [2020] Pens LR 9, ECLI:EU:C:2019:1128

(Reference for a preliminary ruling — Social policy — Protection of employees in the event of the insolvency of their employer — Directive 2008/94/EC — Article 8 — Supplementary pension schemes — Protection of entitlement to old-age benefits — Minimum guaranteed level of protection — Former employer’s obligation to offset a reduction in an occupational pension scheme — External pension institution — Direct effect)

1. Social policy — Approximation of laws — Protection of employees in the event of the insolvency of their employer — Directive 2008/94 — Supplementary occupational pension schemes — Obligation on the Member State concerned to adopt the necessary measures to protect the interests of employees — Scope

2. Social policy — Approximation of laws — Protection of employees in the event of the insolvency of their employer — Directive 2008/94 — Supplementary occupational pension schemes — Protection of entitlement to old-age benefits — Minimum level of protection required — Reduction in occupational pension benefits — Compensation corresponding to at least 50% of the value of the former employee’s acquired rights — Compensation having to meet the at-risk-of-poverty threshold

3. Social policy — Approximation of laws — Protection of employees in the event of the insolvency of their employer — Directive 2008/94 — Supplementary occupational pension schemes — Protection of entitlement to old-age benefits — External pension institution — Possibility for an employee to rely on Article 8 of that directive, which has direct effect, against such an institution — Conditions

A Member State is under an obligation to guarantee to a former employee, in the event of a reduction in the amount of his or her occupational old-age pension benefits following the insolvency of his or her employer, provision of at least half of the amount of those benefits or, if the losses suffered are less than half of the amount of those benefits, that the reduction does not result in the former employee having to live below the at-risk-of-poverty threshold

In the judgment in Pensions-Sicherungs-Verein (C‑168/18), delivered on 19 December 2019, the Court, in its interpretation of Article 8 of Directive 2008/94 on the protection of employees in the event of the insolvency of their employer, (1) held that a reduction in the amount of occupational old-age pension benefits paid to a former employee, on account of the insolvency of his or her former employer, is regarded as being manifestly disproportionate where, as a result of the reduction, the former employee is already living, or would have to live, below the at-risk-of-poverty threshold. The Court took the view that the same applies even if the employee receives at least half of the amount of the benefits arising from his or her acquired rights.

In the case pending before the referring court, a German national received, with effect from December 2000, an occupational old-age pension, which comprised a monthly pension supplement and an annual Christmas bonus that were granted directly by the former employer, together with a pension paid by the German pension fund on the basis of contributions made by the former employer. Following financial difficulties experienced by the pension fund in 2003, the amount of the benefits that were paid was reduced, with the authorisation of the Federal Agency for the Supervision of Financial Services. The former employer offset that reduction until 2012, when insolvency proceedings were initiated in respect of the former employer. Since then, the former employee has received reduced benefits without the reduction being offset, since the private law institution designated by Germany as the institution which guarantees occupational pensions against the risk of an employer’s insolvency assumed responsibility for only the monthly pension supplement and the annual Christmas bonus, refusing to offset the reduction.

The Court, first of all, examined whether the substantive conditions laid down in Article 8 of Directive 2008/94 were satisfied and found that they were, since the present case concerns a former employee whose former employer is in a state of insolvency and, at the date of the onset of his former employer’s insolvency and on account thereof, his immediate entitlement to old-age benefits was compromised. The Court concluded that Article 8 of Directive 2008/94 does apply to a situation such as that in the present case.

As regards, next, the circumstances in which a reduction in the amount of occupational old-age pension benefits must be regarded as manifestly disproportionate, giving rise to the obligation on Member States to ensure a minimum degree of protection, the Court pointed out that Member States have, in transposing Article 8 of Directive 2008/94, considerable latitude and are obliged only to guarantee the minimum degree of protection required by that provision. The Court also recalled that a former employee must receive, in the event of the insolvency of his or her employer, at least half of the old-age benefits arising out of his or her accrued rights, which does not mean, however, that, even where that minimum degree of protection must be ensured, in certain circumstances the losses suffered may not be regarded as being manifestly disproportionate. In that regard, the Court stated that a reduction in old-age benefits must be regarded as being manifestly disproportionate where the employee’s ability to meet his or her needs is seriously compromised. That would be the case if, as a result of the reduction, a former employee is already living or would have to live below the at-risk-of-poverty threshold determined by Eurostat for the Member State concerned, the respective Member State then being obliged to guarantee compensation in an amount which, without necessarily covering all of the losses suffered, is such as to prevent them from being manifestly disproportionate.

Finally, the Court held that Article 8 of Directive 2008/94, in so far as it requires Member States to ensure a minimum degree of protection for a former employee exposed to a manifestly disproportionate reduction in old-age benefits, contains a clear, precise and unconditional obligation on Member States, which is intended to confer rights on individuals. Accordingly, that provision may be relied upon against an institution governed by private law that is designated by the State as the institution which guarantees occupational pensions against the risk of an employer’s insolvency where, in the light of the task with which it is vested and the circumstances in which it performs the task, that institution can be treated as comparable to the State, provided that the task of providing a guarantee with which the institution is vested actually covers the type of old-age benefits in respect of which the minimum degree of protection provided for in that provision is sought.

1 Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (OJ 2008 L 283, p. 36).

Court of Justice of the European Communities (including Court of First Instance Decisions)