Solidarity Across Generations: Comparative Law Perspectives [1st ed.] 9783030505462, 9783030505479

Table of contents :
Front Matter ....Pages i-viii
Front Matter ....Pages 1-1
Solidarity Across Generations from the Perspective of Comparative Law: Reconfiguration of Different Types of Solidarity in the Context of an Aging Society (Eri Kasagi)....Pages 3-34
Front Matter ....Pages 35-35
Elements of Generational Solidarity in the German Pension System (Constanze Janda)....Pages 37-57
Beyond the Formal Principle of Intergenerational Sustainability in the Italian Social Security System (Michele Faioli)....Pages 59-73
Les réformes des pensions en Belgique au regard du droit `la sécurité sociale et du principe de standstill prévu `l’article 23 de la Constitution belge (Elisabeth Alofs, Guido Van Limberghen)....Pages 75-95
La Solidarité Entre Générations Au Sein Du Système De Retraite Français (Laure Camaji)....Pages 97-114
Intergenerational Solidarity in the Spanish Social Security System (Juan Antonio Maldonado Molina)....Pages 115-136
Le Principe de la Solidarité entre Génération Appliqué au Régime Brésilien de Sécurité Sociale (Marcelo Leonardo Tavares)....Pages 137-149
Solidarity Across Generations in the Japanese Public Pension System (Masahiko Ohta)....Pages 151-178
Front Matter ....Pages 179-179
Long-Term Elderly Care, Family and Money in Ageing Finland (Katja Karjalainen, Anna Mäki-Petäjä-Leinonen)....Pages 181-199
Solidarity Across Generations in England and Wales (Brian Sloan)....Pages 201-220
The Elderly and Their Families: The Hungarian Context (Orsolya Szeibert)....Pages 221-240
Support, Care and Employment for the Elderly: Examining the Law and Policy in Singapore (Gary Chan Kok Yew)....Pages 241-264
From Tradition to Transformation: How to Provide Long-Term Care to the Elderly People in China? (Tianyu Wang)....Pages 265-278
Solidarity Between Generations in South Africa: Contemporary Challenges and Prospects (Chanda Chungu, Evance Kalula)....Pages 279-303
Back Matter ....Pages 305-309

Citation preview

Ius Comparatum – Global Studies in Comparative Law

Eri Kasagi  Editor

Solidarity Across Generations Comparative Law Perspectives

Ius Comparatum – Global Studies in Comparative Law Volume 49

Series Editors Katharina Boele-Woelki, Bucerius Law School, Hamburg, Germany Diego P. Fernández Arroyo, Institut d’Études Politiques de Paris (Sciences Po), Paris, France Founding Editors Jürgen Basedow, Max Planck Institute for Comparative and International Private Law, Hamburg, Germany George A. Bermann, Columbia University, New York, USA Editorial Board Member Joost Blom, University of British Columbia, Vancouver, Canada Vivian Curran, University of Pittsburgh, Pittsburgh, PA, USA Giuseppe Franco Ferrari, Università Bocconi, Milan, Italy Makane Moïse Mbengue, Université de Genève, Geneva, Switzerland Marilda Rosado de Sá Ribeiro, Universidade do Estado do Rio de Janeiro, Brazil Ulrich Sieber, Max Planck Institute for Foreign and International Criminal Law, Freiburg, Germany Dan Wei, University of Macau, Macau, China

As globalization proceeds, the significance of the comparative approach in legal scholarship increases. The IACL / AIDC with almost 800 members is the major universal organization promoting comparative research in law and organizing congresses with hundreds of participants in all parts of the world. The results of those congresses should be disseminated and be available for legal scholars in a single book series which would make both the Academy and its contribution to comparative law more visible. The series aims to publish the scholarship emerging from the congresses of IACL / AIDC, including: 1. of the General Congresses of Comparative Law, which take place every 4 years (Brisbane 2002; Utrecht 2006, Washington 2010, Vienna 2014, Fukuoka 2018 etc.) and which generate (a) one volume of General Reports edited by the local organizers of the Congress; (b) up to 30 volumes of selected thematic reports dealing with the topics of the single sections of the congress and containing the General Report as well as the National Reports of that section; these volumes would be edited by the General Reporters of the respective sections; 2. the volumes containing selected contributions to the smaller (2-3 days) thematic congresses which take place between the International Congresses (Mexico 2008; Taipei 2012; Montevideo 2016 etc.); these congresses have a general theme such as “Codification” or “The Enforcement of Law” and will be edited by the local organizers of the respective Congress. All publications may contain contributions in English and French, the official languages of the Academy.

More information about this series at http://www.springer.com/series/11943

Académie Internationale de Droit Comparé International Academy of Comparative Law

Eri Kasagi Editor

Solidarity Across Generations Comparative Law Perspectives

Editor Eri Kasagi Center for Comparative Labour and Social Security Law (COMPTRASEC, UMR 5114) University of Bordeaux Bordeaux, France

ISSN 2214-6881 ISSN 2214-689X (electronic) Ius Comparatum – Global Studies in Comparative Law ISBN 978-3-030-50546-2 ISBN 978-3-030-50547-9 (eBook) https://doi.org/10.1007/978-3-030-50547-9 © Springer Nature Switzerland AG 2020 This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG. The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

This book is the outcome of the General Congress of International Academy of Comparative Law, held on July 22–28, 2018, at Kyushu University (Fukuoka, Japan). The congress has tackled numerous important and topical legal questions from a comparative perspective, including that of “solidarity across generations,” a topic that we will discuss in this volume. In the context of aging population, many countries are facing a challenging matter of reconfiguration of different types of solidarity between generations. The comparative and comprehensive analyses of the ways each country tries to answer this question, in combining the solutions of civil, social, and public laws, give us some clues to deal with this complex issue. This volume includes 13 chapters, based on a general report as well as individual national reports, which were prepared for the abovementioned congress and subsequently updated in 2019. Spanish chapter was submitted afterwards, for publication. Following the general report (first part), the contributions in the second part principally look at solidarity through different pension systems. The third part is composed of the contributions on different types of solidarity, facing the needs of elderly people, particularly that of long-term care. The questionnaire prepared for national reports is included at the end of this book. It has been a great pleasure and honor for me to work with so many experts in different fields of law, in treating very exciting questions concerning solidarity across generations. As this topic is relatively new and not related directly to classical legal questions, we started our collective work in trying to identify and define legal questions that this topic might cover. This difficult but extremely stimulating work would not have been possible without the continuous collaboration with all the national reporters for almost 2 years from the end of 2017. I would like to express my sincere and profound gratitude to all the colleagues who have participated in the congress as well as in this volume, with whom I strongly hope to have other occasions to work together in the future. I would like to convey my special thanks to Prof. Katharina Boele-Woelki, Prof. Diego P. Fernández Arroyo, the President and Secretary-General of the International Academy of Comparative Law, for their kind support and encouragements, and also, v

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for having accepted to include this volume in the honorable Ius Comparatum series. Many thanks to Alexandre Senegacniki for his kind help and advices for the organization of our panel at the congress, as well as for this publication. I also would like to express my gratitude to my former colleagues of Kyushu University, Prof. Toshiyuki Kono as well as Prof. Mariko Igimi, for their kind support and advices for this work. Last but not least, I would like to express my sincere gratitude to Abdus Salam Mazumder, Anitha Chellamuthu as well as Anja Trautmann at Springer for their warm encouragement in realizing this book. Bordeaux, France

Eri Kasagi

Contents

Part I

General Report

Solidarity Across Generations from the Perspective of Comparative Law: Reconfiguration of Different Types of Solidarity in the Context of an Aging Society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Eri Kasagi Part II

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Solidarity Through Pension Systems

Elements of Generational Solidarity in the German Pension System . . . . Constanze Janda Beyond the Formal Principle of Intergenerational Sustainability in the Italian Social Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michele Faioli Les réformes des pensions en Belgique au regard du droit à la sécurité sociale et du principe de standstill prévu à l’article 23 de la Constitution belge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elisabeth Alofs and Guido Van Limberghen La Solidarité Entre Générations Au Sein Du Système De Retraite Français . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Laure Camaji

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75

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Intergenerational Solidarity in the Spanish Social Security System . . . . . 115 Juan Antonio Maldonado Molina Le Principe de la Solidarité entre Génération Appliqué au Régime Brésilien de Sécurité Sociale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 Marcelo Leonardo Tavares Solidarity Across Generations in the Japanese Public Pension System . . . . 151 Masahiko Ohta vii

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Part III

Contents

Different Types of Solidarity Facing the Needs of Elderly People

Long-Term Elderly Care, Family and Money in Ageing Finland . . . . . . 181 Katja Karjalainen and Anna Mäki-Petäjä-Leinonen Solidarity Across Generations in England and Wales . . . . . . . . . . . . . . . 201 Brian Sloan The Elderly and Their Families: The Hungarian Context . . . . . . . . . . . . 221 Orsolya Szeibert Support, Care and Employment for the Elderly: Examining the Law and Policy in Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Gary Chan Kok Yew From Tradition to Transformation: How to Provide Long-Term Care to the Elderly People in China? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 Tianyu Wang Solidarity Between Generations in South Africa: Contemporary Challenges and Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279 Chanda Chungu and Evance Kalula Questionnaire on Solidarity Across Generations . . . . . . . . . . . . . . . . . . . 305

Part I

General Report

Solidarity Across Generations from the Perspective of Comparative Law: Reconfiguration of Different Types of Solidarity in the Context of an Aging Society Eri Kasagi

Abstract This work will examine the issue, which is both universal and topical, of solidarity between generations, focusing on forms of financial and material mutual support within family, as well as collective redistribution, realized by state social security systems. In contemporary demographic, social and economic contexts, we are facing new legal questions, as well as rediscovering and reexamining classic issues, in the field of pension law, family law, social law. Ultimately, through these separate legal questions, the respective roles of State (public) solidarity and family (private) solidarity need to be reconsidered and reconfigured. Comparative and comprehensive analyses of the way that different countries answer these contemporary questions about solidarity between generations in civil, social and public law give us some clues to tackle this complex and challenging issue.

1 Introduction: Issues and Context 1.1

‘Solidarity Across Generations’ from the Perspective of Social and Family Law

This chapter deals with the issue of ‘solidarity across generations’ from a comparative legal perspective, based on the national reports of 16 countries in different

We would like to thank Julie Zambau, research engineer at CNRS and director of documentation centre of COMPTRASEC, as well as Tomoyo Sato, undergraduate student of Sophia University, for their precious help in the realization of this work. E. Kasagi (*) CNRS, Centre for Comparative Labour and Social Security Law (COMPTRASEC UMR5114), University of Bordeaux, Bordeaux, France e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_1

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regions of the world.1 This extremely topical subject2 covers many of the issues and different disciplines of law, in the fields of both public and private law, as well as other fields of social science. Among these various topics, we will study solidarity across different generations in the form of mutual financial and material support or responsibility within families, as well as in the form of collective redistribution carried out by the state. This report will therefore deal primarily with issues concerning state pension systems, family support duties towards elderly people in need, as well as formal and informal long term care of elderly people, from the perspective of social and civil (family) law. As a result, we will not deal with other questions, specifically environmental ones, which could also be discussed in relation to the issue of ‘solidarity across generations’.

1.2

Definitions of “Generation” and Different Types of “Solidarity”

There are two key concepts in the topic of our discussion, which can have various meanings and which therefore need to be clearly defined before we begin discussing specific issues. Firstly, we are, of course, aware that ‘solidarity’ is a polysemous term widely discussed from many perspectives, especially in the field of sociology and, historically, in the French academic and political context.3 In this report, we use a simple and broad definition of ‘solidarity’, already mentioned above: ‘mutual financial and material support or responsibility between individuals as well as in the form of collective redistribution carried out by the state.’ We will not be exploring in detail the concept of solidarity itself. Within this large definition, two types of solidarity

1 (In alphabetical order) Belgium, Brazil, Cameroon (Virginie Yanpelda), China, Czech Republic (Ondřej Horák, Jana Boulaouad), Finland, France, Germany, Greece(Helen Rethymiotaki), Hungary, Italy, Japan, Singapore, South Africa, Spain(Gabriel García Cantero), United Kingdom “England and Wales”. Among the authors of these national reports, 12 authors participate to this book (Above indicated are the names of authors who don’t contribute to this book but had edited national reports for the general congress).To edit this first chapter, we have examined all the national reports of above mentioned 16 countries as well as the chapters which had been updated or newly edited (in the case of Spanish law) after the congress. We will try to distinguish these references in mentioning ‘national report’ when we would like to refer to the reports which had been edited at the occasion of congress, and ‘chapter’ when we would like to refer to the updated or newly edited version for this volume. We try to refer to the latter when it is possible. We have also added several elements by ourselves, in that case in directly indicating their sources. 2 The issues which will be treated in this report are relevant primarily for developed welfare states with an aging population. The issues of environmental law are theoretically important in both developing and developed countries, though the debates on these issues are more or less active in different countries. 3 About Durkheim’s theory of ‘social solidarity,’ see Durkheim (1893). See also Bourgeois (1926), Spiot (2015), Paugam (2011).

Solidarity Across Generations from the Perspective of Comparative Law:. . .

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should be distinguished: private solidarity and public solidarity.4 Private solidarity will be defined as solidarity at work within the family—family solidarity.5 On the whole, private solidarity primarily develops spontaneously, without state intervention. However, it can be made partly mandatory by legal provisions in a form of ‘support duty,’ as we will see later in Sect. 3. Public solidarity will be defined as collective solidarity with state (or local government) intervention, which is organized, and often required by law, for the entire population of the country, as well as a part of the population (workers, persons in need, etc.), sometimes at the regional level. Some scholars use similar concepts, such as ‘social solidarity (solidarité sociale)’6 or ‘collective solidarity (solidarité collective).’7 The typical example of public solidarity is national pension systems, which will be one of our main topics. The other concept which needs to be defined is ‘generation’. Here again we try to define generation in a broad and flexible way as “groups of persons which are distinguished or identified by the year of birth.” The exact definition of generation and how different generations are divided can vary according to context. We also speak of the ‘present generation,’ which includes all existing persons, as opposed to the ‘future generation,’ which concerns those who are not born. The difficulty of the issue of solidarity across generations, as we have defined it, is the fact that the legal questions treated as well as perspectives on this issue in different countries can differ dramatically according to the demographic, economic and political contexts. This is why we will first briefly describe the different contexts in which this issue is dealt with and debated in different countries, and then proceed to focus on issues of social and civil law in the following three sections.

