OPINION OF ADVOCATE GENERAL

delivered on 27 June 2013 (1)

Case C‑166/12

(Reference for a preliminary ruling from the Krajský soud v Praze (Czech Republic))

‘Official of the European Union — Article 11(2) of Annex VIII to the Staff Regulations relating to officials of the European Communities — Retirement pensions — Pensions rights acquired under the national scheme — Transfer to the Union pension scheme — Capital value of the pension rights — Article 34 of the Charter of Fundamental Freedoms of the European Union’

1.These proceedings offer the Court the opportunity to consider for the first time the wording of Article 11(2) of Annex VIII to the Staff Regulations of Officials of the European Communities, as amended by Regulation No 723/2004 (2) (the Staff Regulations). (3) That provision allows officials who take up employment in the service of the Union after leaving employment in a Member State the right to transfer to the Union the capital value of the pension rights to which they have acquired entitlement in the Member State. In this case, the Court of Justice is called upon to clarify what is to be understood by the term ‘capital value … of pension rights’ to be transferred and what limits, if any, are set by the provision for the Member States with regard to the calculation of capital value.

2.The questions have been raised in the context of the entry into the service of the Union of a citizen insured under the Czech pension scheme who, upon applying for a transfer of his pension rights from the Czech social security system, was offered the transfer to the Union pension scheme of a sum of money corresponding to less than 50% of the contributions paid into the national scheme on his behalf.

I – Legal context

A – Union law

3.Article 11(2) of Annex VIII to the Staff Regulations, in the version applicable in the main proceedings, provides as follows: ‘An official who enters the service of the Communities after:

—leaving the service of a government administration or of a national or international organisation; or

—pursuing an activity in an employed or self-employed capacity;

shall be entitled, after establishment but before becoming eligible for payment of a retirement pension within the meaning of Article 77 of the Staff Regulations, to have paid to the Communities the capital value, updated to the date of the actual transfer, of pension rights acquired by virtue of such service or activities…

Officials may make use of this arrangement once only for each Member State and pension fund concerned.’

4.The subparagraph ‘shall be entitled, after establishment …, to have paid to the Communities the capital value, updated to the date of the actual transfer, of pension rights acquired by virtue of such service or activities’ was added to Article 11(2) after the second indent of the first subparagraph by Regulation No 723/2004. It replaced, with effect from 1 May 2004, (4) the subparagraph previously in force ‘shall be entitled upon establishment to have paid to the Communities either the actuarial equivalent or the flat-rate redemption value of retirement pension rights acquired by virtue of such service or activities’.

B – National law

5.The complex legal rules of the Czech old-age insurance system are scattered across several legal acts. Central to this case is Law No 589/1992 on the contributions for social security and for the State employment policy, Law No 155/1995 on old-age insurance and Government Regulation No 587/2006 laying down detailed rules for the reciprocal transfer of pension rights in relation to the pension scheme of the European Communities.

6.In accordance with Law No 589/1992, employers and employees pay contributions into the Czech old-age insurance scheme. Between 1996 and 2003 the employers’ contribution rate was 19.5% of the basis of assessment, and since 2004 it has been 21.5%. During this period employees were required to contribute 6.5% of the basis of assessment. The employer’s basis of assessment is calculated as the sum of the bases of assessment for all employees employed by him (paragraphs 3 to 5 of Law No 589/1992).

7.The amount of the old age pension is calculated as the sum of a basic amount identical for all beneficiaries and a variable amount dependent on the total period of insurance completed by the applicant and on the level of what is called ‘the basis for calculation’ (paragraphs 33 to 36 of Law No 155/1995).

8.Under Paragraph 34(1) of Law No 155/1995, the level of the variable amount for each full insurance year is 1.5% per month of the basis for calculation. Periods in which usually no relevant income is earned (‘substitute periods’, covering, for example, care of minor children, studies etc.) are included for the purposes of the period of insurance at the rate of 80%.

9.The basis for calculation is determined according to the employee’s personal basis of assessment. Under Paragraph 1 of Law No 155/1995, the latter is equal to the average of the monthly income subject to mandatory pension contributions throughout the period of insurance but limited to the preceding 30 years. (5) For a personal basis of assessment of no more than CZK 10000, the basis for calculation is the same as the personal basis of assessment. Sums above that ceiling are included in the basis for calculation at 30% up to CZK 24800, and sums greater than that figure are included at 10% in the basis for calculation (Paragraph 15 of Law No 155/1995). Substitute periods of insurance count towards the insurance period. For the purposes of calculating the personal basis of assessment, the relevant time span is reduced by periods referred to as ‘excluded’, which are essentially the substitute insurance periods.

