Lt

On state social insurance pensions

Case No. 5/96

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of Article 5 of the Republic of Lithuania’s Law on State Social Insurance, Item 1 of Paragraph 2 of Article 8 of the Republic of Lithuania’s Law on State Social Insurance Pensions, and Item 1 of the Resolution of the Government of the Republic of Lithuania (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 with the Constitution of the Republic of Lithuania

 

12 March 1997, Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Kęstutis Lapinskas, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Pranas Vytautas Rasimavičius, Teodora Staugaitienė, and Juozas Žilys

The court reporter—Daiva Pitrėnaitė

Jadvyga Andriuškevičiūtė, an adviser at the Social Affairs and Labour Committee of the Seimas, acting as the representative of the Seimas

Vytautas Žiūkas, Director of the Department of International Affairs at the Ministry of Social Protection and Labour, Benjaminas Merčaitis, Head of the Labour Relations Division at the Ministry of Social Protection and Labour, and Vincas Kunca, Director of the Board of the State Social Insurance Fund, acting as the representatives of the Government, the party concerned

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, in its public hearing, on 19 February 1997, considered case No. 5/96 subsequent to the petition submitted to the Court by the Šiauliai City Local Court, the petitioner, requesting an investigation into whether Article 5 of the Republic of Lithuania’s Law on State Social Insurance, Item 1 of Paragraph 2 of Article 8 of the Republic of Lithuania’s Law on State Social Insurance Pensions and Item 1 of the Resolution of the Government of the Republic of Lithuania (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 were in compliance with the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

On 15 April 1996, the Šiauliai City Local Court, the petitioner, was investigating a civil case pursuant to the claim of E. Šapienė to the city of the Šiauliai division of the Board of the State Social Insurance Fund, the Board of the State Social Insurance Fund and the stock company “Šiaulių Tauras” regarding a person’s diminished pension period. By its ruling, the court suspended the investigation of the said case and appealed to the Constitutional Court with the petition requesting an investigation whether Article 5 of the Law on State Social Insurance (Official Gazette Valstybės žinios, 1991, No. 17-447), Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions (Official Gazette Valstybės žinios, 1994, No. 59-1153), and Item 1 of the Government Resolution (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 (Official Gazette Valstybės žinios, 1996, No. 10-253), were in compliance with Article 52 of the Constitution.

II

The petitioner grounds his request on the following arguments.

Article 52 of the Constitution stipulates that the State shall guarantee the right of citizens to old age and disability pension, as well as to social assistance in the event of unemployment, sickness, widowhood, loss of breadwinner, and other cases provided by law. The petitioner alleges that, under Article 212 of the Civil Code, the guarantee is an obligation to satisfy the creditor for another person in case the person for whom it is guaranteed does not fulfil his obligation or portion thereof. Therefore, in the opinion of the petitioner, the assessment of the norms of Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions, those of Article 5 of the Law on State Social Insurance, and those of Item 1 of the Government Resolution (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 allows drawing the conclusion that, for a person, who is insured by state social insurance on compulsory basis, the time period for which the employer has not paid insurance contributions may be included or not included into a person’s period to get pension depending on the agreement between the employer and the institution of social insurance, even though the insured person cannot exert any influence over it.

In the opinion of the petitioner, in such a case the provisions of Article 1, Item 1 of Article 4, Articles 29, 30, 32, 38 and 45 become meaningless and the state does not guarantee the citizens their constitutional right to social maintenance. Therefore, the local court requests an investigation into whether Article 5 of the Law on State Social Insurance, Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions, and Item 1 of the Government Resolution (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 are in compliance with Article 52 of the Constitution.

III

In the course of preparation of the case for judicial investigation, on 31 July 1996 an explanation of G. Paviržis, the then Chairman of Health, Social and Labour Affairs Committee of the Seimas, was received wherein it was indicated that the system of social insurance is based on principles of uniformity and obligation. The right to insurance payment occurs upon fulfilling the requirements established by law. Article 5 of the Law on State Social Insurance and Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions establish one of the conditions upon fulfilling which the right to social insurance payment occurs. The period of state social insurance and a person’s period of state social pension insurance are defined as the time period when a person’s state social insurance contributions are being paid by the person himself or are being paid for him. The period of state social insurance is important not only to calculation of pensions but also to those of unemployment, sickness, motherhood benefits, as well as other social insurance payments.