1.3

Different Issues in Different Demographic and Economic Contexts

When considering solidarity across generations, the issues which are actively debated differ largely depending on demographic and economic contexts. Of the 16 countries included in this report, the majority are experiencing a trend of aging and waning populations—although of varying degrees and over different time spans—which present (or could potentially present) issues and conflicts concerning solidarity across generations. In these countries, the burden of supporting the older generation has become increasingly heavy on younger generations, whether in terms of contributions to the states’ redistribution and social benefit schemes, or in terms of care support for the elderly members within a family. Cameroon is almost the only

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Boissard (2014). Without going into too much detail, there is some controversy about the political usage of this concept, particularly in France and the French academic community. See Minonzio (2004), p. 8. 6 Lenoir (2011), p. 169. Vigneau (1999), pp. 51–81. 7 Maisonnasse (2016), Minonzio (2004), pp. 7–19. 5

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country where the demographic situation does not raise this kind of question,8 and, in fact, the issues of younger generations are a priority in public debates and social policies without causing conflicts with the older generations. The economic situation can also greatly affect the issues concerning solidarity between different generations. In almost all 16 countries, we can observe a deterioration of (at least) a part of the population’s financial situation, especially after the world’s financial crisis of 2007, because of economic stagnation. The financial crisis brought about a policy of austerity in many countries, especially in Europe, which led to the reduction of some social benefits, which then further aggravated the situation of these populations. In this context, a growing interest in the role of family as a safety net can be seen in a lot of countries. Family solidarity across generations can be imagined in two directions. Firstly, young adults, who often have more financial difficulties at the beginning of their professional careers, are supported by their parents, who own their place of residence and possibly also have a stable income from pension schemes. Secondly, adult children, when they have a more stable situation, financially support their elderly parents who have few resources and who sometimes need to pay for health care or long term care services (see below).

1.4

Developed Welfare States or Countries with Limited Social Expenditure

The issues concerning solidarity across generations can be very different from one country to another depending on the national Social Security systems they have developed. In other words, these issues are discussed very differently in wellestablished welfare states—which constitute the majority of the countries examined in this report—and in countries with limited social expenditure. The latter category can be divided again into two groups, though this distinction is by no means rigid: developing countries that are currently developing social security systems in the wake of their economic development (China, Cameroon) on the one hand, and countries that clearly promote a liberal ideology by keeping social expenditure and redistribution relatively small (South Africa, Singapore). For developed welfare states, the previously mentioned issue of the heavy burden on the younger generation is especially controversial for social security systems, notably pay-as-you-go pension systems, which require significant contributions or taxes from younger generations. Social security systems set up in these countries often guarantee elderly people a comfortable income, even compared to that of the younger working generation. This fact—a success, in a sense, of the welfare state— could create serious concerns/doubts for the younger generation about the legitimacy and fairness of existing social institutions, especially in a context where this younger

8 The fertility rate in Cameroon is still around 4.63 in 2015, although it has decreased from 6 in 1976. The younger generation (0–24 years old) makes up more than 60% of the nation’s population.

Solidarity Across Generations from the Perspective of Comparative Law:. . .

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generation is not sure they will enjoy the same living standards and economic security when they are older. Furthermore, the classic categorization of elderly people as vulnerable is not necessarily accurate in this context. The inversion of the economic positions of younger and older generations is even more striking when we consider the fact that older people are not always physically vulnerable at retirement age, thanks to the overall improvement of the population’s physical health, as well as significantly less arduous working conditions for the contemporary worker. In countries which favour a liberal ideology, the burden of collective solidarity on the younger generation is marginal, especially as these countries do not have a pay-as-you-go pension system. Therefore, the other issues, as the employment of the elderly population, or the need for long-term care (LTC), which we will discuss in the following paragraph, seem to draw more attentions in these countries.9

1.5

Appearance of a New Problem: Long Term Care (LTC)

Today, almost all those countries with an aging population are facing a new challenge—a growing need for long-term care (henceforth LTC). LTC was, and still is to some extent, invisible because of the presence of informal care, often supplied by female family members. The increasing number of elderly people who are in need of long-term care combined with the increase of female workers has made this problem much more visible and calls for a solution. This newly revealed problem raises the question of its nature: in other words, do we consider LTC a private matter, or a public one? Certain countries consider LTC to be at least partly a public matter, and introduce state or local initiatives to provide care services or financial aid to elderly people in need of LTC. At the same time, the importance of informal and family carers has never disappeared, even in the countries where state intervention exists. Compensation or support for these informal carers therefore remains an important issue in a lot of countries.

1.6

Three Main Topics of Discussion

This is the complex and rapidly changing context in which the issues examined in this report are debated. We will attempt to cover the various issues and the different countries’ contexts by examining three main topics concerning solidarity across generations from the perspective of comparative law. Firstly, we will deal with public solidarity, which is actually achieved by mandatory state pension systems. We will also tackle the question of reconciling the

9

See the chapter about Singapore in this volume.

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interests of the younger and older generations, specifically by analyzing the possibility for the legislative branch to cut existing pension benefits (Sect. 2). Both the second and third topics concern the role of private (family) solidarity and the relationship between private (family) solidarity and public solidarity. Specifically, one will focus on family duties in civil law to support the needs of elderly family members, as well as the relationship between these civil law duties and social welfare schemes (Sect. 3). The third question concerns the respective roles of public and family support for elderly people who need long term care (LTC). This section will examine public intervention for LTC, as well as the legal measures taken to encourage, support and compensate informal care provided by family members (Sect. 4).

2 Solidarity in Pension Systems In contemporary welfare states, social security systems can play a role of redistribution across generations, normally towards vulnerable generations—the elderly and very young (children). This redistribution takes the shape of pensions, health care and various benefits which are allocated to the elderly or to children. Among these systems of intergenerational and public solidarity organized and enforced by the state, pension systems are central to the national social policy of many countries because of their importance to elderly people, as well as for the large part of contributions and public spending they represent. This section will analyze solidarity across generations operating within state pension systems.

2.1

Different Types of Pensions

Pension systems can be divided into several types according to different criteria, such as the category (or categories) of people eligible for the system (all residents of the country, employee, self-employed, public servant, general worker, etc.), rule of affiliation (obligatory or voluntary), level of contributions and benefits (universal or proportional to income), administrator (government, social partners, public or private fund), and so on. In terms of ‘solidarity across generations,’ one criterion is extremely meaningful, much more so than the others listed above. Indeed, pension systems can be divided into two groups according to the financial scheme that these systems use to guarantee the pension benefit: tax-financed pensions or contributive pensions. Contributive pensions can again be divided into two groups. The first is what is called ‘pay-asyou-go’, where pension benefits for the older generation are financed directly by the contributions of the younger, active generation. The second group, pre-funded pensions, sees the individual (and sometimes his employer) contribute to his pension continuously as he works, which he then receives some years later, based on what he

Solidarity Across Generations from the Perspective of Comparative Law:. . .

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himself (or his employer) has provided to his account. Many countries combine these three financial schemes, in order to either separate different levels of pension (e.g., minimum and tax-based pension, basic pay-as-you-go pension, complementary pre-funded pension10), or to provide complementary financing within a same pension system (e.g., introducing tax revenue to a primarily contributive pension system, or providing a certain amount of funding to a primarily pay-as-you-go pension system, etc.). Among these different financial schemes, the pay-as-you-go scheme probably best illustrates the idea of solidarity across generations,11 as it means the working generation makes direct contributions in order to immediately finance the older generation’s pension benefits. At first glance, this so-called intergenerational ‘solidarity’ seems to be a one-way contribution from the younger generation to the older, as the working age population receives nothing from the retired population. There is therefore no mutual help between these two generations. However, this system of contribution legally and technically provides a right to a pension benefit for those who contribute once they reach retirement age. And in reality, the working-age population’s future pension will be financed by the next generation—the future working-age population. The pay-as-you-go pension scheme thus creates a series of virtual mutual contributions between several—at least three—generations, thanks to the contribution of the working age population, as well as a legal and theoretical right to a future pension.12 Inversely, the pre-funded pension scheme excludes the idea of solidarity across generations, as it separates each contributing person’s individual pension account. Therefore, in the countries which use a pre-funded financial scheme exclusively, the pension systems do not foster solidarity across different generations as we define in this contribution.13 The tax financed pension systems, on the other hand, provide a certain level of solidarity across generations, as taxes are usually payed by the working population. However, the level, as well as the actual content, of this solidarity differs greatly according to the types of taxes which are used to finance the pension benefit. For example, the older generation itself contributes to the pension when the benefits are financed by a tax, such as consumer tax. Whereas with income tax, the contribution made by the older generation is obviously much less significant.

10

Within the European Union, this three-layer model is considered somewhat standard, even though there are some exceptions, such as the French pension system. See Del-Sol (2014), p. 627. 11 The French ‘Code de la sécurité sociale’ has been changed recently to declare that the pay-as-yougo pension schemes is at the center of the social pact which unites generations and the goal of this pay-as-you-go system is to create solidarity across generations (Code de la Sécurité Sociale, L. 1122-1). See Camaji in this volume. 12 Kasagi (2020). 13 We can mention Singapore and South Africa as examples of countries that have this kind of pension system. See Chungu and Kalula in this volume about the solidarity which can nevertheless be identified in the pre-funded pension schemes.

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It should also be noted, even though this point will not be examined in this report, that pay-as-you-go pension systems, as well as those financed by tax, very often allow income redistribution between people of a same generation who are contributing to these schemes, in addition to creating solidarity across generations.

2.2

Old Age Pension or Retirement Pension?

Another important criterion in terms of ‘solidarity between generation’ is the relationship between pension and retirement. In most countries,14 one of the conditions of eligibility for pension benefits is to have reached a certain age; we speak of ‘pensionable age.’ Furthermore, some countries require people to retire from work before receiving their pension benefit, while other countries do not. This means we make a distinction in theory between retirement pension (pension for those who are a certain age and have also retired from work) and old age pension (pension for those who are simply a certain age). In the past, these two statuses (retirement and old age) were almost synonymous, as people were generally no longer able to work past a certain age. In today’s society, the meaning of ‘old age’ has changed and to have a certain age does not automatically mean that someone is unable to work, as it is more and more frequent for people to work longer, and the distinction between the two has become relevant. We can analyze this point by asking if it is possible to receive pension benefits as of a certain age, without retiring from work. The answer to this question differs greatly according to the country. In certain countries, it is possible for a worker to receive full pension benefits and continue to work with no time limit.15 In this case, someone can theoretically be both a pensioner and a full time worker, thus

14

Brazil is one of the rare exceptions. See note 17. Italy (reform of 2009), Brazil, Czech Republic, England and Wales, South Africa. In Japan, tax based universal and basic pension benefits have no restrictions on combining pension benefits and work. For the old age employee’s pension insurance, however, there is a certain restriction as we will see later. In the South African pre-funded pension system, it seems somewhat logical that whether a person who can receive pension benefits continues to work or not stays a private matter. 15

Solidarity Across Generations from the Perspective of Comparative Law:. . .

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contributing to the pension system and working at the same time.16 The pension benefit then covers the risk of ‘old age,’17 regardless of the income of the person who receives it. In certain countries, there are restrictions to combining pension benefits and salaries, even after one reaches retirement age. In Japan, when a pensioner works and receives a given amount of money, his pension benefit can be reduced.18 As explained in detail in the Japanese national report, this adjustment of the pension benefit is controversial. On the one hand, this reduction is justified by the fact that, as we have discussed above, people who have a stable and suitable income have no need for pension benefits no matter what their age. On the other hand, this mechanism discourages older people from working, when the goal is to encourage their employment. Furthermore, the idea of reducing benefits for those who have income is similar to that of the means test, in the sense that the benefits are provided only when there is a real need, and a social security (social insurance) system is normally and theoretically meant to avoid this situation, as benefits are based on contributions. Finally, some countries19 do not allow people to work while receiving a pension. In these countries, pension benefits can be considered to be strictly a retirement pensions,20 which thus cover loss of income related to the old age, and not ‘old age’ itself.

16

It should be noted that in this case (and in the case that the pensioner can work and contribute to the pension system under certain restriction, as we will see later) there is the possibility of revising their pension benefits by taking into consideration the contributions made after liquidation must be considered (that is, whether the pension benefit will be increased once the pensioner stops working). In Brazil, according a recent decision of the Supreme Court (in 2016), once pension benefits are liquidated, the worker cannot waive this pension and claim a new, revised pension, which means the amount cannot be revised (increased) even if the pensioner continues to work and contribute to the pension system. The pensioner contributes to the pension system without any personal return by contributing to the pension system as a whole. 17 One exception is the Brazilian system, which allows those who have contributed for a certain period of time (35 years for men and 30 years for women) to receive pension benefits, irrespective of the retiree’s age. The pensioner can continue working after the liquidation of their pension benefits. Pension benefits are therefore neither defined as ‘retirement pension,’ nor exactly as ‘old age pension’ (at least in today’s context), as one can start receiving pension benefits in one’s 40s. See Shimamura (2015). 18 See Ohta in the volume for details. 19 Cameroon, Greece. 20 The Japanese pension system once required ‘retirement from work’ as one of the conditions for eligibility to benefits. See Shimamura (2015).