10.Under Paragraph 105a (1) and (4) of Law No 155/1995 on old-age insurance transposing the provisions of the Staff Regulations, insured persons who have become officials or other servants of the European Communities or their institutions and have ceased to be employed or self-employed in the Czech Republic are entitled to have their pension rights acquired in the Czech Republic transferred to the pension scheme of the Communities if they have been granted no pension under the Czech insurance scheme, in which case ‘pension rights shall mean the amount determined as the actuarial equivalent depending on the length of the insured period that has elapsed and the bases of assessment’.

11.Further provisions on the transfer of the pension rights of an official who has entered the service of the European Union are laid down in Czech Regulation No 587/2006. Paragraph 2 thereof governs the calculation of the amount to be transferred as pension rights acquired in the Czech Republic. It provides:

‘1. The amount of the pension rights acquired in the Czech Republic to be transferred shall be calculated by multiplying the unit value of the deferred pension by the sum of the projected variable amount of the retirement pension and a proportionate part of the basic amount of the retirement pension.

12.The annex to Regulation No 587/2006 contains a formula for calculating the unit value of the deferred pension. The maximum technical interest rate is determined in the first sentence of Article 12(1) of Regulation No 434/2009, depending on the yields from Government bonds.

II – Facts and main proceedings

13.Mr Časta is an official of the European Commission. Before he took up his duties on 1 December 2006 he was, according to information provided by the referring court, insured under the Czech old-age insurance scheme for almost 10 years, namely, from 1 October 1996, (6) and the relevant contributions were paid into that scheme.

14.On 28 November 2008 Mr Časta applied to the Commission to have the capital value of his pension rights acquired in the Czech Republic transferred to the Community pursuant to Article 11(2) of Annex VIII of the Staff Regulations. His application was forwarded on 27 March 2009 by the Commission to the Czech social security administration, Česká správa sociálního zabezpečení (‘the defendant in the main proceedings’).

15.By decision of 8 February 2011, the defendant in the main proceedings offered Mr Časta a transfer of CZK 523584. That amount represents 48.26% of the contributions paid in for Mr Časta at that time (CZK 1084922,05). (7)

16.The defendant in the main proceedings calculated the amount offered by applying Paragraph 105a of Law No 155/1995 in the version applicable on the date of the application and Paragraph 2 of Regulation No 587/2006.

17.Mr Časta lodged an objection to that decision. In his view, the method for calculation provided for in Czech law runs counter to Article 11(2) of Annex VIII to the Staff Regulations in conjunction with Article 10 EC (now Article 4(3) TEU). He claimed that the amount to be transferred ought at least to correspond to, if not exceed, the total amount of contributions paid. He also alleged breach of the principle of equal treatment. In addition, Mr Časta criticises the fact that, in the calculation of his pension rights, the period during which he was a member of the pension scheme of the European Community was not taken into account.

18.The defendant in the main proceedings dismissed the objection on 10 May 2011. On 12 May 2011 Mr Časta applied to the Krajský soud v Praze for the decision to be set aside.

III – Reference for a preliminary ruling and proceedings before the Court of Justice

19.By a decision received at the Court of Justice on 3 April 2012, the Krajský soud v Praze stayed the proceedings and referred the following questions to the Court of Justice for a preliminary ruling under Article 267 TEU:

(1)‘(1) How must the concept of ‘capital value of pension rights’ in Article 11(2) of Annex VIII to Regulation (EEC, Euratom, ECSC) No 259/68 of the Council of 29 February 1968 laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities, as amended by Council Regulation No 723/2004 (“the Staff Regulations”), be understood? Does that concept include the level of pension rights determined both in the form of the actuarial equivalent and in the form of the flat-rate redemption value as defined in Article 11(2) of Annex VIII to the Staff Regulations, as laid down prior to the entry into effect of Regulation No 723/2004, or must it be identified with only one of those concepts, and if not, how does it differ from those concepts?

(2)Does Article 11(2) of Annex VIII to the Staff Regulations, in conjunction with Article 4(3) of the Treaty on European Union, as amended by the Treaty of Lisbon, preclude the application of the method for calculating pension rights provided for in Paragraph 105a(1) of Law No 155/1995 on pension insurance and in Government Regulation No 587/2006 laying down detailed arrangements on the reciprocal transfer of pension rights in relation to the pension scheme of the European Communities? In this context, is it relevant that that calculation method results, in a specific case, in the setting of pension rights offered for transfer to the EU pension scheme at a level of not even half the amount of the contributions paid by an official to the national pension scheme?