The said explanation indicated that, after the Law on State Social Insurance Pensions come into force, pensions were recalculated establishing the period of state social insurance that a person had had. The aforementioned period is one of the most objective criteria in establishing the contribution of the insured person into the fund of social insurance as the size of the contribution depends upon the size of the remuneration for work of the insured person.

The State Social Insurance Fund budget revenue consists of compulsory state social insurance contributions paid by legal and natural persons, the revenue of the Board of State Social Insurance Fund activities, appropriations from the state budget allocated under the Law on State Budget, and voluntary state social insurance contributions. The main part of the state social insurance budget is formed from compulsory state social insurance contributions. The period of state social insurance is linked with these contributions so that the rights of citizens, which are guaranteed by the Constitution, to old age and disability pension, as well as social assistance in the event of unemployment, sickness and other cases were realised.

It is maintained in the said explanation that the word “to guarantee” is used in Article 52 and other articles of the Constitution in the sense of “to motion, firmly promise, guarantee, assure; to guarantee compensation for people”. This means that the state motions, guarantees and ensures citizens’ rights by regulating their implementation by law and other legal act. The said local court investigates the case because of the size of the granted pension as the size of pension directly depends on the period of social insurance and the size of contributions but the question of realisation of the constitutional right, i.e. the granting of the pension is not under investigation in the aforesaid case. The calculation and payment of insurance contributions are not identical notions. Calculation of insurance contributions is a primary action by which the size of a particular contribution is established and the said size depends on the remuneration for work of the insured person, whereas the payment of insurance contributions means the factual remittance of calculated contributions into the account of the Board of the State Social Insurance Fund. Therefore, the impugned legal acts are in compliance with Article 52 of the Constitution.

It is pointed out in the 25 July 1996 explanation of V. Žiūkas, the then secretary of the Ministry of Social Protection and Labour, that the words “the state shall guarantee” used in Article 52 of the Constitution are understood in the sense that “the state shall vouch for” or “the state shall secure” citizens’ right to receive the guarantees provided for by the Constitution. In the sense of Article 52 of the Constitution the state, by implementing provisions of laws and other legal acts which must be followed by enterprises, institutions, organisations, officials and citizens of the Republic of Lithuania, secures to citizens social guarantees indicated in the said article ensuring that citizens receive these rights, however, the state does not resort to any security or other agreements while doing so. The notions “a person’s period of state social pension insurance” and “the period of state social insurance” are identical in the sense of the granting of a pension.

Insurance payers are responsible for calculation and payment of insurance contributions. Payments of insurance contributions are controlled and sanctions for the violation of their payment procedure are applied by institutions of state social insurance.

The State Social Insurance Fund budget (from which pensions are paid) revenue consists of compulsory state social insurance contributions paid by legal and natural persons, the revenue of the Board of State Social Insurance Fund activities, appropriations from the State Budget, and voluntary state social insurance contributions. Thereby the state ensures citizens’ constitutional right to an old age pension. The main portion of the budget is formed from compulsory state social insurance contributions paid by legal and natural persons (30+1 per cent against employees’ remuneration for work), therefore, the law associates these contributions but never their calculations with the period of state social insurance because otherwise the required sum of money would not be accumulated to pay pensions. Applying the said provisions, the state guarantees citizens’ constitutional right to an old age pension.

It is alleged in the explanation that the laws do not provide that insurance payers shall be exempted from compulsory state social insurance contributions. Legal provisions regulating payment of state social insurance contributions are interpreted on the assumption that all insurance payers pay them constantly to the budget of State Social Insurance Fund. Providing there are violations, respective sanctions are applied to them without exempting them from the payment of required contributions.