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2.3.1

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Crisis of the Pension System: How Can Pensioner’s Rights be Protected? How Can the Interests of Different Generations be Reconciled? Context

An aging population affects pension systems very differently, depending on their financial scheme. While pre-funded pension systems are not affected by demographics, pay-as-you-go pension systems need stable demographic growth to maintain financial balance, as well as keep a pre-established pension fund. As previously explained, this scheme is based on the promise of a future pension to the active and contributing generation, and this promise can only be fulfilled by the existence of a future active and contributing generation. These pay-as-you-go pension systems are faced with a difficult challenge in this new society of aging and low birth-rates, for a simple and obvious reason: there will be fewer and fewer people to contribute to the system, while the number those who receive benefits from it will increase rapidly. In countries where pension systems are already well developed and long-established, the problem is even more serious because the burden on the active generation is much heavier. What is more, the economic context of growing unemployment and negative GDP growth, which we already mentioned in the introduction, means diminishing revenues for welfare programs, including the pension systems. In particular, austerity measures implemented in European countries after the financial crisis often targeted spending on pensions, which represents a large proportion of government outlays.21 Furthermore, due to this economic context, political tensions concerning pension systems are growing. As young adults in many countries find it increasingly difficult to enter the job market, the heavy burden of supporting the older generation’s fairly generous pension benefits can cause a feeling of injustice to fester. Not only is their burden heavier than the previous generation’s, but they cannot necessarily expect that they will be any better off when they are old. It is within this demographic, economic and political context that many countries with pay-as-you-go pension systems have tried to, or are trying to, cut pension benefits. Before going into a detailed discussion on this topic, it is worth pointing out that there are several ways of reducing pension benefits: raising the pension age, extending the minimum contribution period, limiting the price or wage indexation of benefits (thus giving rise to the reduction of the real value of benefits), imposing social contributions or taxes on pension benefits, reducing the value of points when the amount of pension benefit is calculated by multiplying the number of acquired 21

The following 2013 OECD report indicates this is a general trend of OECD countries. See the ‘editorial’ of the report “Pension at a glance 2013 OECD and G20 indicators”, http://www.oecd.org/ pensions/pensionsataglance.htm.

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points by the value of a point, etc. While each country chooses one or several options according to different aspects of their pension system (financial or demographic situation, existing conditions of pension benefit, etc.), these different ways of reducing pension benefit may have different effects and consequences beside simply cutting pension spending. Thus, for example, the first and second cited options above effect only the pension benefits of those who have not yet started receiving them. The second option (extension of the minimum contribution period) will increase the population having zero pension benefits and most likely depending on social assistance in their old age. The third option (limiting the automatic indexation of benefits), the fourth (imposing tax or social contribution on pension benefits) and the fifth (reducing the value of points) have the specificity of being able to reduce, in theory, not only future pension benefits, but the pension benefits of those who have already liquidated their pension benefits.

2.3.2

Reducing Benefits in Pay-As-You-Go Pension Systems

What is most interesting here is whether the cuts to pay-as-you-go pension benefits22 are limited. Since all of the above-mentioned changes used to cut pension benefits can be carried out by legislation in almost every country examined in this report, the question is what limitations—legally binding, and therefore effective, or not—to this legislative power exist: supranational regulations, national constitutions, national legislations, political obstacles, etc. In several countries, constitutional rights, or principles written into their constitutions, are considered to limit the lawmaker’s ability to cut pension benefits by legal reform.23 Firstly, in some countries, judges have deemed the entitlement to a future pension equivalent to property right, and therefore protected by constitutional24 or

22 As pension cuts are not a crucial question in pre-funded pension systems, we will discuss pay-asyou-go pension systems only. However, we can quickly think on this question for pre-funded pension systems. In pre-funded pension systems, one acquires pension benefits by contributing and accumulating premiums. The individual pension account being separate, it is logical that pension benefits cannot be easily reduced once they are acquired (In South Africa, as explained in national report, pension benefits are considered to be intangible by legal provisions). 23 This can be partly rephrased as a question of the judges’ ability to control lawmakers’ discretion concerning social rights through constitutional and fundamental rights or principles of constitutional value. This question is treated in the following article, which examines the decisions of some European countries in the context of the financial crisis: Roman (2014). 24 Finland, Germany. In Japan, though there is no judicial decision on this topic, certain legal scholars support the protection of entitlement to pension benefit as a property.

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supra-national norms.25 In Finland,26 for example, this protection is based on the idea that the right to a pension is earned while working, which means that pension benefits are earned income even though they are paid later. They are considered to be a part of a worker’s compensation,27 thus benefit from constitutional protection as a property right.28 Protection as a property right is often related to the fact that the right to a pension is obtained on the basis of contribution. Thus, in Finland, the protection in question is recognized only for the contributive pension scheme and not for the national minimum pension given to those who do not have the right to the contributive pension. In Germany, the importance of contribution in terms of constitutional protection of pension rights is more controversial.29 However, the decision of the Federal Constitutional Court is that a protection of ‘legitimate expectation’30 is necessary and would ensure that individuals receive a pension that is fair in relation to their contribution. We can observe that in those countries which adopted (at least partly) a pay-asyou-go system, contribution and benefits are considered to be strongly related, despite, as mentioned above, this relation remaining more or less abstract in this financial scheme. Concerning the protection of pension rights, the distinction between different stages of pension (during the contribution period, after pensionable age, and after liquidation, etc.) could also affect the possibility and degree of protection,31 although this point was not often discussed in the national reports. It would be interesting to look at this matter in more depth, from a comparative perspective, in relation to the theoretical basis of the protection of pensions rights as a property right. Secondly, some countries have specific social rights written into their constitution, whereby any legislation covering pension cuts can be controlled by judges, thus providing another limitation other than property rights protection. We would like to mention the case of Belgium in particular. The art. 23 of their constitution describes a right to social security benefits.32 While it is accepted that the benefits acquired through this right change according to time, social change and the financial means of

25 See Civ.2è 17 avril 2008, n 07-12144 which refers to the Art 1 of the Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms (the decision considers that the decrease of a point value in complementary pension does not represent an unjustified infringement of this article). 26 According Finish national report. 27 PeVL 9/1999 vp, s. 2/I, PeVL 60/2002 vp, s. 2/I. 28 Section 15 of the Finnish Constitution. 29 See Janda in this volume for details. As the chapter shows, the equal treatment principle can also affect the legitimacy of pension reforms. 30 Though we cannot explore this in detail, the protection of the ‘expectation’ of pension rights might and should be distinguished from the protection of pension rights. The principle of legal security can be discussed in relation to this point, as Camaji in this volume examines in detail. 31 This question is discussed in Camaji and Ota in this volume. 32 Art. 23 of the Belgian Constitution. The article guarantees, first of all, a right to have a standard of life respecting human dignity (para.1), which should be specified by economic, social and cultural

Solidarity Across Generations from the Perspective of Comparative Law:. . .

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the government, this article is interpreted as a ‘standstill’ obligation for lawmakers. A ‘standstill’ obligation means an obligation to keep social benefits at their status quo, especially those which existed at the time this article was implemented (1994). Unlike the previously discussed protection as a property right, the protection provided by the standstill obligation is not related to the contributive nature of the social benefits in question. Standstill obligation does not imply, however, an obligation to preserve social benefits. Small reductions, as well as modifications of practical aspects of benefits, are possible. Also, the reduction of one benefit can be compensated by other measures. In Italy, the constitution has two articles concerning workers’ social rights, which also describes the right to pension benefits.33 According to a recent Constitutional Court ruling,34 the discretionary power of the lawmaker to modify pension income of individuals must meet the constitutional limit of the rationality and proportionality principles, derived from these two articles.35 In a court decision in 2015, a reform which stopped automatic adjustment for those who receive a pension exceeding a certain amount36 was considered to be unconstitutional.37 In other countries, the various descriptions of social rights or, more broadly, welfare state principles in their constitution have been referred to in order to limit the discretionary power of lawmakers. In Greece, the reaction to financial crisis led to an attempt to cut pension benefits in 2012. These cuts were judged to be against primary constitutional rights and principles, such as: the ‘obligation of the State to respect and protect the value of human beings’;38 ‘contribution by citizens without distinction to public charges in proportion to their means’;39 ‘rights of human beings. . . . and the principle of welfare state rule of law. . . .’40 and ‘the duty of citizens to social and national solidarity.’41 particularly because there was no sufficient justification to go through with them. What these countries have in common in terms of constitutional protection for pension benefits is that they do not guarantee the inviolability of pension benefits

rights through laws and administrative rules (para.2), including a right to work, a right to social security, a right to protection of health, a right to decent accommodation, etc. (para.3). 33 Art. 36(1), as well as Art. 38(2). 34 Judgement no. 70 of 2015 on April 30, 2015. 35 Art. 36, para. 1 (Workers have the right to a remuneration commensurate to the quantity and quality of their work and in any case such as to ensure them and their families a free and dignified existence) and Art. 38 para. 2 (Workers have the right to be assured adequate means for their needs and necessities in the case of accidents, illness, disability, old age and involuntary unemployment) of the Italian Constitution. 36 The 2011 reform stopped the automatic adjustment (indexation) of pensions over 14,000 euros per month. 37 About this decision, see Bergonzini (2016), p. 177. 38 Art. 2, paragraph 1 of the Greek Constitution. 39 Art. 4, para. 5 of the Greek Constitution. 40 Art. 25, para. 1 of the Greek Constitution. 41 Art. 25, para. 4 of the Greek Constitution.

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even when they are liquidated, as we have already briefly discussed with the Belgian ‘standstill’ obligation. On the contrary, the general tendency of the judges in almost all the countries that we examined is to allow the lawmakers a great deal of leeway when it comes to legislation on social rights, including pension rights. In these countries (Greece, Belgium,42 Italy,43 Germany, France), the decision to cut pension benefits can be justified by the economy, the national budget, the financial sustainability of the pension system, extraordinary circumstances, etc., as long as the pension cut is proportional to the chosen justification. It is worth mentioning that in France, equity across generations has been brought up as one of the justifications for pension cuts.44 In addition to these substantial justifications, the judges often require procedural and supplementary efforts to justify pension cuts. For example, they can ask for an adequate explanation of justification from the government.45 German courts have also instructed that pension cuts be implemented gradually, over a long period.46 To summarize, two common ideas emerge about the role of judges concerning pension cuts. Firstly, lawmakers have a wide scope for decisions concerning the legal provisions which guarantee social rights. Secondly, the financial stability or sustainability of the pension system is often considered sufficient justification for pension cuts.

2.3.3

The Legislative and Political Limitations of Pension Cuts

In the countries where the constitutional protection of the right to pension benefits has not been recognized (or not yet discussed) by judicial ruling, there are attempts at limiting pension cuts by means of legislative or political promises.47 Japanese law is

42 According to the Belgian Constitutional Council and the Conseil d’État, standstill obligation is violated only when the reduction of benefits is significant. Conseil d’État 23 septembre 2011, nr. 215.309,20, Conseil d’État 6 décembre 2011, nr. 216. 702, nr. 33. See Alofs and Van Limberghen in this volume for the detail. 43 Judgment No. 223 of 2012. According to this decision, the government can adopt exceptional measures in a serious financial crisis to reconcile (1) the need to stabilize the budgetary situation and (2) the need to guarantee services and rights for individuals according to the constitutionally entrenched principles of equality. 44 CE, 26 mars 2010, n 323201. See Chap. 5 of this volume. In Japan, while there is no judicial decision on this point, the government raises the argument of intergenerational justice to justify pension cuts. See page 37 of the Japanese national report. 45 See the Greek and Italian cases cited above. 46 According to the decisions of the German Federal Constitutional Court, this adjustment period can protect the legitimate expectation that we have mentioned above. 47 In England, what is called the ‘triple lock’ principle was a political promise of the coalition government formed in 2010, which ensured that state pensions would increase by the highest of the increase in earnings, the increase in prices (as measured by the Consumer Price Index) and 2.5%. This principle recently provoked a controversy. See Chap. 10 of this volume and Crawford et al. (2016).

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an interesting case. It not only introduces the automatic adjustment of the indexation rate of pensions according to the demographic situation (i.e. substantial reduction of the amount of the pension), but it also sets a limit for this pension cut by fixing the minimum replacement rate (50%48) for the amount of a model pension49 and by requiring the government to take measures to ensure this limit.

2.3.4

Different Perspectives on the Question of Pension Cuts

The question of pension cuts and their limits can be discussed from different perspectives. The judicial decisions that we have examined seem, overall, to have treated this question from a perspective of balancing two important requirements— the protection of individual rights, as well as financial and budgetary sustainability of pension systems. These requirements, individual and collective respectively, are closely tied to each other, in the sense that the financial balance, or, in other words, the sustainability,50 of the pension system is the basis of an individual’s pension right.51 This connection between collective and individual interests of different generations is a unique aspect of solidarity across generations as it is organized by pay-as-you-go pension systems. From this point of view, even if the individual right to pension benefits is protected as a property right, this protection cannot be of the same nature as the traditional individual property right, since the collective interest of sustainability can never be neglected. This dichotomy is particularly interesting in the context of Italy, where an article which calls for a balanced budget has recently been added to their constitution (Art. 81). The recent court decision (No.70 of 2015), discussed above, pointed out that (even though this decision was made before Art. 81 was introduced) lawmakers could adjust pensions in consideration of the available economic resources. The Court emphasized the fact that the economic reasons which could be given as justification had not be adequately clarified.52 Spain also introduced a new article (Art. 135) in its Constitution, in 2011, pronouncing a principle of budgetary stability, the application of which includes the social security administration. This Spanish Constitutional reform was an important contextual factor of the pension system reform which opened the possibility of automatic adjustment of pension level according to demographic development.53 Though it is not clearly discussed in the different decisions that we examined, this also raises the question of the weight of different legislative decisions at different moments in time. Pension cuts decided by lawmakers today can, after all, be

This rate was fixed at 62% in 2014. The total pension of a male worker who has worked for 40 years for the average male worker’s salary. 50 See Janda in this volume about for details on the concept of ‘sustainability’. 51 See particularly Camaji and Ohta in this volume. 52 See Bergonzini (2016). 53 For more details, see Maldonado Molina in this volume. 48 49

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considered to be a withdrawal from promises made by lawmakers in the past54 (which, in a way, can be said of all the changes in legal institutions). The trend of judicial decisions we discussed in this section means, from this point of view, that the judges primarily respect the considerations and decisions of today’s lawmakers, who consider the current financial and demographic situation that require changes to what had been decided by lawmakers in the past. As we have seen, judges often require that the justification for change be thoroughly explained by lawmakers, without examining themselves the changes of the financial and demographic situations, as well as the sustainability of the pension system.