(3)Must the judgment of the Court of Justice in Case C‑293/03 Gregorio My v Office national des pensions (ONP) be interpreted as meaning that, for the purposes of calculating the value of pension rights to be transferred to the EU pension scheme by means of an actuarial method dependent on the period of insurance, the personal basis of assessment must also include the period during which, before the date of submission of an application for the transfer of pension rights, the EU official has already participated in the EU pension scheme?’

20.Mr Časta, the defendant in the main proceedings, the Czech Republic and the Commission have submitted written submissions.

21.Mr Časta, the Czech Republic and the Commission made submissions at the hearing of 13 March.

IV – Legal appraisal

A – Preliminary observation

22.Before I examine the questions referred for a preliminary ruling, I must set out some fundamental principles that may be deduced from the case-law and, in particular, the judgment in My, (8) which I believe to be relevant to this case.

23.Article 11(2) of Annex VIII to the Staff Regulations gives an official entering the service of the Union the right (9) to transfer to the pension scheme of the European Union pension rights previously acquired in a Member State. The coordination of the pension schemes thus established involves two stages: in the first, the value of the pension rights is determined by the competent national authority and transferred to the Union. According to the case-law of the Court of Justice, Article 11(2) of Annex VIII to the Staff Regulations, in conjunction with Article 4(3) TEU, requires the Member States to adopt the measures necessary to this end. (10)

24.The second stage entails the conversion of that value by the EU institutions into pensionable years of service that may be taken into account by the EU pension scheme. (11) Calculation of the capital value falls to the Member States, (12) for which reason the questions relate to the first stage of this process.

25.The purpose of this option of transferring pension rights is to facilitate the change from employment in the Member States to employment in the service of the Union and thus to enable the Union to recruit qualified and experienced staff. (13)

26.A fundamental principle can be deduced from this purpose of recruiting qualified staff, in pursuit of which the Member States support the Union in keeping with the principle of cooperation in good faith laid down in Article 4(3) TEU. This principle, in my view, informed the case-law of the Court of Justice on the provision at issue in this case: the pension situation of a person having worked in a Member State may not be prejudiced as a result of his taking up employment as an official of the EU.

27.This fundamental principle is specifically illustrated in My. In that case, an official of the Council of the EC, a member of the European social security scheme for 27 years and of the Belgian scheme for 19 years before that, expressly waived the transfer of his Belgian pension rights to the EC. The early retirement pension for which he applied in Belgium was not granted, because he had not completed the necessary 35 insurance years in the Belgian pension scheme.

28.Although Article 11(2) of Annex VIII to the Staff Regulations contains no express statement concerning Member States’ pensions in cases in which an EU official waives the transfer of his pension rights, the Court found that a Member State which does not permit years of employment completed in the service of a Community institution to be taken into account for the purposes of entitlement to an early retirement pension under the national scheme contravenes the provision of the Staff Regulations, in conjunction with Article 10 EC (now Article 4(3) TEU). (14) The observations made by Advocate General Tizzano show that that fundamental principle was central to the Court’s reasoning. In fact, he considered that the point of that interpretation of the rule was ‘to ensure transferability of the social security entitlements of civil servants’. (15)

29.The judgment in My shows that the principle that the pension situation of a person having worked in a Member State may not be prejudiced as a result of his taking up employment as an official of the EU is to be applied both in the case of a transfer of pension rights and in the case of a waiver of that transfer.

30.In the case of an EU official who decides not to apply for a transfer of his pension rights, national law must take account of the years of service completed in a body of the Union for the purpose of determining any minimum period of insurance provided for in order to acquire a right to a pension, (16) thereby offering the prospect of a part pension corresponding to the rights acquired.

31.If the official entering the service of the EU decides to have his pension rights transferred he must, as in my view follows from that principle, be placed, once that transfer has been made, in the same financial position as he would have been in if he had stayed in the national pension scheme. In other words, the principle requires the current value of the pension rights in the event of the person’s hypothetically remaining in the Member State’s pension system to be equal to the current value of the part pension in the event of entry into the service of the EU when the pension rights are not transferred and to the value of the amount transferred in the event of the transfer of pension rights.

