Report for the Hearing delivered in Case 151/87

I — Legal background to the dispute

The Netherknds legishtion

In the Netherlands, the Algemene Ouderdomswet (General Law on Old-Age Insurance) provides that any person residing in that country is to be compulsorily insured between the ages of 15 and 65 years, irrespective of whether or not he or she exercises any profession or pursues trade activity. Insured persons in receipt of an income pay contributions. On the other hand, responsibility for the payment of contributions by persons having a low income or no income is assumed by the State, which also covers deficits. The benefits obtained under this system are standardized. An unmarried person, whether a man or a woman, who has attained the age of 65 receives a pension equivalent to 70% of the net minimum wage.

As regards the rights of married persons, before 1 April 1985 á pension equal to 100% of the minimum net wage was awarded to married men. That sum also included his wife's old-age pension. She only became entitled to her own pension (equal to 50% of the net minimum wage) from the age of 65 and after the death of her husband.

From 1 April 1985 the Algemene Ouderdomswet was amended to take into account the principles of equal treatment for men and women laid down in Council Directive 79/7 of 19 December 1978 (Official Journal 1979, L 6, p. 24). The new system provides inter alia that upon reaching the age of 65 any married person, man or woman, becomes entitled to his or her own old-age pension equal to 50% of the gross minimum wage. It also provides that married persons aged 65 whose spouse has not reached that age are to receive a supplement to their pension until such time as the spouse also becomes entitled to his or her own pension.

The Belgian legislation

Under Article 10 (1) of Belgian Royal Decree No. 50 of 24 October 1967 (as amended by the Law of 15 May 1984), entitlement to a retirement pension is based on a fraction of the gross remuneration taken into account, which is:

75% for an employed person whose wife has ceased to be in paid employment, except when authorized by the King, and does not receive a retirement or survivor's pension or a benefit deemed to be equivalent thereto or any of the allowances referred to in Article 25 (the household rate);

60% for other employed persons (the single person's rate).

Pursuant to Article 10 (4), a retirement pension at the household rate is also awarded when:

the spouse of the person entitled gives up the benefits which the spouse receives; or

the spouse of the person entitled receives benefits granted under the social security legislation of a foreign country, provided that the amount of those benefits is deducted from the Belgian pension awarded at the household rate.

The Community rules

Article 12 (2) of Regulation No 1408/71 provides as follows:

II — Facts and procedure

Mr Cornells Bakker, who is a Netherlands national, worked as an employed person both in the Netherlands and in Belgium and obtained an old-age pension in those Member States.

In the Netherlands, by decision of 15 October 1985, the Nederlandse Sociale Verzekeringsbank (Netherlands Social Insurance Bank) awarded Mr Bakker a married man's pension payable from 1 May 1984 under the provisions in force before the Algemene Ouderdomswet was amended on 1 April 1985. However, by another decision dated the same day the Sociale Verzekeringsbank applied the new rules of the Algemene Ouderdomswet to Mr Bakker's pension.

Under the second decision, as from 1 April 1985, Mr Bakker's pension was automatically converted into a married man's pension (equivalent to 50% of the pension which had previously been granted) plus a supplement for his wife. Furthermore, as from 1 September 1985, since his wife had reached the age of 65 years, that supplement was withdrawn and a personal old-age pension was awarded to Mrs Bakker the amount of which was equivalent to that received by her husband.

In Belgium, by decision of 29 March 1985, the Rijksdienst voor Werknemerspensioenen (National Pension Office for Employed Persons) awarded Mr Bakker a retirement pension based on an insurance record in that country of 3/45ths, the amount of which was calculated on the basis of the household rate (75%) referred to in Article 10 (1) of the abovementioned royal decree.

Later, after it had been informed that Mrs Bakker had been granted a Netherlands pension under the Algemene Ouderdomswet, the Rijksdienst voor Werknemerspensioenen reduced the amount of Mr Bakker's retirement pension by decision of 26 March 1986 and applied the rate for a single person (60%) as from 1 September 1985.

Mr Bakker appealed against the decision of 26 March 1986 to the Arbeidsrechtbank (Labour Tribunal), Antwerp, which decided, by judgment of 8 May 1987, to stay the proceedings and to refer the following questions to the Court under Article 177 of the EEC Treaty:

The judgment making the reference was registered at the Court on 14 May 1987.