The explanation indicates that providing the time period when the insurance payer does not pay state social insurance contributions for the insured person were included into a person’s state social insurance period, the interests of conscientious insurance payers and those of the insured persons for whom these contributions are honestly paid would be violated. Besides, the law does not provide for the implementation of solidarity principle between the payer and the insured. According to the Rules of the List of the Insured on State Social Insurance Basis approved by the Government Resolution (No. 782) “On the Approval of the Rules of the List of the Insured on State Social Insurance Basis” of 5 June 1995, the insured person, once a year, is entitled to acquaint himself with the information which has been accumulated by the employer or which has been transferred to a territorial division of the Board of Social Insurance Fund. Thus, the insured person is granted the right to exert control by himself over the payment of compulsory state social insurance contributions for him into the budget of the State Social Insurance Fund.

It is noted in the explanation that the 17 October 1995 Law “On Amending and Supplementing the Republic of Lithuania’s Law on State Social Insurance” granted the right to the Board of the State Social Insurance Fund to exempt enterprises, institutions, organisations from fine payments for overdue remittance of contribution sums or to postpone exaction of the said fine provided they are not able to pay contributions into the budget of the State Social Insurance Fund for the reasons that are not dependent on their activities. Therefore, by Item 1 of its Resolution (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996, the Government supplemented the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation and established that providing the Board of State Social Insurance Fund postpones exaction of contributions compulsory to the insurance payer, and providing the insurance payer pays all current contributions or clears off existing debts in other manner, the period of accumulation of debts and the period of their payment postponement shall be included into the period of social insurance. If the period of contribution exaction is postponed, and the insurance payer does not pay them, the debt period may be included into the period of social insurance of the insured person when in a particular case of pension granting the insurance payer pays for him a respective sum of compulsory social insurance contributions which have not been paid.

Alongside, regarding the impugned legal norms, the Constitutional Court received the 13 January 1997 explanation of Assoc. Prof. R. Lazutka, Director of the Centre of Social Insurance Training and Research, acting as a specialist.

IV

In the hearing of the Constitutional Court, the representative of the Seimas J. Andriuškevičiūtė agreed in essence with the arguments set forth in the paper of the Chairman of Health, Social and Labour Affairs Committee of the Seimas.

During the court hearing the representatives of the Government V. Žiūkas, B. Merčaitis and V. Kunca agreed in essence with the arguments of the explanation of the Ministry of Social Protection and Labour and alleged that the impugned legal acts were in compliance with Article 52 of the Constitution.

Explanations in the court hearing were presented by a specialist—the associate professor R. Lazutka, Director of the Centre of Social Insurance Training and Research.

The Constitutional Court

holds that:

Article 52 of the Constitution provides that the State shall guarantee the right of citizens to old age and disability pension, as well as to social assistance in the event of unemployment, sickness, widowhood, loss of breadwinner, and other cases provided by law.

These provisions express the social character of the state, while social maintenance, i.e. contribution of the society to maintenance of such its members who are incapable of providing themselves from work or other means or who are not sufficiently provided due to important reasons provided by law, is deemed to have the status of a constitutional value.

This is in line with the contemporary concept of functions of the state, as well as the constitutional tradition of the Lithuanian State of the 20th century, the origins of which is in the 1922 Constitution which provided that the state, pursuant to certain laws, shall protect employees in the event of sickness, old age, accident or unemployment.

Alongside, it should be noted that the provisions of Article 52 of the Constitution guaranteeing citizens’ right to social maintenance, are in line with the principles of social protection consolidated in international legal acts, too.

Measures of social protection express the idea of public solidarity. They help a person to protect himself from possible social hazards. Of course, in a civic society the principle of solidarity does not deny personal responsibility for one’s destiny. This is the most important condition of the expression of a free human being. The recognition of the mutual responsibility of a person and the society is important in ensuring a social harmony, guaranteeing freedom of a person and the possibility of protecting oneself from difficulties which could not be overcome by one person alone. Therefore, the state creates a system of social maintenance which would help to maintain living conditions corresponding to personal dignity, and, in case of need, would render a person necessary social help.

As a rule, social maintenance is rendered in two forms—social insurance and social assistance—for persons who due to the reasons that do not depend on them are incapable of providing themselves with sufficient means for the living.