B – First question referred

32.By the first question, the referring court seeks clarification of the term ‘capital value of the pension rights’, which was inserted into Article 11(2) of Annex VIII to the Staff Regulations by Regulation No 723/2004. In that context, in particular the relationship of that term to the two concepts used before that regulation came into force, that is to say, ‘actuarial equivalent’ and ‘flat-rate redemption value’ of pension rights, need to be discussed.

33.Mr Časta takes the view that the capital value of the pension rights is to be determined according to national criteria, but that the period of insurance and the contributions made by the insured must be taken into account. He considers that in an insurance system funded by contributions the capital value must be proportionate to the contributions. In addition, Mr Časta argued, according to the order for reference, that since Regulation No 723/2004 entered into force it is no longer permissible to apply the actuarial value as the method for calculating the rights to be transferred.

34.The Czech Republic, on the other hand, takes the view that the concept of capital value of the pension rights relates to the financial equivalent of any pension which the insured would be entitled to in the future. The amendment to the wording of the Staff Regulations by Regulation No 723/2004 was not intended to exclude the actuarial equivalent as a method of calculation, but rather to confirm the competence of the Member States to determine the method of calculation of capital value, in light also of the right of the Member States to define the fundamental principles of their social security systems (Article 153(4) TFEU). The method of calculation depends on the way in which the pension scheme is set up. The European Commission is also of the view that the purpose of that amendment was to afford the Member States greater freedom with regard to the methods for calculating capital value.

35.Until it was amended by Regulation No 723/2004, Article 11(2) of Annex VIII of the Staff Regulations offered the Member States an alternative, and provided that an official of the Communities was entitled to have paid from the national system to the Communities ‘either the actuarial equivalent or the flat-rate redemption value of retirement pension rights acquired by virtue of such service or activities’.

36.The Court defined both those terms in Bodson. There, it ruled that the purpose of the actuarial equivalent is to capitalise the value of ‘a future contingent periodic benefit’, in this case the pension, the foreseeable pension being reduced by the application of a discount rate by reason of the early payment, compared with the due date, together with a reduction coefficient proportionate to the risk of the death of the recipient before the due date. The flat-rate redemption value, on the other hand, is calculated by ‘adding up the contributions paid by the insured person, together, where appropriate, with those paid by his employer; interest may be added to these contributions’. (17) In Commission v Luxembourg, the Court of Justice made clear that the Member State, not the official, has a choice between the two methods of calculation. (18) A transfer must also be possible if the pension right is limited, conditional or future or is not sufficient for the immediate award of a retirement pension. (19)

37.After its amendment by Regulation No 723/2004, the provision now provides for the transfer of the ‘capital value of the pension rights’. Against that background, the referring court is uncertain as to the consequences of that amendment as regards the two methods of calculation mentioned in the earlier version of the provision.

38.The wording, structure, origin and scheme and purpose of Article 11 (2) of Annex VIII to the Staff Regulations show that the capital value means the value of the pension rights as established by means of a mathematical process without the mode of calculation’s being fixed.

39.On its wording, the ‘capital value of the pension rights’ means a sum of money corresponding to the value of the pension rights. It gives no express information as to how the capital value is determined, but suggests a calculation of the current value of any future pension rights at the time of the transfer to the European insurance system, that is to say the actuarial equivalent.

40.A systematic interpretation of the provision also suggests that it is still, at the very least, permissible to calculate the sum of money to be transferred using the actuarial equivalent. Article 11(1) of Annex VIII to the Staff Regulations in fact provides, as the Commission correctly points out, precisely this method for calculating the value of the pension rights when a Union official leaves the service of the Union and joins a national insurance system. It would appear unconvincing to argue that the Member States are forbidden to use the calculation procedure used by the Union itself.

41.The origin of the provision shows that, with regard to the calculation of the sum of money to be transferred, the Member States should, as a result of the amendment of the provision, be able to choose other methods of calculation (such as mixed models), alongside the two earlier methods of calculation expressly provided for previously. Thus, the Commission gave as grounds for its proposal for the amendment to the Staff Regulations relating to officials the aim of ‘ensuring greater neutrality for the transfer of pension rights’. (20)

42.Analysis of the purpose of the provision in question dispels any doubts as to the permissibility of various methods of calculation, in particular those set out earlier. I have already established that the provision is intended to make it easier for the Union to recruit qualified, experienced staff by guaranteeing pension rights acquired by such staff under the national schemes of the Member States.