3 Family Solidarity and Public Solidarity55 In these third and fourth sections, we will tackle solidarity across generations within the family, as well as the relationship between this family solidarity and collective solidarity, which is organized and made obligatory by the state through various institutions (what we have called ‘public solidarity’ in this report). Almost all the national reports talk of the importance of inter-generational solidarity, whether in the form of financial and material support or in the form of care within the family, between three different generations—grandparents, adult children and grandchildren. Solidarity across generations within the family can be divided into several types of solidarity, and in the following two sections (3, 4) we will focus on two of these. Firstly, solidarity in the form of financial support towards a person in need, made mandatory often by provisions in civil and family law on support duties between family members. Secondly, solidarity beyond legal duties, notably in the form of ‘care’ for a person in need of LTC. For both of these types of solidarity within the family, we will analyze the relationship between private (family) and public (collective) solidarity. These two types of family solidarity must be clearly distinguished, especially from a legal point of view, because financial support between family members is, as we have mentioned, for a long time and in almost all countries, partly considered to be legal obligation in family law. The ‘care’ within the family, on the other hand, has been until very recently largely invisible, and then often ignored or very marginally taken in consideration by family law. It should also be noted that from a legal point of view, ‘care’ might not be considered suitable to integrate in the framework of legal obligation, which implies compulsory execution under certain circumstances.56

54

Ota (2000), p. 120. For both Sects. 3 and 4, see Sayn (2006). 56 Yamawaki (1997) p. 78. 55

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19

Support Duties Between Adult Members of a Family and Welfare Benefits Different Types of Support Obligations

Among the different legal support duties between family members, the duty of parents to support their minor children holds a privileged position in all countries. The protection of children is a value shared internationally, as is demonstrated by the UN convention on the Rights of the Child.57 The maintenance obligations between spouses also exist in most countries. However, support and maintenance duties between other family members are prescribed (or not prescribed) by family law provisions in ways which vary from one country to another. In this section, we will concentrate on support duties of adult children towards their aged parents in need.58 In many countries, there are laws describing the support duties between family adult members, including those of adult children towards their aged parents.59 However, very often these laws have conditions, such as, first of all, in almost every country where adult family members have an obligation to support other adult family members, the person claiming support (ex. aged parent) must be unable to support himself/herself (need of support). The person from whom the support is claimed (the adult child) must also be able to support the claimant (capacity of support). The nature, as well as the level, of these obligations between adult family members are often clearly differentiated from the obligations of parents towards their minor children, as well as obligations between spouses.60 In addition to the conditions of need and capacity for support, many countries also require a condition of minimum reciprocity of support between family members, to recognize support duties between adult family members. This third condition is usually discussed in the context of support duties of adult children towards aged parents. This means, more specifically, that adult children can deny support when their parents have seriously neglected their own duties towards their minor

57

See Art. 7 of the UN Convention on the Rights of the Child. Even though other relatives can also play a very important role in supporting elderly people who are in need. 59 Germany, Cameroon, Belgium, Spain, Czech Republic, Singapore, Hungary, Brazil, Japan, South Africa, Italy. However, the effectiveness of these obligations should be carefully examined, as adults are often reluctant to ask for the support of their family when this support is not volunteered. See the Belgium report on this point. 60 We can see a typical example in Japan where doctrine and case law clearly distinguish two types of support duties by giving them different names and definitions. Concerning obligations of parents toward minor children, as well as obligations between married persons, the provider must assure the claimant the same standards of living as their own (so called obligation to maintain) without any other condition than family relation. For other types of relations, support duty is less demanding, the provider should help only when the claimant is in need and the provider can afford to do so (so called obligation to help). 58

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children.61 The reciprocity of support is especially emphasized in this child-parent relationship,62 probably, and at least partly, because of the essential nature of support obligations of parents towards minor children. In Belgian law, the loss of parental authority is considered to be the only factor of ‘unworthiness’ of support;63 thus distinguishing the child-parent relationship from other types of family relationships. Among the European countries included in this contribution, Hungarian law, unlike the law in other countries, features in the constitution (Basic Law) an article which prescribes the support duties of adult children towards parents (Art. XVI). Hungarian law is also unique in that it requires absence of fault of the support claimant in general for a person of legal age to claim support from relatives,64 therefore requiring a sort of ‘worthiness’ to claim family support. On the other hand, there are some countries where support duties towards adult family members does not exist.65 In these countries, adult children are never obliged or enforced to support their parents even when they are in need. However, it should be said that in these countries, as we can see in Greece and in Finland in particular, even though the law does not specifically state this obligation of support, financial support from children towards their aged parent is in fact widespread. With today’s trend of aging populations, longevity, and the rapid increase of the cost of nursing homes, support duties towards elderly family members will surely become an important and controversial issue.66

3.1.2

Reinforcing Support Duties in the Context of an Aging Society

An interesting trend has emerged in some Asian countries, which tend to have relatively little social spending. They reinforce the support duties of adult children towards aged parents by promoting traditional family values.

In Hungarian law, the claimant of support should not be ‘unworthy’ of maintenance. When it comes to adult children’s obligations toward parents, if the parent fulfilled his or her obligation to maintain and care for the child and to provide for his or her upbringing, the child cannot allege unworthiness except in the case where there is proof of extreme misconduct of the parent against the child. Section 4: 194 (2) and (3) of the Hungarian Civil Code. In French family law, according art. 207 of the Civil Code, the judge can ‘supprimer ou diminuer (eliminate or reduce)’ support obligations, in cases where the claimant has not fulfilled his own obligations (a typical example of this is a parent who had not cared for his child). Bénabent (2016), p. 498. 62 In German doctrine, support obligations between parents and children are considered to be based on a relationship of reciprocity across different generations. This reciprocity can therefore limit, as well as justify the support obligations. Hilbig-Lugani (2013), p. 763. 63 Cour de Cassation, 6 mai 1987, 5796. 64 Section 4:194 (1) of the Hungarian Civil Code. Belgian law excludes support obligations between adult family members only when the condition of the person in need has been caused deliberately. 65 Finland, England, Greece. 66 See the following report published in France on the initiative of the French Sénat: Étude de législation comparée n 189 - octobre 2008 – L’obligation alimentaire envers les ascendants. 61

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In 1995, after much debate and controversy, a law was passed in Singapore called the ‘Maintenance of Parents Act,’67 which prescribes the maintenance obligations of adult children towards their vulnerable and elderly parents. According to this law, any Singaporean resident of 60 years old or more, and who is unable to support himself/herself adequately, is entitled to claim support from their children, either as a lump-sum payment or as a monthly allowance. This entitlement to support, however, is denied to parents who neglected or abused their children, which condition is justified by the ‘principle of reciprocity of care.’68 This law must be examined separately from the support obligations that we have observed previously in other countries, because it was introduced specifically as a response to the problem of an aging society. Moreover, the context of the law’s creation is further complicated by the fact that Singapore has a meager collective or public mechanism for supporting people in need, including the elderly,69 and civil law has no regulation about support duties between adult family members. This law is sometimes explained as reflecting the Confucian idea of reciprocity in child rearing and caring for aged parents, which is deeply rooted in Singaporean society. However, these ‘Asian family values’, including filial piety and respect for elders, may be weakened in contemporary Singaporean society as they come into conflict with industrialization and Westernization, at least from the lawmaker’s point of view. Actually, this transformation of social norms—or, at any rate, a fear of this transformation—was a significant factor of this legislation.70 Singapore has also recently introduced a ‘proximity housing grant’ to encourage their citizens to live close to their family. This grant is attributed to those who buy a resale flat to live with or close to their parents or children.71 More recently in China, the General Provisions of the Civil Law (implemented October 1, 2017) stipulates for the first time the obligation of adult children to support their aged parents.72 This reform is part of a general tendency in China to reinforce the values of family and family solidarity, also in the context of an aging society, which is also exemplified by another law requiring children to care for their aged parents (‘Law about protection of the interest and the rights of aged persons’). We will discuss this trend in more detail in Sect. 4.

67

See the following website: https://sso.agc.gov.sg/Act/MPA1995. See the Singaporean national report. 69 Except the Public Assistance Scheme. 70 Lee (1995), p. 671. 71 This grant is a part of a comprehensive public housing program, common in Singapore. See for example Phang and Helble (2016), pp. 174–209. 72 Here again, the abandonment of the minor child by the parents by blood breaks the legal relationship of family and therefore exempts the child from the obligation to support the parents. 68

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3.2 3.2.1

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Family Support Duties and Social Minimum Benefit Principle of Subsidiarity and Family Support Duties

Since solidarity between family members provides a guarantee for a basic standard of living for those who are in need, part of public solidarity, typically the state’s social minimum benefit, can play a similar role. Historically, the social minimum benefit was introduced and developed to complement and replace family solidarity, thus relieving, at least partly, the burden of financially supporting family members.73 This is why the question of the relationship and balance between these two support systems—family (private) solidarity and public solidarity—should be examined carefully74 and especially in the contemporary context. More specifically, in those countries where adult family members have a duty to support each other, and where social minimum benefit (social assistance) is based on the subsidiarity principle and accompanied by a means test (which is almost always the case), the question of coordination and adjustment between family solidarity and collective solidarity is raised. We can distinguish different circumstances which could impact this issue. Firstly, the least problematic circumstance is when the person who has support duties fulfills these duties voluntarily. In this case, social minimum benefits are attributed when the applicant is still in need, even with the support of family. The question becomes more complicated when the applicant or recipient of minimum benefits has a family member who can take on support duties, but does not do so voluntarily. In this case, there are two main situations in which applying the principle of subsidiarity can be especially problematic: a priori through the means test, or through the retrospective recovery of social benefit costs. First of all, it is worth asking whether the support of family members should be seen as a potential resource of the person in need, in the context of the means test for social minimum benefits.75 In other words, when someone has a family member who has an obligation to support him, is capable of doing so, but does not actually fulfill this obligation, should the person in need be none the less considered eligible for social minimum benefits, or should he or she first of all resort to his family members’ support? The question truly seeks to clarify how the law about social minimum benefits should position the family members support duties, which are of a civil and family law nature.76 It becomes clear that there are different ways of responding to this question.

73

Minonzio (2004), pp. 7–19. Maisonnasse (2013), p. 747. 75 When the resources of the applicant is appreciated by unit of household and not individually, support duty is actually imposed on all persons in a same household, even those who do not have support duty according to Civil Law. See Sayn (2005), p. 16. We observe a similar situation in Japan. 76 Sayn (2005), p. 11. 74

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In certain countries, the law about minimum social benefits prescribes the principle of subsidiarity regarding support duties between family members,77 thus excluding in theory the attribution of social minimum benefits to those who have family members who can financially support the applicant. However, this principle is not always strictly applied and strict application often occurs only within the same household.78 In Germany, the support duties of family members are generally included in the resources of the person in need. However, in case it is used for a social minimum benefit system specifically designed for elderly people, the means test is slightly more generous compared to tests carried out in other systems. One of the reasons for this relatively generous means testing is to prevent support duties towards their parents from being too burdensome to the adult children. In Japan, the Public Assistance Act excludes the potential possibility of family support from the resources considered in the person’s means test for eligibility for this benefit, while at the same time recognizing that family support comes before public assistance, when the support is actually supplied (see Art. 4, para. 1 and 2 of the Public Assistance act).

3.2.2

Recovery of the Cost of Social Benefits from Family Members

The second solution is the possibility for the social security system (often an agency of the state or local government) to retrospectively recover the cost of social benefits attributed to the person in need from the family members who should have supported them. In some countries, the state or a municipality can turn to the family members who are under the obligation to provide support to recover what they have payed to the recipient.79 This recovery procedure introduces an exceptional feature to family support duties, which are often seen as duties of a private nature and of which, therefore, only the creditor himself can require the fulfillment.80

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Brazil, Germany, Belgium, South Africa, France. See Art. L. 132-6 of the French Code de l’action sociale et des familles. 78 Theoretically speaking, this situation could be independent from support duty and a result instead of the fact that the means test is executed at household level. See note 75. See also Kesteman (2011), pp. 219–226. As for the French personalized allowance for autonomy (allocation personnalisée d’autonomie), the very application of this principle is excluded. See L. 232-24 of the Code de l’action sociale et des familles. However, it should also be noted that the APA does not, in general, impose a strict means test for the attribution of allocation. Therefore, French scholars do not consider the APA as a ‘social minimum benefit’ in its classical form. Martin (2015), pp. 768–776. About the detailed analyses of the treatment of support duties in different social security and welfare schemes, see Sayn (2005). 79 France, Belgium, Japan. In Japan, public assistance administrators must also notify family members who will take on the duty to support public-assistance recipient before they make the decision to start public assistance when there is a strong possibility that the administrators will claim such payment later (Clause 8 of Article 24 of the Public Assistance act and Clause 2 of Article 2 of the Regulation for Enforcement of the Public Assistance Act). 80 Sayn (2005).