The sources of social insurance are associated with the recognition of the right of employees to certain payments, as well as to an old age pension. To implement this right social insurance funds are founded which are formed from contributions of employers and employees. As a rule, a certain part of means are allotted to these funds by the state. The contributions of employers and employees are calculated taking account of remuneration for work while the sizes of would-be pensions or benefits are associated with the said contributions. This is an essential characteristic of social insurance. In this it differs from social assistance which is rendered to persons who need it but who are not entitled to get maintenance from a social insurance fund, or who get some means from it but they are insufficient for living. The source of social assistance is budgets of either the state or municipalities.

Upon the restoration of the independent State of Lithuania, it became evident that the inherited system of social guarantees did not correspond the relations of market economy. Devising a social protection corresponding changed economic and social living conditions, a model of social protection was chosen according to which state social insurance acquires the main role.

The principles of the relations of state social maintenance are consolidated by the Law on Principles of State Social Maintenance System passed on 23 October 1990 by which it is established that State Social Maintenance System is the basis of State Social Welfare. The law also provides that along with this system, other public and private systems of social maintenance may exist. It is established by the Law on State Social Insurance adopted on 21 May 1991 that State Social Insurance shall be the system of social economic measures established by the State, which shall provide insured residents of Lithuania, as well as their family members in cases established by law, with finances and services necessary for living if, for reasons established by law, they are unable to subsist on their earned income or other income, or for valid reasons established by law, they have additional expenditures. The relations of state social insurance are also regulated by the Law on State Social Insurance Pensions passed on 18 July 1994.

The following types of state social insurance are established in Lithuania: pension insurance; sickness or motherhood insurance when persons are insured for sickness and maternity (paternity) benefits; insurance for burial benefit; insurance for compensations for transport expenses; insurance against unemployment when persons are insured for unemployment benefits under the Law on the Employment of the Population; insurance against accidents at work and occupational disease, as well as for other payments. The categories of persons who are insured by every type of insurance are established by respective laws regulating the procedure of that type of insurance. Alongside, there exists established procedure of compulsory insurance of persons.

Alongside, the provisions of Article 52 of the Constitution which guarantee citizens the right to social maintenance obligate the state to establish sufficient measures to implement and protect the said right.

1. On the compliance of Article 5 of the Law on State Social Insurance and Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions with the Constitution.

1.1. Article 5 of the Law on State Social Insurance stipulates that “the period of state social insurance shall be the period when a person’s contributions are being paid by the person himself or are being paid for him, as well as any other period which is equalled by law to the period of state social insurance coverage”.

Article 8 of the Law on State Social Insurance Pensions determines the insured person’s period of state social pension insurance which was acquired when the person was working under employment contract or on the basis of membership or service, as well as that which was acquired when the person was self-employed.

Items 1–4 of Paragraph 1 of Article 2 of the Law on State Social Insurance Pensions list the persons who acquire the said period under employment contract, as well as employed in elective institutions on the basis of membership, partnerships, agricultural companies or cooperative organisations and receiving remuneration for work, as well as other indicated persons. A person’s period of state social pension insurance of the aforementioned categories of persons is determined by the norms impugned by the petitioner. Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions stipulates that a person’s period of state social pension insurance is “the period during which these persons pay by themselves state social insurance pension contributions established by law or the contributions are paid for them”.

The petitioner is of the opinion that, provided the impugned norms are followed, the period for which the employer has not paid insurance contributions may be either calculated or not calculated into the period under which pension is received for a person who is insured by compulsory state social insurance. Therefore, the norms of Article 5 of the Law on State Social Insurance and those of Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions violate the rights of these persons when they associate a person’s period of state social pension insurance with the payment of insurance contributions. The petitioner doubts whether these norms are in compliance with Article 52 of the Constitution which provides that the state shall guarantee the right of citizens to old age and disability pension, as well as to social assistance in the event of unemployment, sickness, widowhood, loss of breadwinner, and other cases provided by law.

Investigating the issues pointed out in the petition, the Constitutional Court notes that, when allotting pensions, “the period of state social insurance” established in the Law on State Social Insurance and “a person’s period of state social pension insurance” established in the Law on State Social Insurance Pensions, have in essence an identical meaning, therefore, the compliance of the both impugned norms with the Constitution should be investigated concurrently.