43.The Court of Justice has previously pointed out that Article 11(2) of Annex VIII to the Staff Regulations does not harmonise the social security systems of the Member States. (21) Indeed the Union is not competent to carry out such harmonisation: (22) on the contrary, Article 153 (4) TFEU refers expressly to ‘the right of Member States to define the fundamental principles of their social security systems’. The Union does no more than adopt ‘such measures in the field of social security as are necessary to provide freedom of movement for workers’. (23)

44.As a consequence of the competence of the Member States to define their social security systems, a growing array of such systems has developed. (24) These may, for instance, provide for financing by a pay-as-you-go scheme or through a funded scheme. They may link the amount of payments out of the scheme to the amount of contributions made, in the case of funded systems they may even determine them entirely by the value of the amount saved (‘defined-contribution’), or lay down the amount of payments independently of the contributions, for example, according to criteria such as the period of insurance and the salary of the insured or as a basic pension equal for everyone (‘defined-benefit scheme’) (25).

45.It is a necessary consequence of there being so many systems that there is a plethora of calculation methods from which the Member States may choose. If a pension scheme fixes the pension exclusively according to the value of, for example, the contributions invested in mutual funds, it will be difficult to calculate the capital value of the pension rights using an actuarial equivalent, in that the pension rights are not quantifiable. Conversely, the calculation of the flat-rate redemption value according to its very definition depends on the existence of insurance contributions which, according to the referring court, did not exist at all in the Czech Republic before 1993, for pensions were paid out of tax revenue. However, even in a contributory scheme, to calculate capital value by way of the flat-rate redemption value seems contrary to the scheme if the amount of the pension is totally unrelated to the contributions paid.

46.In light of all of the foregoing, the reply to the first question referred must be that the term ‘capital value … of pension rights’ in Article 11(2) of Annex VIII of the Staff Regulations relates to the value of the pension rights, as calculated according to an actuarial procedure without the mode of calculation’s being fixed. The methods of calculation previously used hitherto continue to be permissible for determining the capital value of pension rights.

C – Second question referred

47.The second question referred concerns the conformity of the method provided for, and used in, national law for calculating the capital value of pension rights to be paid to the Union with Article 11(2) of Annex VIII of the Staff Regulations and Article 4(3) TEU; the referring court draws particular attention to the fact that using that method of calculation in this specific case results in a capital value that does not amount even to half the insurance contributions paid. The question may become more controversial because, according to the information provided by the parties, Czech law provides for transfer of the capital value of pension rights only for insured persons entering the service of the Union and the corresponding provisions were created precisely for such persons. This provision was therefore adopted for this particular situation, which has consequences, especially for the analysis of the principle of equal treatment.

48.The question arises, as is clear from the facts of the case, against the background of the Czech pension scheme, whose essential characteristics I wish to set out in highly simplified form. The scheme in question is essentially based on contributions, which have been paid by employers and employees since 1993. The amount of the pensions to be paid when the conditions for payment are met is, according to the referring court, laid down by law (‘defined-benefit scheme’) (26) and is calculated according to a formula which takes into account not only the total insurance period but also the level of income, although highly degressively as regards the latter. That is to say that although a higher income leads to a higher pension, amounts over and above certain income limits are taken into account on a reduced basis only. A notable feature of the scheme is, therefore, its high degree of solidarity.

49.When an insured person enters into the insurance system of the Union, the actuarial equivalent of the pension rights is transferred. (27) Under the calculation method provided for, that value applicable to the pension rights of Mr Časta came in the end to less than 50% of the contributions made by him and his employer.

50.According to Mr Časta, this method of calculation infringes Article 11(2) of Annex VIII of the Staff Regulations and Articles 4(3) TEU and 45 TEU. In the proceedings before the referring court, he argued that the capital value had to approach or exceed the total sum of the contributions paid. In his view, as a result of the national provisions at issue, Union officials from the Czech Republic were at a disadvantage as compared to Union officials from other Member States. He claims that the method of calculation is incomprehensible, employs parameters (such as the interest rate used) which depart from those used to calculate national retirement pensions and employs a value for life expectancy which does not accord with Eurostat data.

51.The Czech Republic takes the view, as, by implication, does the defendant in the main proceedings, that the calculation method is legitimate. It is consistent with Article 4(3) TEU, for Czech EU officials on the transfer of their pension rights suffer no loss in value, in relation to persons remaining in the Czech pension system. The Czech pension system is notable for its high level of solidarity, which inevitably means that for high insurance contributions relatively lower retirement pensions are obtained.