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What should also be highlighted here is that the law often allows the authorities some discretion when turning to family members and does not impose any obligation to do so. This means that even in countries where cost recovery is possible, or, even more, considered a principle, it might not often actually be applied. The sensitive and personal nature of support duties, as well as the administrative cost of recovery, which can be more expensive than the social benefits in question, might discourage the authorities from applying this measure. In Japan, for example, while the law authorizes the welfare office to retrospectively recover the cost of social minimum benefits from family member with a duty to support the recipient of the benefit, actual requests are very rarely attempted, and even more rarely carried out through judicial action.81 Moreover, when the local authorities have this discretion, as it is often the case, it can produce a disparity between different districts within a country. A controversy arose decades ago in Belgium concerning this system of recovery claims from family members, because claims were treated differently according to the municipality in which the elderly person was accommodated in a nursing home.82

4 LTC: Formal and Informal Care In this fourth section, we will discuss the role of informal care, provided by family members for elderly people who have lost their autonomy and need long-term care (LTC). While the issue of LTC also concerns family solidarity and its relationship with the state, or public solidarity, the laws on this issue should be dealt with separately from those we looked at in the third section, because ‘care’ was not generally considered a part of traditional support duties prescribed in civil and family law.83 Here, we primarily discuss family solidarity that goes beyond support duties defined by law, and is in reality widespread in our society. Until very recently, and even to this day in some countries, the need for LTC has not been provided by social security systems, even in well-developed welfare states. The provision of LTC is therefore undertaken de facto in many countries by family members or close relatives, very often by adult children (including in-laws), particularly women. As we have already discussed in the introduction, these informal contributions may also be one of the reasons why social security systems have not fully developed in many countries, as they make LTC invisible in modern society. It 81 There are only 551 reported cases of attempt of recovery, 0 judicial action from year 2010 to 2012. See the document by the Ministry of Internal Affairs and Communications: http://www.soumu.go. jp/main_content/000305399.pdf. 82 See the Belgian report for the details. The following article points out a similar problem in France: Kesteman (2011), p. 222. 83 It should be noted, in some countries and under certain circumstances, civil law recognizes (or is interpreted to recognize) the obligation of family members to welcome the other member in their place of residence as a part of their support duties (France, Japan and Belgium, for example).

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is important to mention that this lack of visibility on the problem of LTC also means a lack of visibility on informal care. Informal care by family members is considered a natural part of family function in many countries, although, as we have already mentioned, there is no legal obligation for family members to care for elderly relatives in these countries84 (except for spouses who can be, to some extent, legally obliged to take on the LTC of his or her spouse). Recently, this problem of LTC has become more and more visible in many countries, particularly for three reasons. Firstly, the number of elderly people who need LTC is increasing due to a worldwide trend of longer lifespans. Secondly, the population who support these elderly people has become much smaller in many countries, which have declining birth rates and trend toward nuclear families. Thirdly, family members, especially children (including in-laws), are less and less available to take on informal care. There are several factors behind this third change, such as the increasing participation of women in the workforce and changes in traditional family values. Encouraging women’s participation in the workforce is motivated for some governments, who are trying both to increase the country’s workforce and to create more gender equality in their society. In this context, who can, or who should, deal with the developing LTC problem by partly taking on the role of family members? One option might be to continue considering LTC a private matter and opt for private and market solutions. For those with sufficient resources, people who need LTC can personally purchase care services (including a nursing home) on the private market, which has already been working to meet this need.85 Another option might be to prioritize LTC as a social and public matter and to develop some type of public intervention. Among the countries included in this report, these three options—family, market and public—are combined in different ways, sometimes explicitly, but also implicitly in state policy and legislation. We can try to imagine a rough typology of ways these options can be combined, even though the distinction between different types of combination remains extremely relative and cannot be defined in the absolute.86 First of all, there are countries where LTC is clearly considered to be mainly (except in cases where the elderly person is in financial difficulty) private—a personal and family matter. These countries can be divided into two groups: countries where care 84

See Sloan (2015), p. 275. It is clear that though the third and fourth sections deal with questions that should be legally quite distinct, in reality, these two questions cannot be separated, as the cost of LTC can drive elderly people into financially difficulty, which can then raise an issue about support duties of family members. 86 Furthermore, as we will see, there is often a gap between what is officially declared as social policy direction and what is really happening. Even when state responsibility for LTC is officially indicated, the family can continue to play a dominant role if the system remains insufficient in practice. A report on the role of family in the care and support of elderly people argues that the level to which each legal system and national policy is family oriented can be appreciated by the evaluation of the abundance of social measures for elderly people. It also points out that the radical way to appeal to family solidarity toward elderly people is not to introduce social measures for them. Sayn (2006). 85

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provided by family members is encouraged, and countries where there is no such explicit promotion of family solidarity. Secondly, there are countries where LTC is to some extent considered a public matter. Among these countries, the level of public intervention varies considerably, and in many of them, informal care provided by family members is also both explicitly or implicitly encouraged, supported, or at least expected.

4.1

Taking Care of Elderly People: An Individual, Family or State Concern?

As we previously mentioned, compared to ‘classic’ problems like sickness or old age (loss of working ability and income loss on account of old age), the need for LTC has only recently come to light, and state intervention has been, generally speaking, quite weak on this issue. We can divide the 16 countries included in this report into two groups—ones where LTC is considered a personal and family matter, and ones where LTC is considered, at least to some extent, a public matter.87

4.1.1

LTC as a Personal and Family Matter

In the countries where there is very little or no public intervention for elderly people in need of LTC,88 we might say that the Governments of these countries consider or have considered it to be primarily a personal and family matter, even when this is not officially declared by law or national authorities. However, some of these countries’ governments have recently officially declared a certain degree of state responsibility for LTC, showing that this situation will change in the near future. For example, China’s 12th and 13th Five-Year Plans (2011–2015, 2016–2020) declared the Government’s will “to explore the establishment of a long-term care insurance system”.89 At the other hand, Hungary90 sets itself apart from the group because of its decision to define LTC clearly and more and more as a family matter. China seems to be crossing a transitional period concerning its position about the role of family in the society and in the field of care. While, as mentioned above, the LTC has recently and repeatedly been declared to be public matter in China, China’s 87 See also Martin (2011) about the situation in European countries including those we don’t examine in this chapter. 88 Brazil, Greece, Italy, Cameroon, South Africa, Hungary, Singapore. 89 For the detail, see Wang in this volume. 90 In Hungary, public intervention is not inexistent (the Social Welfare Act (1993)), but not universal, and very limited in quality and quantity of services. Particularly, the direction of policy changed in the late 2000s to reduce public intervention and to shift the burden of care to families. The 2011 reform of the Constitution, which imposes a duty of caregiving on families, has confirmed this trend from a legal point of view. See Sczéman (2015), pp. 245, 247, 248 and 250.

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‘Law about protection of the interest and the rights of aged persons’, implemented in 1996 and significantly reformed in 2013,91 seems to go in the opposite direction. This law requires adult children who live far from their aged parents “to frequently go back to his parents’ home and care for them,”92 This law emphasizes the importance of caring for parents from a psychological point of view, not only a financial or material one.93

4.1.2

LTC as a Public Matter

In the other countries, LTC is considered, to a certain extent, a public matter which requires substantial public intervention. In particular, Germany, Japan, France, Spain and Finland have all introduced universal public LTC systems, which do not use a means test. While Germany94 and Japan have opted for universal social insurance systems covering all elderly citizens (and in Germany, young citizens with disabilities as well), the French system is completely tax based, with no obligation of contribution. The French LTC system (Allocation Personnalisée d’Autonomie, APA) is also different compared to German and Japanese LTC systems, in relation to the above mentioned solely tax based financial mechanism, in that it requires the recipients to pay a percentage of care cost, which can amount to 90% for those with a relatively high income. On the other hand, the German LTC social insurance system is unique in that it covers disabled people in general, thus without making a categorical distinction between young disabled people and elderly people in need of LTC. Meanwhile, there are countries where public intervention exists, but offer benefits only on the basis of a means test,95 which indicates a fundamental belief that state intervention should remain only secondary. For a more rigorous study of the real significance and consequence of these systems as well as a comparison of the different positions of each country, it will be necessary to look at the details of the services these systems offer, the financial cost that the users of these systems should pay, as well as the trend of the development of these elements. In Finland, the recent trend of above mentioned system is a decrease of public home care services, therefore reallocating the responsibility of care to the elderly person’s family and relatives (see also the note 118 about the Spanish system). 中华人民共和国老年人权益保障法. Art. 18, para. 2 of the law. 93 Art. 18, 1st para. 94 For Germany, see the “Gesetz zur Neuausrichtung der Pflegeversicherung.” Germany reduces the contribution for LTC social security of the citizens who are raising (or have raised) one or several children. For Japan, see ‘Kaigohokenho(Long-Term Care Insurance Act)’ and Curry et al. (2018). 95 For example, England and Belgium. In England, lawmakers intended to substantially lighten the means test with the 2014 Care Act. However, this part of the 2014 reform has later been delayed and scrapped. For Belgium, see Belgian ‘Allocation pour l’aide aux personnes âgées, APA’. 91 92

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Rewards, Support, or Compensation for Family and Informal Carers The Importance of Informal Care

Even in countries where substantial public intervention exists for LTC, it does not cover all the LTC needs of elderly people. Informal care, including, especially, that provided by family, plays an important role almost without exception throughout the world.96 There are several reasons for this situation: absent or insufficient public intervention, lack of financial means for elderly people to purchase services on the private market, resistance to leaving the home and ‘official’ involvement in one’s care, social or cultural norms,97 etc. As we have already mentioned, informal care is not a legal requirement or obligation, unlike the obligation of financial support of certain family members towards another family member in need. At the same time, many countries have introduced measures to support, compensate or encourage these care givers, as a response to the clear importance of informal care.98 We can observe that, generally speaking, the clear trend in EU countries is to officially recognize the importance and the burden of family care.99 These measures try to fulfill the real and pressing need of care givers who require recognition of their effort and who need to conciliate their professional or private life with care work for their family. At the same time, through these measures, the state relies, at least implicitly, on family carers to support and continue to support the increasing number of aged people who need long-term care.100

96 In the Czech Republic, it is estimated that approximately 80% of care is provided by the family, mainly spouses, children and other relatives. Sowa (2010), pp. 15–16. 97 Public opinion also varies significantly from country to country regarding the idea that children should pay for the care of their parents if their parents’ income is not sufficient. In the two candidate countries support is most widespread (88% in Turkey and 86% in Croatia). Greece is the only EU member state where over three-quarters of the public agree (78%). Conversely, there is strong opposition to this idea in Denmark (86% disagreeing) and Sweden (84% disagreeing), with Finland and the Netherlands not far behind with 77% disagreeing. So, support for the idea that close relatives should care for dependent people even when it means sacrificing their careers ranges from only 7% in Sweden to 77% in Turkey. (Special Euro Barometer, European Commission, Health and long-term care in the European Union, 2007). 98 As a majority of these carers are female, this question could also be examined from the perspective of female workers’ work and life conditions, as well as from a gender perspective more generally, though this report will not be able to discuss these perspectives in depth. 99 See for example Recommendation n. R98(9) of the Committee of ministers to member States adopted on 18th September 1998, during the 641th meeting of Ministers’ Deputies, mentioned in Rousset (2015). 100 See chapters on Finland and England (9 and 10) where government intention is relatively obvious. In England and Wales, around 5.8 million informal carers and the majority of elderly people who need care are in their own homes and receive care from family members.

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Types of Measures for Informal Care Givers

We observe several types of measures for informal care givers, in different branches of law (civil law, as well as social law (labour law, social security law and welfare law)), which do not exclude each other.101 In fact, more than one of the following solutions can be found in a same country’s law. Firstly, if the care giver is working, it is often difficult for him to reconcile his professional life with care work for his family. A typical measure to help juggle the problems of caring and working is to give workers a right to carer’s leave.102 China’s law, mentioned above, which obliges children “to frequently go back to his parents’ home and care for them” also provides a right to “children’s leave” to fulfill this obligation.103 Therefore employers are obliged to accept the absence of workers when they go back to their family.104 Furthermore, in Spain, as well as in England and Wales, workers who care for adults have a right to request flexible working hours. In some countries like Germany, England and Wales, we can also observe the financial support for the social contribution burden of carer. The second typical example of measures to help care givers are developed in social security law, in countries where a public LTC system exists. In these countries, it is possible to somewhat ‘formalize’ these informal carers by allowing the care recipient the possibility of directly contracting and paying the carer, in the framework of or in relation to the public LTC system.105 A similar measure consists of granting financial aid to care givers. Several countries give a social benefit directly, with certain conditions, to the family carer.106 101

See also Rousset (2015), pp. 96–98. This measure exists, for example, in Germany, Japan, Spain, England and Wales. In other countries, like the Czech Republic and Belgium, while there is no specific mechanism for the worker taking care of the family member in need of LTC, there is working leave when the family member needs to be accompanied for medical treatment or examinations. About the support for informal carers in Spain, see Blázquez Agudo E-M et Quintero Lima (2014), pp. 115–134. 103 Art. 18 of the ‘Law about protection of the interest and the rights of aged persons’. See also Kwang-jun (2014), p. 43. 104 In this law, employers also have to supervise the children’s obligation to go back to their family and care for their aged parents, as well as to sanction those who do not carry out this obligation. 105 This kind of measure exists, for example, in Germany, France, Czech Republic and Spain. About the French system, see I. Sayn (2006), p. 52. On the contrary, in England, the care recipients are not allowed hire their family members, including their children, when they are living in the same household (see Care and Support (Direct Payments) Regulations 2014 SI No 2871 for the exact conditions) in the Direct Payments Scheme (a system which allows care recipients to directly hire their care givers). About the Czech Republic’s ‘care allowance’, see Wija (2015), pp. 233–244. According to this article, in Czech Republic, ‘Care allowance presents a significant, often the only, source of income for informal carers, although the allowance is not primarily intended as a reward for informal caregivers but rather as income support for care recipients, enabling them to buy professional social services’. (p. 240). 106 In Finland, as well as in England and Wales. As we can see in chapter 9, the caregivers of adults (including handicapped adults) in Finland can receive some allowance for informal care (act on support for informal care). The allowance can be accepted if a person is taken care of at his or her 102