1.2. State social insurance pensions are paid from the budget of the State Social Insurance Fund of the Republic of Lithuania. It is an independent budget which is included neither into the budget of the state nor those of municipalities. Article 30 of the Law on State Social Insurance provides that the State Social Insurance Fund budget revenue consists of compulsory state social insurance contributions paid by legal and natural persons, the revenue of the Board of State Social Insurance Fund activities, appropriations from the state budget allocated under the Law on State Budget, and voluntary state social insurance contributions. The main part of state social insurance budget is formed from compulsory state social insurance contributions.

Insurance payers, i.e. enterprises of all forms of ownership, institutions and organisations, as well as natural persons, that pay remuneration to persons who work under employment contract, as well as employed in elective institutions on the basis of membership or service, are responsible for fair calculation of state social insurance contributions and their duly payments into the budget of the State Social Insurance Fund. The functions of insurance payers are implemented by owners of individual enterprises and other persons equalled to them by an established procedure.

Paragraph 36 of the Law on State Social Insurance provides that state social insurance contributions shall be calculated and paid to the budget of the State Social Insurance Fund by the insurance payer himself. Item 1 of Paragraph 2 of Article 4 of the Law on State Social Insurance mentions persons for whom state social insurance is compulsory. Article 2 of the Law on State Social Insurance Pensions lists persons who are compulsorily insured by state social pension insurance. Paragraph 3 of the said article points out that other persons may be insured by this insurance on a voluntary basis.

The insurance payers—enterprises, institutions, organisations—calculate and deduct social insurance contributions from incomes of the aforesaid insured persons and pay them into the budget of the State Social Insurance Fund. The procedure and dates of their payment are established by the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation. They provide that insurance payers, when calculating the sums of remuneration for work, must calculate compulsory state social insurance contributions and pay them into the budget of the Republic of Lithuania’s State Social Insurance Fund no later than the last working day which falls before the fifteenth day of the following month. The paid remittances are presented for banks for the whole sum of respective period of compulsory state social insurance contributions irrespective of the fact how much funds exist in the account of the insurance payer, while the sums of contributions of the insurance payer and those of the insured are indicated separately.

On associating a person’s period of state social insurance with the aforesaid contributions, the impugned norms attempt to ensure the accumulation of the funds required to pay pensions and benefits.

The problems and difficulties of current period of changes in Lithuanian economy and social life influence the functioning of the social insurance system. Not all enterprises are able to adapt themselves to the new conditions, other business entities are still under formation or undergo reorganisation, not all business plans are carried out. The employers not always get the planned income, therefore, they cannot pay remuneration for the employees and compulsory social insurance contributions. Sometimes the employee is paid his remuneration while social insurance contributions are not paid. Due to these or similar circumstances, in order to ensure the right of persons to social maintenance, a positive performance of all levels of the system of social insurance is necessary. Such a performance should be guaranteed by a clear and functional mechanism of legal regulation.

Insurance payers must constantly pay contributions into the budget of the State Social Insurance Fund. Laws provide for responsibility of legal and natural persons to state social insurance, as well as sanctions for violations of contributions payments. Valid laws do not provide for cases exempting insurance payers from compulsory state social insurance contributions. Conforming to Article 29 of the Law on Enterprise Bankruptcy, regulating the sequence of and procedure for fulfilling creditors’ claims, in case of an enterprise bankruptcy the satisfaction of claims concerning compulsory state social insurance under the Law on State Social Insurance shall be second in sequence, after employees’ claims connected with employment relations and claims of compensation for maiming or other physical injuries as well as for the deprivation of life have been satisfied.

The laws regulating relations of social maintenance establish the system of administration of state social insurance which is commissioned to implement state social insurance. It is comprised of the Board of the State Social Insurance Fund under the Ministry of Social Protection and Labour, the board of directors of the fund and its territorial divisions, as well as other state social insurance institutions and insurers.