52.In the Commission’s view, neither Article 11(2) of Annex VIII to the Staff Regulations nor Article 4(3) TEU prescribes the specific content of the measures to be adopted by the Member States for the transfer of the capital value of pension rights. The obligation of the Member States was limited in that regard to making provision for a mechanism for the transfer of the capital value.

53.In regard to the drawing up of measures that they must adopt in order on the basis of the foregoing to implement Article 11(2) of Annex VIII to the Staff Regulations, the Member States enjoy considerable latitude, but not unfettered discretion. Specifically they must observe two fundamental principles. On the one hand, the implementing measures adopted must give actual effect to the requirements of Article 11(2) of Annex VIII to the Staff Regulations and so observe the abovementioned (28) fundamental principle. On the other, they must observe the principle of equal treatment.

54.In accordance with the requirement of effective implementation of the provisions of Article 11(2) of Annex VIII to the Staff Regulations, the situation of the official may not suffer by reason of entry into the service of the Union. The Member States must therefore ensure that the entire, correct actuarial capital value of the pension rights that the official has acquired from employment in the Member State is transferred, using as the basis the date of the actual transfer.

55.If the capital value, as in the case of the Czech pension system, is calculated as an actuarial equivalent, for the purpose of that calculation actuarially and statistically acceptable interest rates, mortality tables and formulae must be used. In addition, the parameters used must in particular observe the principle of non-discrimination. (29)

56.The use of parameters which, as criticised by Mr Časta, differ from those used for calculating pensions in the Member State is permissible, in so far as this is due to the fact that the calculation of the actuarial equivalent entails an arithmetical operation different from that used for calculating pension rights. Nor are Member States obliged to have recourse to Eurostat statistics, as long as they draw on other reliable sources.

Further requirements for the structuring of the measures adopted by the Member States in the context of Article 11(2) of Annex VIII to the Staff Regulations are provided by the principle of equal treatment.

Mr Časta can, however, rely (30) neither on discrimination against officials of the Union from other Member States owing to the use of a different method for calculating capital value, nor on discrimination against persons insured under the Czech system who join the pension scheme of another Member State and benefit from coordinating EU policies. (31) In both cases the differentiation is based on the competence of the Member States to organise their pension schemes.

However, it would not be lawful for the national law of a Member State to offer, in the case of a transfer of pension rights between two State schemes, calculation methods from which those members of the national scheme who enter the service of the Union may not benefit. The Court has previously determined that in this situation the same calculation option must be available for the transfer of the rights of Union officials. (32) Nor may a Member State deny officials of the Union a method of calculating the capital value of pension rights that it makes available to members of its old-age insurance system who transfer to an international organisation.

It is for the national court to establish whether national law is consistent with the requirements laid down.

Finally, the comparison made by the national court of the calculated capital value with the contributions paid has to be considered. Such a comparison is meaningless if, as under the Czech pension scheme, the insurance contributions have no influence on the amount of the pension, while the capital value is calculated according to the actuarial value of that pension.

In such a case, it is possible that the calculation of capital value, especially in pension schemes based on solidarity, can sometimes result, in the case of persons with higher incomes, in a capital value that is distinctly less than the contributions paid into the pension system. In such systems, those with high incomes fund by their contributions the pension claims of those with low incomes.

I have pointed out above that defining the fundamental principles of national social security systems forms part of the competence of the Member States. It follows, therefore, that a Member State’s basing its pension scheme on solidarity is not contrary to Union law. Structuring pension schemes on a basis of solidarity constitutes a legal and historic achievement of the modern welfare state that benefits the population as a whole. (33) The Union, as expressly stated in Article 34(1) of the Charter of Fundamental Rights of the European Union, which cannot be overlooked in interpreting the provision at issue, ‘recognises and respects entitlement to social security benefits …, providing protection … in old age … in accordance with Union Law and national laws and practices’.

Regarding the second question, I therefore propose that, on a proper construction of Article 11(2) of Annex VIII to the Staff Regulations, in conjunction with Article 4(3) TEU, the entry into the service of the Union of a person having been employed in a Member State may not lead to a worsening of his social security situation with regard to pension rights. The method used by the Member State to calculate the capital value of the pension rights in the event of a transfer thereof must, in particular, use reasonable parameters, be effected in an actuarially correct manner, and observe the principle of equal treatment. It is for the national court to review these requirements. For the reasons given above, capital value calculated on an actuarial equivalent on accordance with those requirements and falling well below the amount of the contributions paid, is not unlawful as a matter of principle.