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written observations were submitted by Mr Bakker, appearing in person, by the Rijksdienst voor Werknemerspensioenen, represented by R. Masyn, General Administrator, by the Belgian Government, represented by P. Mainil, acting as Agent, by the Netherlands Government, represented by E. F. Jacobs, acting as Agent, and by the Commission of the European Communities, represented by J. Griesmar, Legal Adviser, acting as Agent, assisted by F. Herbert, of the Brussels Bar.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.

By decision of 26 November 1987 the Court assigned the case to the First Chamber.

III — Written observations submitted to the Court

In his observations Mr Bakker submitted that the decision of the Belgian Rijksdienst voor Werknemerspensioenen reducing the amount of his retirement pension was not well founded. However, he does not put forward any arguments in support of his position.

The Rijksdienst voor Werknemerspensioenen states first that the existence of two different rates for the calculation of the retirement pension, namely the household rate (75%) and the rate for a single person (60%), is based on the fact that whilst families have the same fixed costs as single persons they must bear higher variable costs than single persons. It also points out that the Belgian legislation at issue, as amended by the Law of 15 May 1984, contains no discrimination on the grounds of sex as regards retirement pensions. Both a man and a woman may apply for a pension to be granted at the household rate.

It further submits that Article 12 (2) of Regulation No 1408/71 is not applicable in this case since that provision only relates to benefits, which may or may not overlap, acquired by the same person.

On the other hand, the first paragraph of Article 10 of Royal Decree No 50 relates not only to benefits awarded to two different persons but, in particular, is not intended to prohibit the overlapping of pensions acquired by husband and wife. Consequently, Article 10 should not be regarded as a rule against overlapping within the meaning of the abovementioned Community provision but rather as a rule for calculation the purpose of which is to guarantee a higher pension in the case of an employed person whose spouse does not receive a pension or other social security benefit.

In view of the negative response to be given to the first question the Rijksdienst voor Werknemerspensioenen considers that it is unnecessary to reply to the other questions which have been asked.

The Belgian Government notes first of all that the rule in Article 10 (1) of Royal Decree No 50 is a rule for calculation which is justified by social reasons and is not a provision for reduction of benefit within the meaning of Article 12 (2) of Regulation No 1408/71.

In any event, Article 12 cannot be applied in cases involving overlapping of benefits awarded to two different persons. Furthermore, even if Article 12 were applicable, Article 10 of the Belgian law, considered as a provision for reduction, would not be incompatible with the Community provision concerned.

The Netherlands Government agrees with the argument that Article 12 (2) of Regulation No 1408/71 relates only to the overlapping of benefits awarded to one and the same person.

However, it considers that it is unacceptable for the amendment of the Netherlands legislation in question to entail a reduction of retirement pensions awarded by the Belgian institution to men whose wives have acquired entitlement to a pension of their own under the Algemene Ouderdomswet. Such a reduction is contrary to Article 48 et seq. of the Treaty since it has the effect of dissuading a married employed person residing in the Netherlands from going to work in Belgium.

The Netherlands Government submits furthermore that Article 10 (1) of Royal Decree No 50 is incompatible with the provisions of Council Directive 79/7 on equal treatment between men and women on the ground that it adopts a criterion for calculating the amount of the benefit which is related to the family situation of the person entitled to benefit.

The Commission considers that the questions submitted by the Arbeitsrechtbank, Antwerp, should be answered in the negative.

It takes the view that Article 12 (2) is not applicable in this case since that provision refers exclusively to situations in which one single person is entitled to several benefits.

In those circumstances, Article 10 (1) of Royal Decree No 50 may not be considered to be a provision for the reduction of benefit within the meaning of the abovementioned provision of Community law. The same conclusion may be drawn implicitly from the judgment of the Court of 2 February 1982 in Case 7/81 (Sinatra v Fonds national de retraite des ouvriers mineurs [1982] ECR 137).

Furthermore, in the Commission's view, the question whether or not the benefits awarded under the Netherlands and Belgian legislation at issue should be considered to be benefits of the same kind for the purposes of Article 12 of Regulation No 1408/71 is entirely irrelevant since the fact that benefits are of the same kind can only be relevant when the benefits are claimed by the same person.

Finally, the Commission points out that since Mr Bakker's retirement pension was awarded wholly by virtue of Belgian legislation, no provision of Community law precludes the application of national rules concerning the conversion of the household pension into a single person's pension. The unfavourable consequences suffered by Mr and Mrs Bakker following that conversion flow not from the application of the Belgian rules but from the Netherlands legislation on old-age insurance as in force before 1 April 1985.

In those circumstances, the Commission suggests that the following reply should be given to the national court:

1 Language of the Case: Dutch.