Every constituent part of this system has particular rights and duties necessary to ensure the realisation of the rights to social maintenance guaranteed by the Constitution. For instance, Article 44 of the Law on State Social Insurance determines the duty of insurance payers for timely and accurate calculation and payment of contributions into the state social insurance budget. According to Article 43 of the same law, local divisions of the Board of the State Social Insurance Fund shall be established in rural areas and towns, which shall be directly responsible for the collection of state social insurance contributions, timely and accurate pension payment, as well as other provided functions. Article 45 of the said law determines the right of state social insurance institutions to exert control. Institutions authorised to implement state social insurance shall have the right to check the documents on which the contributions and payments administered by them are based. While exercising their duties, officials of the state social insurance institutions shall have the following rights: to receive information and copies of documents from enterprises, institutions, organisations and other persons pertaining to the property and income of a legal or natural person under investigation necessary for exercising their duties; without a prior warning on presenting office certificate to enter the insurance payer’s working premises (including those taken on lease) connected with his activities to inspect working conditions, the number of employees, etc.; to issue instructions to the insurance payer mandatory to be observed on issues concerning state social insurance; to draw up the records of violation of administrative law in such legal cases that are within the competence of the official of state social insurance; to demand from the insurance payer that his book-keeping be put in order; to receive from the insurance payer explanations concerning issues of state social insurance contributions and payments; to draw up acts of established violations concerning calculation of state social insurance contributions, penalties, fines, etc. The heads of enterprises, institutions and organisations, as well as natural persons, who impede the official to exercise this right are brought to responsibility pursuant to the procedure provided for by law. Alongside, the law grants broad rights to the Director and deputy directors of the Board of the State Social Insurance Fund, as well as to the heads and deputy heads of its territorial divisions. They are entitled to exact overdue social insurance contributions and forfeit under non-dispute procedure from accounts of enterprises in commercial banks, to instruct banks to suspend money payments and remittances from accounts of enterprises, to impose administrative penalties, etc. Fine is established for contributions remitted overdue. The law provides that overdue contributions of insurance payers and the insured persons for the State Social Insurance Fund, as well as fine and penalties, shall be exacted under non-dispute procedure but only for the period which is no longer than two foregoing years.

The analysis of these norms allows asserting that a special system is created to implement state social insurance. Civil, administrative and criminal responsibility is provided for violations in the sphere of social insurance relations. Institutions and officials of social insurance are entitled and authorised to collect the funds provided by law. Thus, legal prerequisites are established by law for the system of social insurance institutions so that it could fulfil the duty which has been commissioned to it and ensure the rights guaranteed to citizens in Article 52 of the Constitution.

1.3. A special place in the relations of social insurance is occupied by the ensured working persons. First, with their work they create material preconditions for social insurance. The main portion of the budget of the Social Insurance Fund is comprised of deductions from calculated remuneration for work. On the other hand, the purpose of social insurance is to provide these persons with finances and services necessary for living if, for reasons established by law, they are unable to subsist on their earned income or other income, or for valid reasons established by law, they have additional expenditures. Therefore, the social insurance system established by legal norms is meaningful only in such a case when it ensures the constitutional right to social maintenance of the aforesaid persons.

The impugned legal norms are of an imperative character. The insured person with his work creates values, as well as finances, necessary for social insurance, while the employer must calculate and pay them into the budget of the State Social Insurance Fund. The institutions ensuring insurance must take all measures provided by law that the employer who is an insurance payer fulfil his duty. Any failure to pay state social insurance contributions is a violation of the law. The insured persons should not suffer from performance or non-performance of the employer or other institutions implementing insurance. Otherwise, the law-established mechanism of the implementation of the constitutional right would not correspond to its purpose.

The impugned legal norms regarding the period of state social insurance and a person’s period of state social insurance are applied to persons who insure themselves on voluntary basis, as well as persons who are insured on compulsory basis. It should be noted that in the first case the appearance of voluntary insurance relations is linked with the will of a person. The basis of these legal relations is an agreement upon voluntary insurance. In the second case relations of social insurance occur irrespective of the will of the parties and are obligatory to the employer, social insurance institutions, and the insured person alike. Furthermore, in the first case a person pays social insurance contributions by himself, whereas in the second case it must be done by the employer. These differences exert influence over establishing the period of state social insurance and a person’s period of state social insurance. This must be taken account of when interpreting the impugned legal norms.