The national court appears to me also to ask the question concerning a minimum value with regard to the relation between capital value and contributions, attaching significance to the symbolic percentage of 50%. In light of the foregoing considerations, there is plainly no sense in fixing in that way a precise minimum percentage below which EU law would automatically be infringed. Furthermore, the ratio between capital value and contributions in the present case roughly coinciding with the proposed symbolic value, in my opinion the answer to the second question given in the previous paragraph is sufficient.

D – Third question

By its third question, the national court wishes to know whether the judgment of the Court in My is to be construed to the effect that a Member State, in calculating the capital value of the pension rights of an official entering the service of the Union using the actuarial method and having regard to the period of insurance, must also include in the personal basis of assessment the period during which the official was already a member of the insurance system of the Union but had not yet applied for a transfer of his pension rights. The background to the question, according to information provided by the participants to the proceedings, is that the transfer of capital value for officials entering the service of the Union is the only situation in which a member of the Czech pension system who has not yet completed the minimum insurance period (34) receives a payment from the Czech pension system.

The Czech Republic considers that the judgment in My, which is based on an entirely different set of facts, does not give rise to any obligation to take that period into account. Rather, under the wording of Article 11(2) of Annex VIII to the Staff Regulations, it is only the duration of membership of the national pension scheme that is to be considered for the calculation of the capital value. Taking into consideration the period between entry into the Union’s pension scheme and the application for transfer of pension rights in the calculating by the Member State of the capital value of those rights would lead to that period’s being taken into account twice in calculating the pension. The defendant in the main proceedings and the Commission share this view.

The Member States, in the calculating of the capital value of pension rights, are not obliged to include, in the personal basis of assessment, the period during which an official was already a member of the Union’s pension scheme, but had not yet applied for a transfer of pension rights.

No such obligation for the Member States may be inferred from My, which, as stated above, does not deal (35) with the case of an EU official who arranges for his pension rights to be transferred to the EU, or from the terms of Article 11(2) of Annex VIII to the Staff Regulations, which refers to pension rights ‘acquired [by the official] by virtue of such service or activities’, that is to say, under the national pension scheme, or from Regulation No 883/2004, which in accordance with Article 2(1) thereof is not applicable to officials of Union institutions. (36) The loss of rights under the Czech scheme that Mr Časta claims to have sustained on transferring his pension rights is due to the change in the pension scheme of which he is a member.

V – Conclusion

I propose that the Court should answer the questions referred to it as follows:

(1) The term ‘capital value … of pension rights’ appearing in Article 11(2) of Annex VIII of the Staff Regulations relates to the value of the pension rights, as calculated according to an actuarial procedure, without the mode of calculation’s being fixed. The methods of calculation previously used continue to be permissible for determining the capital value of pension rights.

(2) On a proper construction of Article 11(2) of Annex VIII to the Staff Regulations, in conjunction with Article 4(3) TEU, the entry into the service of the Union of a person having been employed in a Member State may not lead to a worsening of his social security situation with regard to pension rights. The method used by the Member State to calculate the capital value of the pension rights in the event of a transfer thereof must, in particular, be effected in an actuarially correct manner, use reasonable parameters and observe the principle of equal treatment. It is for the national court to review these requirements. Capital value calculated on an actuarial equivalent in accordance with those requirements and falling well below the total amount of the contributions paid is not, as a matter of principle, unlawful.

(3) A Member State, in calculating the capital value of pension rights using the actuarial equivalent method, is not obliged to include in the personal basis of assessment the period during which an official was already a member of the Union’s pension scheme, but had not yet applied for the transfer of pension rights.

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(1) Original language: German.

(2) Council Regulation (EC, Euratom) No 723/2004 of 22 March 2004 amending the Staff Regulations of officials of the European Communities and the Conditions of Employment of other servants of the European Communities (OJ 2004 L 124, p 1).

(3) Inserted by Regulation (EEC, Euratom, ECSC) No 259/68 of the Council of 29 February 1968 laying down the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Communities and instituting special measures temporarily applicable to officials of the Commission (OJ L 56, p. 1).

(4) Article 2 of Regulation No 723/2004.

(5) The value is updated on the basis of the index of average pay development to the point in time of calculation.