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The third type of measure concerns civil and family law. In some countries, the contribution of an informal carer can be taken into consideration in the succession process.107 Other private law sources are also debated by English scholars, for example those which could realize the remedies for the carers at the basis of the unjust enrichment theory.108 Lastly, there is also a new comprehensive and theoretical approach, which can also cover the above cited different individual measures. This approach is to create a status of ‘caregiver’ and devise a series of rights or supports that this caregiver can receive for himself and for his own needs, including training and information. A typical example can be found in England. UK law has developed a policy to clearly and officially recognize the importance of carers’ work109 and thus has been introducing and developing laws about carers since the 1990s,110 with the idea of making carers ‘not so much unpaid providers of care services, but as people in their own right’. Also in France, recent reform has established the legal status of ‘close caregiver’111 for those who take care of their family members and people closely related to the person who receives care. This status gives them new support and rights, including a right to respite.112 It should also be noted that the downside of this policy to promote this status of caregiver, in the UK, is that the idea persists that some responsibility for care should, or at least will inevitably, rest with family members.113 It is interesting to mention that in Japan, on the contrary, the possibility of creating an allowance for family carers was fiercely debated when the social insurance system for LTC was

home and the care is especially demanding and binding. The municipality has some discretion in the decision of the amount of the allowance. This allowance entails a considerable expense (The expense for this allowance amounts to 2.8 billion euros, compared to 5.2 billion euros in total for the services for old people and disabled people), despite the limited number of carers who receive it (One in three of informal carers (estimated to be 60,000) do not receive this allowance). 107 In the Czech Republic and in Japan. In Japan, a 2018 reform of Civil law introduced a new ‘claim for special contribution’ in relation to inheritance, which gives a person who is not a heir but has contributed to the care of the late person, a right to claim a certain amount of money (art. 1050 of reformed Civil Code). 108 Sloan (2015), p. 275. 109 See the following report: http://www.jil.go.jp/institute/siryo/2017/documents/186_04.pdf. 110 The carers (recognition and services) Act 1995, the carers and disabled children act 2000, the carers (equal opportunities) Act 2004. 111 The ‘Close caregiver’ of an elderly person is a concept which covers three categories of people – (1) ‘family caregivers’ (spouse, partenaire in civil union, cohabitant, parent, etc.,), (2) those who live with the person, as well as (3) those who maintain close relation with him. The law recognizes a status of close caregivers to those people when they come to help the elderly person regularly and frequently, in non-professional way, to accomplish all or a part of acts and activities of everyday life (art. L. 113-1-3 of Code de l’Action sociale et des familles). 112 About the details and the limitation of this new legal system, see Rebourg (2018), p. 693. The support for close caregiver was recently reinforced by a new law: LOI n 2019-485 du 22 mai 2019 visant à favoriser la reconnaissance des proches aidants. 113 See Sloan in this volume.

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established in 1997. The allowance was discarded in the end, partly to encourage people to choose the new options of professional and formal care, rather than informal care. There were concerns that people would continue to count on informal and family care if the system officially recognized this option by compensating it with this kind of allowance. One author explains that this choice, not to take into consideration informal care, was a way of ‘socializing’ care by encouraging all families to use professional services, but it only contributed to masking actual existing forms of informal cares.114 In these two countries, we can observe contrasting attitudes towards informal care, which raises further questions about the ambiguous results of compensation for informal carers and the logical and legal relationship between social, civil, public law. Should stronger attention to family care be interpreted as a sign that the government intends to rely on family solidarity, or a sign that it recognizes the inadequacy or failure of its social policy on LTC? Or rather, should this compensation be considered a necessary measure which can be justified independently of these state policies? Should attention to family care in private and succession law be considered secondary to state intervention, or are they totally independent of each other?115

5 Conclusion To conclude, we would like to go back to the question of the relationship between family solidarity and public solidarity across generations, and we will make several points from a broader perspective covering all sections (2, 3, 4) of this report. As we have already discussed concerning the family support duty (see Sect. 3), in developed welfare states, public solidarity has largely replaced family solidarity, through the development of various social security systems. However, when we see the current and future demographic and economic trends, interest for family solidarity may be rediscovered or restored once more even in these countries,116 implicitly or explicitly. There are two main reasons for this that we have already examined: the trend for reducing pension benefits (2) and the increase of LTC, which is, and which will probably continue to be, insufficiently covered by existing social security

114

Shimoebisu (2007), p. 223. In Spain, when the public LTC system was introduced, professional care was theoretically favoured over family care, for similar reason. However, the Spanish system attributes a cash benefit for those who receive family care so that the elderly person can pay to family members directly. And also, in practice, family care remains dominant in the Spanish LTC system. When also taking into consideration the cutbacks of the state’s LTC benefit, the system has today almost entirely changed its direction, keeping in reality only a residual role in supporting family solidarity. 115 Sloan (2015) argues that the compensation of informal carers by private law provisions should be justified independently of the failure (or not) of public and social care services supplied by the state. See also Sayn (2006), p. 52. 116 Maisonnasse (2016), p. 748.

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systems (4). The somewhat classic question of the respective roles of family solidarity and public solidarity for people in need (3) will require new perspectives and considerations in this current and future context. Two Asian countries have caught our attention precisely for insisting on the importance of family solidarity across generations, though in a completely different manner. Singapore and China have reinforced the legal obligations of adult children towards their aged parents as a way of dealing with longevity and an aging population.117 Both countries have tried to restore and revive traditional family values,118 which, in reality, are fading fast,119 by imposing new regulations. Generally speaking, the increase of the need for LTC is a universal trend in almost all of the countries included in this book. However, in the current economic and demographic context it does not seem realistic to think that this need will be sufficiently covered by collective solidarity in the future. Therefore, family solidarity plays and will play, de facto, an important role in current and future societies. At the same time, the traditional view of care work within family as being totally free is changing rapidly.120 Thus, a new question emerges of how to treat this existing and more and more visible family solidarity in public, social and private laws (4). A comprehensive overview of these different fields of law would seem extremely interesting and useful, particularly from a comparative point of view. Lastly, almost all the national reports showed the real importance of family solidarity, whether in a country where it is not legally imposed or in a country where public solidarity is very well developed. The Finnish national report, in particular, tells us that the reinforcement of public solidarity (e.g. The expansion of social welfare systems) does not weaken voluntarily organized family solidarity, in fact, quite the opposite. The relationship between the law and reality would also be an interesting question to tackle, though we cannot do so in this report.

References Bénabent A (2016) Droit de la famille 3ème édition. LGDJ, Paris Bergonzini C (2016) The Italian Constitutional Court and balancing the budget: judgment of 9 February 2015, no. 10 Judgment of 10 March 2015, no. 70. Eur Const Law Rev 12 (1):177–191 Blázquez Agudo E-M et Quintero Lima M-G (2014) Les aidants familiaux en Espagne. Statut juridique et politiques en matière de dépendance In: Martin P (ed) La dépendance des personnes âgées, un défi pour l'Etat social. Presses Universitaires de Bordeaux, Bordeaux, pp 115–134

Although, for China, we have observed rather stronger accent on State’s role in the field of LTC. See 4.1.1. 118 About the tradition of Confucianism in Singapore and about the Maintenance of Parents Act, see Lee (1995). 119 Kwang-jun (2014), p. 33. 120 Sayn (2006). 117

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Shimamura A (2015) Koreiki no syotoku hosyo - Brazil, Chili no hoseido to nihon. Tokyodaigaku syuppankai, Tokyo Shimoebisu M (2007) Kazoku no syakaiteki igi to sono hyoka - ikuji kaigo no ninaite to shite. In: Motozawa M (ed) Kazoku no tameno sogoseisaku - nichidoku kokusaihikaku no shiten kara. Shinzansya, Tokyo, pp 217–238 Sloan B (2015) Informal care and private law: governance or a failure thereof? Can J Comp Contemp Law 1:275–291 Sowa A (2010) The System of Long-term Care in the Czech Republic. CASE Network studies& Analyses, no.415/2010 Spiot A (ed) (2015) La solidarité: enquête sur un principe juridique. Odile Jacob, Paris Vigneau C (1999) Les rapports entre solidarité familiale et solidarité sociale en droit comparé. Revue internationale de droit comparé 51(1):51–81 Wija P (2015) Formal and informal long-term care and the role of family carers - Czech Republic. Eur J Mental Health 10:233–244 Yamawaki S (1997) Koreisyakaigo to fuyo hori In: Ishikawa T, Yoshida K, Eguchi T (eds) Koreisyakaigo to kazoku - minpo to syakaihosyoho no setten. Shinzansya, Tokyo, pp 78–108

Part II

Solidarity Through Pension Systems

Elements of Generational Solidarity in the German Pension System Constanze Janda

Abstract The article focuses on the legal aspects of intergenerational solidarity in the German statutory pension system. Organised on a pay-as-you-go basis, it relies on a balance of those obliged to pay contributions vs. those who receive benefits. The footing of this system, however, becomes fragile in times of rising life expectancy and declining birth rates: fewer employees will have to finance the pension rights of a growing number of pensioners. These developments do not only lead to lower acceptance of the “intergenerational contract” by the economically active who have to invest a large share of their income in the financing of current pensions while facing the risk of receiving low payments in the future. It also raises questions of intergenerational justice. Since the 2000s, the German pension system has undergone several reforms to strengthen intergenerational solidarity and sustainability of pensions. Yet the debate is going on. The article outlines elements of solidarity in the calculation of both contributions and benefits and shows the opportunities and limits for further reforms raising from EU law and German constitutional law.

1 Introduction Germany has been the first country in the world that introduced a statutory pension system. Ever since its coming into force in 1889, the system has undergone a number of reforms in order to adapt its financing and spending to the economical and societal situation. To a large extent, social security in case of old age is awarded by the obligatory statutory pension insurance. It is complemented by occupational schemes, which cover about 60% of the employees (BMAS 2016, p. 132), and private schemes, which cover 70.4% of all employees (BMAS 2016, p. 153). These additional types

C. Janda (*) German University of Administrative Sciences Speyer, Speyer, Germany e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_2

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of provision are voluntary; benefits and contributions are determined by a privatelaw contract (Becker 2018, p. 66). Persons who are not members of the social insurance system or whose entitlements in the pension system are below the minimum of subsistence, receive benefits from the tax-financed and means-tested social assistance scheme for those incapable to work or older than pensionable age (Becker 2018, p. 60). This system is different from the assistance for those younger and capable to work insofar as the means testing is more generous for the elderly. Thereby it can be avoided that elderly persons in need will have to spend their whole income and assets before claiming the benefit. Moreover, their adult children will be obliged to pay alimony in few cases only.

1.1

Basic Principles of the German Pension System

The German pension system still reflects its Bismarckian origins. The statutory pension scheme for employees is operated by a public corporation (“Körperschaft des öffentlichen Rechts”). It takes part in the self-governance of the social security bodies. This means that all organs of the corporation are held by employees’ and employers’ representatives based on parity (Eichenhofer 2019, p. 157; Waltermann 2018, p. 167). The social partners are thus involved in the governance of the pension insurance institutions. The representatives are elected by the insured persons in the so-called “Sozialwahl” (social elections) every 6 years.

1.1.1

Personal Scope

The statutory pension insurance does not cover the whole population, but applies to employees and apprentices only. They are compulsorily insured if their monthly income exceeds a minimum amount of currently 450.00 Euro.1 Under certain conditions, self-employed persons are subject to compulsory insurance as well. As a rule, this applies to those who are vulnerable and therefor have a similar need of protection like employees. The Pension Insurance Act (SGB VI2) defines this group of self-employed as persons who (a) do not regularly employ an employee and (b) essentially work for one client only. They are referred to as “solo self-employed”. Their economic success and the income they generate from their work depend on one single customer, not allowing for adequate private provision for

1 Persons with earnings below this limit are referred to as “marginal employment” (geringfügige Beschäftigung). They are not included in the obligatory social insurance, because they usually are covered by it for other reasons, be it as family members of their breadwinner, as students or pensioners. 2 6. Buch Sozialgesetzbuch ¼ Social Insurance Code Part VI.

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old age. Hence, their position is comparable to that of an employee; that is why they were included into the compulsory pension insurance (Waltermann 2018, p. 171). Persons who are older than 16 years and not subject to compulsory insurance may opt for voluntary insurance.

1.1.2

Financing

The statutory scheme is income-based: contributions are levied as a percentage of gross income from work before taxes; currently it amounts to 18.6%. It is borne by employees and employers based on parity. Hence, the financing does not refer to the individual risk, but to economic performance expressed by the level of income (Hebeler 2001, p. 39). The contribution is levied on income up to the so-called Beitragsbemessungsgrenze, i.e. a contribution assessment ceiling, which is annually determined by the Federal Ministry of Labour and Social Affairs. In 2019, this ceiling was established at a monthly income of 6900 Euro in Western Germany and at 6540 Euro in Eastern Germany. Self-employed persons must finance their contributions entirely by themselves. This also applies to voluntarily insured persons; however, they can choose between a minimum and a maximum contribution. For persons receiving sick pay or unemployment benefits and for those who care for a family member in need of care, the respective social security agency—health insurance, unemployment insurance, long-term care insurance—has to pay contributions to the pension insurance. The German Federation pays contributions for persons in voluntary military service or in the state volunteer programme. The financing is based on a pay-as-you-go-system: current expenditures are financed out of current revenues of the same calendar year. Additionally, the Federation contributes to the pension insurance scheme: in 2018, it granted 44.56 billion Euro,3 financed out of taxes.

1.1.3

Entitlement Conditions

In order to be entitled to an old-age pension,4 a person must have reached the pensionable age of 67 years and completed a waiting period of 5 years. In order to fulfil this condition, the insured person has to aggregate months in which he/she has paid contributions on income or has accumulated income points for periods of child 3

In comparison, income from contributions reached 235.76 billion Euro in the same year, see https://www.deutsche-rentenversicherung.de/Allgemein/de/Inhalt/Allgemeines/GrosseTabellen/ kennzahlen_finanzen_vermoegen/3_mittelfristige_finanzentwicklung/03_einnahmen_allg_rv. html?cms_submit¼Los&cms_resultsPerPage¼5&cms_templateQueryString¼Bundeszuschuss. 4 The Pension Insurance awards benefits in case of incapacity for work and in case of the death of a spouse or parent. These benefits, however, are not considered in this chapter.