It should be noted that the purpose of the designed social insurance system is not only to pay social insurance pensions and benefits but, first of all, to collect all the funds provided by law. This is a function of social insurance implementation but not that of mediation. The law does not provide for the duty for the insured person to exercise control over the insurance payer or to fulfil functions characteristic of a social insurance institution. In legal relations of social insurance a juridical fact of working activity obligates an insurance payer to duly calculate and pay social insurance contributions, while institutions of social insurance are obligated to exert control over the insurance payer, as well as to ensure collection of contributions.

Therefore, the Constitutional Court notes that the question of the period of social insurance regulated by the impugned norms should be investigated not only taking account of reciprocal relations of contributions payments between the insurance payer and state social insurance but also bearing in mind the overall system of state social insurance relations by which social maintenance to people is rendered.

Solving the issue as to how significant insurance contribution payments are for the implementation of the right to social maintenance, one should consider several circumstances. First, one should consider the fact that with his work the working person creates a material basis to implement this right. Therefore, the duty occurs for other participants of social insurance relations—employers, institutions of social insurance—to fulfil all duties established by law. Relations of contribution payments are reciprocal relations between the employer and institutions of social insurance. They constitute only one part of the whole-complex of social insurance relations devoted to ensure the right of the insured person to social insurance pension or benefit. In case the subjects of these legal relations fulfil their duties improperly, the insured person should not suffer.

As it was mentioned, the meanings of the period on the basis of which pensions are granted as established by the Law on State Social Insurance, as well as the Law on State Social Insurance Pensions, are virtually identical. On the other hand, the characteristics of the period established by the Law on State Social Insurance are more general, they are applied to various types of social insurance, while the characteristics of a person’s period of state social insurance are applied only for state social insurance of pensions, i.e., they are special ones. Thus, one should ground himself on special characteristics when deciding questions concerning receiving pensions under social insurance period. Establishing this period, the insurance period is emphasised, i.e. the time period during which persons pay by themselves or the employer pays or must pay contributions for them, but never is the payment of funds calculated by the employer accentuated in such a case.

The Constitutional Court notes that providing this norm were understood otherwise, the persons who are insured on compulsory basis, who acquired this right to such maintenance because of their work would become dependent on particular actions of the employer or those of institutions of social insurance. The imperative legal norms which peremptorily obligate all the subjects of the relations to fulfil the duties prescribed by law would also become meaningless. Therefore, in order to implement the right of a person who is insured on compulsory basis one may not interpret the period of state social insurance and a person’s period of state social pension insurance on the basis of the fact whether the employer or institutions of social insurance fulfilled their duties properly or improperly. If the insured person’s period of state social pension insurance were interpreted so, thereby the essence of the right to social maintenance provided for in Article 52 of the Constitution would be denied.

The Constitutional Court emphasises that granting pensions to persons who are insured on compulsory basis, person’s insurance period is understood as a certain time period during which persons either pay contributions by themselves or they are paid for them, i.e., as the time period during which a person with his work creates values, as well as means of social insurance. Therefore, the length of a person’s period of state social pension insurance may not be associated with the fact whether the employer paid the finances prescribed by law. It is such an interpretation of the period of social insurance and a person’s period of state social insurance which is in conformity with the essence of the system of social insurance relations guaranteed by the Constitution, and which ensures implementation of rights for persons who are insured on compulsory basis in the sphere of social insurance. Only the interpretation of the period of social insurance and the period of state social pension insurance of persons who are insured on compulsory basis in such a way allows drawing the conclusion that the norms of Article 5 of the Law on State Social Insurance and those of Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions are in compliance with Article 52 of the Constitution.

2. On the compliance of Item 1 of the Government Resolution (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 with the Constitution.

