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Slovenian Government supports the proposal of the National Assembly that the Constitutional Court decides on the possible unconstitutionality of the non-implementation of the new Pension and Disability Act

At today's correspondence session, the Government of the Republic of Slovenia formed its position on a proposal from the National Assembly that the Constitutional Court decide on whether a deferral of the implementation of the Pension and Disability Insurance Act (ZPIZ-2) or its rejection at a referendum could result in unconstitutional consequences, and referred it to the National Assembly. The Government supports the proposal of the group of deputies, with  Dušan Kumer as first signatory, that the National Assembly requests that the Constitutional Court decide on whether a deferral of the implementation of ZPIZ-2 or its rejection at a referendum could result in unconstitutional consequences.


The Government bases its opinion on the fact that in the case of the non-implementation of ZPIZ-2, the current Pension and Disability Insurance Act (ZPIZ-1) - which has twice been deemed unconstitutional with regard to the self-employed and the handicapped by the Constitutional Court – will apply. The deadline for the implementation of both decisions has passed, so the non-implementation of ZPIZ-2 continues the non-constitutional situation, possibly for years. The non-constitutional situation cannot be eliminated with minor changes to the relevant legislation, and ZPIZ-2 comprehensively regulates the equality of insured persons and their rights.


The Government also believes that continuing in the existing situation doubtlessly infringes on the right to social security and the right to a pension pursuant to Article 50 of the Constitution. Critical changes in the economic and social circumstances in the country can affect changes in the conditions for acquiring a pension and the assessment of pensions, where the state must bear the responsibility for the operation of compulsory pension and disability insurance.


The Government also maintains that the principle of legal certainty would be breached if, due to a deferral of the implementation of ZPIZ-2 or its rejection at a referendum, it did not regulate longer periods of transition, as was established by the Constitutional its decision No. U-I-150/94 of 15 June 1995 (Official Gazette of the Republic of Slovenia, No. 65/95). Considering demographic trends and financial effects of the current system, the pension system reform (all the effects of which would lead to raising the pension age by three years) must be completed by 2021 at the latest, which means in the following ten years of transition. The provisions of ZPIZ-2 stipulating the gradual changes of parameters of the pension system take into account the demands of the Constitutional Court and define periods of transition which are long enough to protect the “expected rights” of individual insured persons. 


In view of the above the Government explains that extending the activity by three years until 2021 does not mean non-equal treatment of insured persons, but equally distributes the burden so that, which is clear from the calculations provided by the Faculty of Economics which show that with an active period extended by three years, both men and women will be able to enjoy pensions for about the same period (a man in 2009 of 58 years of age, and a man in 2021 of 61 years of age will receive lifelong pensions for about 21 years; while women aged 58 in 2009 or 61 in 2026 will receive pensions for about 25 years).


The Government believes that when assessing how to achieve the sustainability of the pension system, fiscal restrictions under the Treaty on the European Union must be considered. EU member states are bound not only by their own view of fiscal sustainability, but also by criteria set at EU level (the Maastricht convergence criteria), which sets the maximum level of government debt at 60 per cent of GDP. Slovenia is not as indebted as some other EU countries; however, this does not mean that changes in the pension system are not urgent. Considering estimated government expenditure on pension insurance, long-term forecasts for Slovenia are negative to such an extent that changes are urgently needed or debt will rapidly increase. It will no longer be possible to finance increased expenditure on pensions by increasing government deficit and debt. Without reform, Slovenia will not be able to fulfil its obligations to future pensioners due to negative demographic trends. This means that the commitment arising from Article 2 of the Constitution which stipulates that Slovenia is a social country will not be met, nor will Slovenia meet the Maastricht criteria.


The Government states that the state must ensure that expenditure on pensions does not rise disproportionately, as the funds to finance these rights should be provided from other sources. Because the budget provides funds for several categories of expenditure enshrined in the Constitution, such as the protection of the country, the rule of law or legal protection through relevant institutions (the judiciary), the work of local self-government, the social security system in its widest sense (social insurance, health insurance, unemployment insurance, social transfers, etc.), it should be ensured that increases in expenditure do not affect the provision of other rights enshrined in the constitutions.


Slovenia is bound by the Constitution to ensure the functioning of all social security systems, and is a social state. In view of unfavourable demographic trends, it can be established that pension and disability insurance will bear the greatest burden of all social insurance in the future. The pension system works on the principle of intergenerational solidarity, which means that the burden must be equally distributed. If the current legislation continues to be enforced, the generation which will soon retire will be privileged, as it will not bear the cost of longevity. This will disproportionately burden the younger generation, which will have to provide more funds for the payment of pensions and its continuation. Such a situation is not sustainable; therefore, the Government believes that an unconstitutional situation could also arise from the fact that the provision of rights under the current legislation will not be enforceable (ZPIZ-1). This is proven by intervention acts which interfered with pensions, i.e. their harmonisation will salaries, in 2010 and 2011, and the failure to enforce the new legislation could prolong or even worsen this situation.


On the basis of what has been stated above, the Government supports the motion of the deputies, with Dušan Kumer as first signatory, for the National Assembly to refer to the Constitutional Court a request to decide on whether a deferral of the implementation of ZPIZ-2, or whether its rejection at a referendum would result in non-constitutional consequences.


On 14 December 2010, the National Assembly adopted the Pension and Disability Act (EPA 1300-V). The National Council of the Republic of Slovenia requested that the National Assembly decide again on the act before it is promulgated. The National Assembly adopted ZPIZ-2 when reviewing it on 23 December 2010.


On Friday 31 December 2010, the Association of Free Trade Unions of Slovenia made an appeal to the voters to request a referendum on ZPIZ-2. The President of the National Assembly decided that the collection of voters’ signatures begin from Thursday, 6 January 2011, which means that the 35-day period ends on Wednesday, 9 February 2011.