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raising. Child raising periods, however, are recognised only in the first 3 years after birth of the child.

1.1.4

Calculation of Benefits

The level of benefits reflects the lifetime income from work of the insured person in relation to the income of the current employees. Hence, the pension functions as an income replacement or, in other words, as a quid-pro-quo for a long working life (Köhler-Rama 2019, p. 80; Sodan 2005, p. 565; Hebeler 2001, p. 56). Benefits are paid irrespective of individual need. At the same time, the pension system strives for redistribution, since the mutually supportive group of insured persons (“Solidargemeinschaft”) balances unequal risks at the labour market (Papier 2019, p. 3). The amount of the pension is dependent on both the height of income on which contributions have been levied and the duration of gainful employment (Waltermann 2018, p. 184). Calculation of pensions follows a point-based system: for every month, in which the insured person earns average income,5 he/she accumulates one income point (“Entgeltpunkt”). If he/she earns double average income two income points, in case of half the average income 0.5 income points will be accumulated etc. Persons who are not carrying out a professional activity due to child raising gain 3 income points per month if the child is younger than 3 years. There are deductions for early retirement, which is possible after reaching the age of 65 years.6 For every month before the fulfilment of the retirement age of 67, the amount of the pension is permanently reduced by the factor 0.003. On the contrary, for each month of later retirement, the pension increases by the factor 1.005. Furthermore, pensions are “dynamic”. This means that they are annually adjusted to the gross wages of the actively employed persons, the rate of contributions currently paid to the pension insurance (including both statutory pensions and voluntary private schemes) and the so-called “sustainability factor”, which represents the relation between contributors and pensioners (Cf. Schmähl 2015, p. 173 et seq). Hence, pensioners participate in both the increase as well as the decrease of general wealth. There is a statutory guarantee that the level of pension for a fictitious person who has been actively working for 45 years, always earning exactly average income and paying contributions out of it, must not be lower than 43.0% of the former income7 (Eichenhofer 2019, p. 175). This so-called “standard pension” amounts to 1,396.35 5

In 2019, the Federal Ministry of Social Affairs, based on data by the Federal Statistical Office, has set the average gross annual income of all insured persons at 38,901 Euro. 6 Until 2022 there is a transitional period, because pensionable age is gradually rising from 65 to 67; hence the age for early retirement is gradually rising as well from 63 to 65 years. 7 From the average earnings social security contributions to health care, long-term care, pension and unemployment insurance as well as the average expenditure for additional private old-age provision are deducted.

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Euro in Western Germany and to 1,336.05 Euro in Eastern Germany, referring to the net pension level before taxes. This pension level is not related to a person’s last earnings, nor does it allow any forecast of the individual pension amount. The notion of the standard pension model, which is criticised because it does not reflect the career of a typical employee in Germany, must not be confused with the income replacement rate, which is a mere statistical measure. Pensions are subject to taxation. Furthermore, contributions to health and longterm care insurance are levied.

1.1.5

Other Schemes of Social Protection in Old Age

There are different schemes of protection in old age for different types of economically active persons. This differentiation has historical roots: it stems from the medieval guild system, which provided social security for certain, strictly separated, occupational groups. There are special pension schemes for farmers and for artists. The pension scheme for farmers is run by a federal public corporation, whereas the pension scheme for artists is administered by a specific department of the statutory work accident insurance, which has its own budget. Other types of self-employed persons are not covered by mandatory schemes; they will have to conclude private insurance contracts in order to cover the risk of old age. If they fail to do so, they will have to rely on social assistance benefits if their private savings do not suffice to cover their basic needs. Freelancers (lawyers, doctors, architects etc.) are obligatory members of the “berufsständische Versorgungswerke”. These are pension funds established by the professional organisations based on legal provisions of the German Länder (federal states) and organized as public bodies (Eichenhofer 2019, p. 167). Civil servants are not covered by the statutory pension insurance. Their pensions are tax-financed and represent an integral part of the life-long alimentation. There is a minimum pension of 35.0% of the last income, which prerequisites a minimum of 5 years of work as a civil servant. The general pension amounts to 1.7937% of the pensionable income for each year of seniority, however maximum 71.75% of the last income. The pension is reduced by 3.6% per year of early retirement. The pension schemes for civil servants are administered and financed by the employing entity, i.e. the “Bund” or “Länder” (Eichenhofer 2019, p. 166).

1.2

Prerequisites for Pension Reforms

The pay-as-you-go system refers to the financial aspect of the intergenerational contract. It is based on the assumption that a sufficient number of children—the future contributors—will be born to finance future benefits, presupposing that the number of contributors and beneficiaries remains almost constant (Hebeler 2001,

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p. 32). Nevertheless, the fertility rate of German women has been decreasing since the 1970s; at the same time, life expectancy is continuously rising. This touches upon the fundamentals of the pay-as-you-go system twice: The shift in the relation between contributors and beneficiaries does not only lead to a shrinking contribution base, but also increases the expenses due to the longer duration of pension payments (Ruland 2001, p. 3505). Legislation will have to react to these developments in order to ensure long-term financial stability of the scheme as a whole. Since pension insurance is part of a statutory system, it is open for reform. Pensionable age and pension level can be changed by legislation only, requiring a simple majority in parliament and the approval of the “Bundesrat”, i.e. the Federal Council representing the government of the Länder. Certain questions of detail, for example the determination basis for the income ceiling, can be determined by a regulation of the Federal Ministry of Labour and Social Affairs, i.e. an administrative ordinance. The dynamic “Rentenformel” (pension formula) allows to annually adjust the pension level according to the earnings of the active workforce (Eichenhofer 2019, p. 183). However, if these earnings decrease, this does not lead to a cut in the pension level but rather to a non-increase. To cut pensions would require a change in the pension formula by the parliament. However, there have to be long transition periods, because the entitlement to a (future) pension is regarded as property right (cf. 1.2.2.3), which is protected under the constitution. That is the reason why the raising of the pensionable age in Germany has been stretched over many years. Any changes in the legal provisions will have to be compatible with both European and Constitutional law.

1.2.1

EU Law

The European Union does not have the competence to harmonise national social security law. According to Art. 153 (1) TFEU it may only support and complement the activities of the member states in the field of—among others—social security and social protection, the combating of social exclusion and the modernisation of social protection systems. Nevertheless, European law has considerable influence on the member states’ social security system even if a genuine European welfare state does not exist. With the Lisbon Strategy, the EU set itself the goal of becoming the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion by 2010. This objective was supposed to be achieved by a process of policy coordination based on commonly agreed objectives, the Open Method of Coordination OMC (Schulte 2009, p. 52). Initially focused on employment policy, the scope of the OMC soon has been extended to social inclusion policies, pensions, health care and long-term care (Janda 2018, p. 386). In 2008, the separate coordination processes have been included in the “OMC Social Protection and Social Inclusion” (COM(2008) 418 final; cf. Eichenhofer 2014, p. 204). The Commission identified

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three major challenges for old age pension systems: the increasing life expectancy, the lowering birth rates and the upcoming retirement of the so-called baby-boomers who were born after 1945 (COM(2010) 365 final). It therefore recommended to link retirement age to life expectancy, to restrict access to early retirement, to close the gender pension gap and to encourage complementary private pension saving (COM (2012) 55 final). As a consequence of the financial and banking crisis, in “EU 2020”, the follow-up to the Lisbon Strategy, the OMC has been integrated into the context of economic, financial and employment policy (COM(2010) 2020 final). In this revised strategy, the European Commission committed itself—among others—to assess of the adequacy and sustainability of social protection and pension systems. Member states are obliged to define and implement measures addressing groups at particular risk of poverty and to fully deploy their social security and pension systems in order to ensure adequate income support. The Commission stressed the need to fiscal consolidation, long-term financial sustainability and structural reforms of all social security schemes. Taking this as a starting point, the Commission launched a recommendation on necessary reforms in Germany in 2018 (COM(2018) 405 final). Regarding the sustainability of the German pension system, the Commission stated that the labour market participation of older workers would have to be improved, increasing income in old age and reducing the need for precautionary savings. Currently only 16.1% of workers aged 65–69 are working. Even though the current economic situation of the country is rather stable, the Commission expects large increases in pension expenses until 2070. Moreover, the risk of poverty in old age is regarded as above EU average—17.6% compared to 14.7%, one of the reasons being inadequate benefits in the first pillar for low-wage earners, persons with atypical contracts and those with interruptions in their employment histories. Finally, the gender pension gap in the German system is one of the widest in the EU. The Commission proposed Germany to encourage people to work more hours, especially by reducing the high tax wedge for low-wage earners or persons with more than one job as well as to promote a longer working life and higher page growth (COM(2018) 405 final). These recommendations, however, are not binding.

1.2.2

Constitutional Law

The German constitution (Grundgesetz, GG) does not contain binding normative patterns regarding the design of the pension system. Legislative freedom is, however, restricted by fundamental rights.

Social State Principle Art. 20(1) GG contains the Social State Principle, which obliges the legislator to set rules that assure social security and social justice, to protect the weak and to offer

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equal opportunities (Hebeler 2001, p. 87; Sodan 2005, p. 567). Terms like “justice” or “protection of the weak” are rather vague, therefore the Social State Principle does not bear any concrete specifications for the design of the pension system. The Federal Court of Justice has always underlined the legislator’s prerogative and broad discretion. Consequently, the Social State Principle does not constitute a basis for individual rights.

Protection of Human Dignity Art. 1(1) GG contains the guarantee of human dignity. In conjunction with the Social State principle, this provision demands the safeguarding of the minimum of subsistence for every human being. Hence, social security law must contain provisions and benefits that enable everyone to lead a life at an adequate standard of living. This is the main function of the German social assistance system. Pension insurance, however, does not refer to the aim of an adequate standard of living, but rather to the maintenance of the standard of living during the employee’s working life (Ruland 2000, p. 748; Kreikebohm 2015, p. 188; Köhler-Rama 2019, p. 80).

Protection of Property Rights Regarding social insurance, the constitution does protect the expectancy of all contributors to receive an adequate pension level. This has been derived from the protection of property rights in Art. 14(1) GG (BVerfG, Beschluss v. 21.7.2010, 1 BvL 11/06 – 13/06, 1 BvR 2530/05 (juris Rn. 68) mit Bezugnahme auf BVerfGE 53, 257, 289 f.; BVerfGE 97, 271, 283 f.; BVerfGE 69, 272, 300; BVerfGE 92, 365, 405; BVerfGE 97, 271, 284; BVerfGE 100, 1, 32). In an obligatory system, in which employees are forced to spend a certain part of their earnings on contributions for the current pensioner generation, they are hindered to freely use their own financial means. According to German constitutional law doctrine, this constitutes an interference into the freedom of action (Hebeler 2001, p. 92). Yet, this impairment can be justified by the overarching aim of a common provision system for old age. Furthermore, entitlements to social security benefit are regarded as property rights, if their asset or value is individually attributed to the entitled person, and if it is based on considerable personal contributions of that person and intended to cover her/her means of subsistence (BVerfGE 69, 272, 300; 72, 9, 18; 76, 220, 235). The protection is stronger, the more contributions an insured person already has paid and even higher if the pension is already paid out.

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The Federal Constitutional Court has stressed the need to protect the “legitimate expectation” of an individual to receive a pension that is adequate8 to the individual’s income and the contributions paid out of it (BVerfGE 58, 81; 64, 87; 100, 59; 100, 138; 122, 151).9 Cuts need to be justified for reasons of public interest and must be adequate—from a general as well as from an individual point of view. The aim to reconstruct public financing would not suffice. From a constitutional law perspective, the reduction of pension entitlements of future pensioners presupposes that they are indispensable to maintain the financing and the capacity of the pension systems as such on a long-term basis (Hebeler 2018, p. 850; BVerfGE 117, 272; 112, 151). This is the case, for example, when cutting benefits due to demographic changes if these changes causally affect the financial stability of the whole pension system. The classification of pension entitlements as property rights is largely due to their financing out of income from work; this distinguishes them significantly from social assistance benefits granted in old age (Hebeler 2001, p. 97; Köhler-Rama 2019, p. 81). The principle of proportionality—here: the proportional relation of risks and chances of the insurance system—determines the legally allowed extent of cutbacks in pension entitlements (Sodan 2005, p. 563). Hence, one has to question whether the expectation to receive a pension is still effective if an individual’s contributions do not accrue to an adequate pension, or, if today’s obligatory contributions are not reflected by an equivalent level of the individual’s pension. Furthermore, the principle of protection of confidence—derived from the rule-oflaw principle contained in Art. 20(1) GG—demands for long transitional periods (Eichenhofer 2019, p. 77). Short-term and harsh cuts of current pensions would be contrary to this principle (BVerfG, Beschl. v. 13.6.2006 – 1 BvL 9/00, 1 BvL 11/00, 1 BvL 12/00, 1 BvL 5/01, 1 BvL 10/04, juris Rn. 98, 102, 105 f.). Rather, the legislator has to take into account both the legitimate aim to secure the long-term financial stability of the pension system and the legitimate trust of those persons with pension entitlements. The Pension Act (Art. 306 SGB VI) generally prohibits cuts in benefits that are already being paid out.

Equal Treatment Principle The equal treatment principle, which is laid down in Art. 3(1) GG, may also affect the legitimacy of pension reforms. Due to the long period between paying contributions and receiving benefits, this principle will have to be applied in a long-term perspective (Hebeler 2001, p. 123 et seq). However, there cannot be absolute equality of all generations in the pension system, because the means that are distributed will not be the same throughout all periods (Ruland 2000, p. 751).