By Item 1 of its resolution No. 142 of 26 January 1996, the Government supplemented Paragraph 2 of Item 21 of “The Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation” approved by the Government Resolution (No. 266) “On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation” of 20 February 1995 with the following norms: “Providing the Board of State Social Insurance Fund suspends the time of exaction of debts of compulsory contributions for the insurance payer, while the insurance payer pays all current contributions and fulfils the conditions indicated in the agreement or clears off existing debts in other ways, then the time period of the accumulation of debts and their payment shall be included into the period of social insurance of insured persons. Providing the Board of State Social Insurance Fund does not suspend the time of the exaction of debts, and providing the insurance payer does not pay them, the time period of the accumulation of debts may be included into the period of social insurance of the insured person provided the insurance payer pays for him in a particular case (in the case of pension granting, permanent sickness and death) a corresponding sum of compulsory social insurance contributions which have not been paid.”

The petitioner alleges that under the impugned legal norms and Item 1 of the said government resolution and depending on the agreement between the employer and an institution of social insurance, it is permitted to include or not to include the period during which the employer did not pay insurance contributions. The person himself neither takes part in such a bargain nor can he exert any influence over it. In such a case the state does not ensure for its citizens the right to social maintenance guaranteed by Article 52 of the Constitution.

The Constitutional Court notes that the rule is established in the item of the impugned resolution that, while deciding the question of suspension of the time of exaction of debts of compulsory contributions, the time period of accumulation of debts and their payment is included into the period of social insurance only provided that existing debts have been cleared off. When the Board of State Social Insurance Fund does not suspend the time of debts exaction, and the insurance payer does not pay them, the time period of the accumulation of debts may be included into the aforesaid social insurance period if the insurance payer pays for him in a particular case (in the case of pension granting, permanent sickness and death) a corresponding sum of compulsory social insurance contributions which have not been paid. Thus, the norms of the impugned item of the government resolution associated the right of the insured person to social maintenance with the payment of contributions failing to take into account the fact that such debts may have occurred because of performance or non-performance of the employer or institutions of social insurance.

The Constitutional Court has held in the present ruling that granting pensions to persons who are insured on compulsory basis, a person’s insurance period, under Article 5 of the Law on State Social Insurance and Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions, is understood as a certain time period during which persons either pay contributions by themselves or the employer pays or must pay contributions for them as established by law. Therefore, this time period may not be associated with the fact whether the employer in fact paid the funds established by law. The Government, while defining the length of a person’s period of state social pension insurance by the impugned norms of the resolution, groundlessly associated the said length with factual payment of contributions. Therefore, assessing Item 1 of the impugned government resolution, it should be concluded that it contradicts the norms of Article 5 of the Law on State Social Insurance and those of Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions, as otherwise the rights of citizens guaranteed by Article 52 of the Constitution would be denied.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55, and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

1. To recognise that Article 5 of the Republic of Lithuania’s Law on State Social Insurance and Item 1 of Paragraph 2 of Article 8 of the Republic of Lithuania’s Law on State Social Insurance Pensions are in compliance with the Constitution of the Republic of Lithuania providing the compliance of the norms of these laws is based on the interpretation that a person’s insurance period, under Article 5 of the Law on State Social Insurance and Item 1 of Paragraph 2 of Article 8 of the Law on State Social Insurance Pensions, is understood as a certain time period during which persons either pay contributions by themselves or the employer pays or must pay for them contributions as established by law.

2. To recognise that Item 1 of the Resolution of the Government of the Republic of Lithuania (No. 142) “On a Partial Amendment of the Resolution of the Government of the Republic of Lithuania (No. 266) ‘On Approving the Rules of the Forming of the Budget of the Republic of Lithuania’s State Social Insurance Fund and Its Implementation’ of 20 February 1995” of 26 January 1996 contradicts Article 52 of the Constitution of the Republic of Lithuania, Article 5 of the Republic of Lithuania’s Law on State Social Insurance, and Item 1 of Paragraph 2 of Article 8 of the Republic of Lithuania’s Law on State Social Insurance Pensions.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:

 

Egidijus Jarašiūnas     Kęstutis Lapinskas     Zigmas Levickis

 

Augustinas Normantas      Vladas Pavilonis     Jonas Prapiestis

 

Pranas Vytautas Rasimavičius      Teodora Staugaitienė      Juozas Žilys