(6) Mr Časta calculates his insured period as 17 years and 259 days. The difference may be explained by the fact that the referring court might not have included periods of insurance in respect of which no contributions were made in its calculation.

(7) The amount was calculated by the referring court. Mr Časta had cited the figure CZK 1124633,40 before the court.

(8) Case C-293/03 My [2004] ECR I-12013.

(9) Case C-37/89 Weiser [1990] ECR I-2395, paragraph 12.

(10) Cases 137/80 Commission v Belgium [1981] ECR 2393, paragraphs 9 and 18; 72/85 Commission v Netherlands [1986] ECR 1219, paragraph 16; 130/87 Retter [1989] ECR 865, paragraph 22; C-52/96 Commission v Spain [1997] ECR I-4637, paragraph 9.

(11) Article 11(2) of the Staff Regulations. Case T-67/02 Radauer v Council [2004] ECR I-A-89 and II-395, paragraphs 29 and 30.

(12) Joined Cases 75/88, 146/88 and 147/88 Bonazzi-Bertottilli and Others [1989] ECR 3599, paragraph 17.

(13) Commission v Belgium, cited in footnote 10, paragraph 11, My, cited in footnote 8, paragraph 44.

(14) My, cited in footnote 8, and Case C-441/93 Pafitis and Others v TKE and Others [1996] ECR I-1347, at paragraphs 45 to 49.

(15) Opinion of Advocate General Tizzano in the My case, cited in footnote 8, point 95.

(16) Order of 9 July 2010 in Joined Cases C-286/09 and C-287/09 Ricci [2010] ECR I-93, at paragraphs 30 to 33.

(17) Case 212/81 Bodson [1982] ECR 1019, paragraphs 7 and 8.

(18) Cases 315/85 Commission v Luxembourg [1987] ECR 5391, paragraph 22 and 64/85 Watgen [1988] ECR 2435, paragraph 9.

(19) Commission v Belgium, cited in footnote 10, paragraph 12.

(20) COM(2002) 213 final, p. 5.

(21) Commission v Luxembourg, cited in footnote 18, paragraph 21

(22) Opinion of Mr Bot in Case C-343/08 Commission v Czech Republic [2010] ECR I-275, point 53; Case C-340/94 de Jaeck [1997] ECR I-461, paragraph 18.

(23) Article 48 TFEU.

(24) The Commission referred to over 300 variants at the hearing.

(25) See OECD, Pensions at a Glance, 2005; updated in OECD, Pensions at a Glance, 2011. On the amendments of the systems see the Commission White paper ‘An Agenda for adequate, safe and sustainable pensions’, COM(2012) 55 final of 16 February 2012.

(26) Mr Časta takes the view that the contributions but not the pensions are fixed. The Court of Justice must take the characterisation set out by the referring court as decisive.

(27) For details of the legal rules, reference is made in particular to points 11 and 12 of this Opinion.

(28) Point 26 of this Opinion.

(29) Cf. In regard to the duties of the Community legislature, see Case C-227/04 P Lindorfer v Council [2007] ECR I-6767, paragraphs 52, 58 and 59.

The total refusal by a Member State to facilitate the transfer of pension rights gives rise none the less to discrimination (Commission v Belgium, cited at footnote 10, paragraph 19).

(31) Council Regulation (EEC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community (OJ. L 149, p 2), now Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems (OJ. L 166, p 1). The latter applies in accordance with Article 91 since 1 May 2010. See Schreiber, F., Art. 91, in: Schreiber F. and Others, Regulation (EC) No 883/2004, CH Beck, Munich, 2012.

(32) Judgments in Commission v Luxembourg (cited in footnote 18, paragraph 24), and Watgen (cited in footnote 18, paragraph 10).

(33) Ritter, G., Der Sozialstaat, Entstehung und Entwicklung im internationalen Vergleich, Oldenbourg, München, 3. Roland/L. Ed. 2010.

(34) This is also the situation in which Mr Časta finds himself. According to his written pleadings, the minimum insurance period is 25 years but, according to his oral submissions, it is 35 years. The difference may be accounted for by the fact that in the Czech Republic the 25 year minimum insurance period originally provided for has been progressively raised since 2010 to 35 years: OECD, Pensions at a Glance, 2011, p. 212.

(35) Points 27 and 28 of this Opinion.

(36) Regarding Article 2(1) of Regulation No 1408/71, see Case C-411/98 Ferlini [2000] ECR I-8081, paragraph 41, and My, cited at footnote 8, paragraph 35.