This is called the “principle of equivalence between contribution and benefit”, cf. Ruland (2000), p. 747; Sodan (2005), p. 564. 9 Note: BVerfGE is the official collection of the Federal Constitutional Court’s decisions. 8

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Treating current and future beneficiaries different, would demand for justification by legitimate goals of common interest. This is particularly the case if a reform imposes a higher burden on certain groups of insured persons compared to others (Hebeler 2001, p. 121). Fiscal reasons alone would not suffice in this context, since this would suggest that current contributors need to show solidarity towards current pensioners, but not vice versa (Sodan 2005, p. 566).

2 Elements of Generational Solidarity in the German Pension System In the statutory pension insurance for employees, there are several elements to strengthen the solidarity between generations. Recent reforms (Cf. Waltermann 2018, p. 161 et seq) have aimed at tackling the issue of demographic change, such as the gradual rising of the pensionable age from 65 to 67 years, the restriction of early retirement and the awarding of income points for periods of child raising or education.

2.1

What Does the Notion of “Solidarity” Refer to?

Colloquially, “solidarity” refers to a feeling of belonging together, of responsibility for each other, based on common values, the necessity to put one’s own interests behind those of others and the willingness to help others in situations of need (Ruland 2000, p. 735 et seq). It is based on voluntariness, sympathy and affection (Schlegel 2008, p. 565). In legal terms, the notion of solidarity refers to “a social condition in which relations between individuals and the community are characterised equally by the autonomy and responsibility of individuals and by the aspirations and responsibilities of the community.” (Zacher 1997, p. 830). The term does not stand for complete equality, but rather for the necessity to counterbalance unequal distribution of chances and wealth among those forming a society (Becker 2018, p. 78) or a distribution of goods by the state or its agents, according to social criteria (Schlegel 2008, p. 568). Compulsory insurance ensures that no one can refrain from solidarity (Schlegel 2008, p. 568). Within the specific context of social security law, solidarity refers to financial redistribution within the community of insured persons (Becker 2018, p. 78). Elements of intergenerational solidarity can therefor occur in both contributions to and benefits from the pension insurance, because solidarity of the current contribution payers is largely based on their expectation that they will receive sufficient benefits once they reach pensionable age (Müller and Burkhardt 1983, p. 74).

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47

Calculation of Contributions

The level of contributions to the pension insurance is set by the Pension Insurance Act. It currently amounts to 18.6%, financed by employers and employees based on parity.

2.2.1

“Contribution Bonus” for Parents

Since the sustainable financing of pensions does not only presuppose sufficient financial means, but is highly depending on the birth and growing of children, there have been claims to privilege parents. Intergenerational solidarity in the pension system does not only comprise the generations of pensions and contributors. Rather one has to include a third generation, those of the future contributors, which means that current employees are not only obliged to financially contribute to the system but also to raise the generation of future employees in order to maintain the secure future prospects of the pension system (Müller and Burkhardt 1983, p. 74; Krüger 1996, p. 644; Hebeler 2001, p. 59). The contribution bonus for parents in the long-term care insurance could function as a model for this.

“Contribution Bonus” for Parents in the Long-Term Care Insurance Germany has introduced a social insurance against the risk of long-term care in 1995. The system is organised similar to the statutory health care insurance: all persons who are (compulsorily or voluntarily) insured in the health care system are automatically insured in the long-term care insurance. It is financed by contributions on income from work, which rate at 3.05% for those who have children and 3.3% for those who are older than 23 years and do not have children. The higher contribution rate for childless persons is a consequence of a decision of the Federal Constitutional Court (Bundesverfassungsgericht ¼ BVerfG) in 2001. It held that a pay-as-you-go system presupposes a high birth rate to ensure the financial stability. Parents therefore contribute in two ways to the system: by paying contributions and by raising children. If they had to pay the same rate of contributions as persons without children, parents would be disadvantaged because they contribute with both financial means and the raising of children to a social security system that is intended to offer protection in an ageing society (BVerfG, 3.4.2001, 1 BvR 1629/94). At the same time, parents have to abstain from consumption and saving due to the high costs of child-raising (Sodan 2005, p. 566). Furthermore, childless persons do not suffer any disadvantages from their not-raising of children, because for them, care will be provided by professional care services that are financed by the future contributors. Consequently, they have a privileged position, as they contribute less to the system, but can receive full benefits (BVerfG, 3.4.2001, 1 BvR 1629/94).

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As a consequence of the BVerfG judgement, an extra 0.25% contribution is levied from all insured persons who are older than 23 years and childless. The age limit reflects the duration of the free health insurance for family members.10 This decision has been heavily criticised because—among others—there is obviously no guarantee that the children of the insured persons will be paying contributions in the future. They might die before they reach working age, become civil servants or self-employed or move away from Germany. Furthermore, the contribution bonus for parents might discriminate against persons who do not have children due to medical reasons.11 In contrast to the pension insurance, the long-term care insurance does neither recognise times of child raising as insurance periods nor does it contain other factors that would reward parenthood. Thus, the difference in the contribution rate is the only element of solidarity between generations.

Contribution Bonus for Parents in the Pension Insurance? In its decision on the long-term care insurance, the Federal Constitutional Court held that these principles might be of relevance in other fields of social security as well. This statement found some support: the specific burden of parents has to be compensated in pension insurance likewise by recognising a “generational contribution” (Lenze 2001, p. 280).12 In order to justify this view, reference is made to the costs of bringing up children. Lower contributions for parents would therefore relieve the burden on the family household (Müller and Burkhardt 1983, p. 76). In 2006, the Federal Social Court (Bundessozialgericht ¼ BSG) decided that the expenses of parents for the raising of their children do neither require them to be exempted from compulsory insurance nor from paying pension insurance contributions. Membership in the social security system depends solely on the pursuit of gainful employment and not on the ability or willingness to reproduce. Moreover, the discretion in legislation is broad; even the protection of the family in Art. 6 GG does not oblige the legislator to compensate for all financial burdens related to the raising of children. Having children is not only necessary for pension insurance purposes, but for society as a whole; therefore parents can be supported by the state in manifold ways (BSG, 5.7.2006, B 12 KR 20/04 R).13 This view has been confirmed in another judgement in 2015, when the BSG held that contributions to the pension system do not have to differ for persons who raised 10

Children of an insured person are no longer covered by their parent’s insurance if they are older than 23 years unless they are studying or in an apprenticeship. 11 A constitutional complaint against the contribution malus by a couple that has been childless due to medical reasons, however, has been rejected by the BVerfG, 2.9.2009, 1 BvR 1997/08. 12 Cf. Müller and Burkhardt (1983), p. 76, even long time before the establishing of the long-term care insurance. 13 A constitutional complaint directed against this judgement was not accepted for decision, cf. BVerfG, 5.1.2010, 1 BvR 3039/06.

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children compared to those who have not. The Court held that a pay-as-you-gosystem largely depends on high birth rates, thus the pension insurance has to promote families. However, families are protected adequately in the current system, e.g. by the awarding of income points for periods of child raising or by survivors’ pensions. Hence, the constitutional obligation to protect families is safeguarded. Furthermore, it is by no means clear that all children will be contributors in the future, whereas there is a certain probability that children will care for their frail parents. Therefore, the principles of the judgement related to the contribution bonus in the long-term care insurance were not regarded as transferable to the pension insurance (BSG, 30.9.2015, B 12 KR 15/12 R).

2.2.2

Sustainability Reserve

Another measure to ensure intergenerational solidarity by safeguarding stable contribution rates in the future, is the so called sustainability reserve (Nachhaltigkeitsrücklage). The statutory pension insurance institutions are obliged to establish this reserve, Art. 216 SGB VI, which consists of the operating resources (excluding the administrative capital) and reserves of the pension insurance institutions. Any surplus of current contributions over current pensions is transferred to this fund. It shall be used to cover future deficits that might arise due to cyclical fluctuation and thus leading to a situation that the statutory contribution rate is not sufficient to cover the expenses of the pension insurance institutions. Therefore, it is accounting for the solvency of the pension system as a whole, at least at short notice (Hebeler 2018, p. 850). The sustainability reserve fund shall amount to at least 0.2 times, maximum to 1.5 times the monthly expenses of the pension insurance, cf. Art. 158(1) SGB VI. The sustainability reserve is administrated by the German pension insurance, which is obliged to invest the financial means in a manner that excludes the possibility of loss of those means, ensuring adequate returns and guarantees sufficient liquidity. All investments with a maturity, notice period or remaining term of up to 12 months are considered as liquid. More detailed regulations regarding the administration of the “sustainability reserve” are regulated by the German Pension Insurance’s directorate.

2.2.3

Contribution Ceiling

As a rule, the contribution rate has to be calculated as to cover all necessary expenses of the pension insurance in the following year. The contributions have to raise if the sustainability reserve is expected to cover less than 0.2 of the pension insurance’s average expenditure, they have to decrease if the sustainability reserve is higher than 1.5 of the expenditure, Art. 158 SGB VI. In order to prevent an unlimited increase of the contribution rate, a contribution ceiling has been introduced in 2019. According to the new Art. 287 SGB VI, an

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exception to the rule of congruence between income and expenses is due, when the contribution rate would have to exceed 20%. If this is the case, the statutory ceiling of 20% comes into force. At the same time, a minimum contribution rate of 16.8% has been set up. In order to finance the gap, the federal government will provide an additional annual subsidy of 500 million Euros from tax revenues, Art. 287a SGB VI. These provisions will expire in 2025. They have been criticized due to high costs involved and for its missing long-term perspective to solve the financial problems of the pension insurance (Ruland 2019, p. 198 et seq). In order to discuss the long-term development, an expert commission “Verlässlicher Generationenvertrag” (“Reliable Generation Contract”) has been set up in 2018; in March 2020, it has submitted proposals for the future development of the pension system after the year 2025. Among others, the commission recommended to maintain the contribution ceiling. At present, the retirement age should not be raised further, as the increase from 65 to 67 is still ongoing. The pension insurance reserve should be increased; private and occupational pension provisions shall be further promoted. Hence, the commission’s proposals remain firmly rooted in the existing system and will not bring about impulses for fundamental reforms.

2.3

Elements of Generational Solidarity in the Calculation of Pensions

The legitimacy of the pension insurance system is increasingly being questioned—not only in respect of rising contributions but also due to fears that the pension level will not suffice to lead a life beyond the poverty line. The principle of equivalence between contributions and benefits14 seems weakened. Moreover, it is foreseeable that persons receiving the statutory minimum wage will receive a pension below the poverty line, thus being dependent on social assistance benefits in old age. Ever since the 1950s, the rules regarding the calculation of pensions have been under reform in order to ensure financial stability of the pension system and its sustainability for future generations. The Bismarckian system did not address the whole population, but focused on the social protection of the blue-collar workforce.15 In the funded system, pensions were due at the age of 70 years after a minimum of 30 contributory years; average life expectancy at that time, however, was about 45 years only. Hence, take up-rates were rather low in the early years and questions of intergenerational solidarity did not occur (Schlegel 2008, p. 566).

14

Equivalence does not have to be secured individually each insured person, but rather regarding the pension system as such, Hebeler (2001), p. 17; Eichenhofer (2019), p. 155. 15 At that time, the pension system had been limited to blue collar-workers; white collar-workers were included in 1911 only.

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1950s: Pay-as-you-go and Indexation of Pensions

This changed in the age of the German “Wirtschaftswunder” during the 1950s, which lead to an overall increase of income of the economically active. Since pensions consisted of a lump sum with a low earnings-related supplement only, pensioners faced an increasing risk of poverty. Social policy therefore addressed the aim that pensions should no longer function as a mere supplement to other forms of income, but should offer a basis for decent living. The 1957 pension reform lead to a shift from capitalisation to a pay-as-you-go scheme, which is based on the generational contract, i.e. the financing by the currently active generation (Ruland 2001, p. 3505; Schmähl 2015, p. 177). One of the underlying assumptions was that people would always have children, not anticipating birth control and changing social attitudes that lead to a severe decline of the birth rates from the 1960s. Pensions were now based on insurance years and the individual contributions. Another important aspect of the 1957 reform was the indexation (“Dynamisierung”) of pensions, which means that the benefits were adapted to the development of the gross income of all insured persons during the last 3 years. Thus, pensioners shall be able to participate in general prosperity. With this reform, pensions became a benefit that allowed to keep one’s standard of living during the work life even after retirement: The standard pension offered a replacement rate of 60% of the average income.

2.3.2

1970s: Promotion of Early Retirement

The economic crisis 1970s lead to a massive increase of unemployment rates. Social policy, however, did not follow a sustainable strategy, but rather focused on elder persons leaving the labour market by allowing early retirement without any cuts in benefits, which has been heavily criticised for its consequences regarding the financing of the pension system (Ruland 2000, p. 745).16 Hence, the unemployment risk had partially been transferred to the pension insurance. At the same time, indexation of pensions has been curtailed, periods of education were limited, contribution rates raised, and conditions for invalidity pensions restricted.17 It became evident, that with the decreasing birth rates and rising unemployment the expenditure would have to be financed by fewer workers, while at the same time the number of recipients increased. Thus, the basis of the intergenerational contract, which—in technical terms—does not fulfil the criteria of a contract because it is not

16

The possibility of early retirement at the age of 63–65 without any adjustments in pension amounts had been introduced with the 1972 reform for persons who had completed 35 contributory years and at the age of 60 for persons with disabilities who would not find employment, be it for health reasons or due to the situation on the labour market. Moreover, it was rather simple to gain an invalidity pension. 17 For an overview of the 1970s and 1980s reforms cf. Kreikebohm (2015), p. 182 et seq.

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concluded on a voluntary basis and cannot be terminated (Hebeler 2001, p. 58), has been questioned.

2.3.3

1990s: Reunification, New Pension Formula, Shift to Revenue-Oriented Spending Policy

With the 1992 reform, the pension-formula has been adapted in order to avoid that the contribution rate might amount up to 36–41% in 2030 (Ruland 2001, p. 3506). Pensions are now indexed to the average net income of the insured persons, taking into account that the rising financial burden of taxes and social security contributions had lowered their disposable means significantly. Pensions should therefore no longer increase when taxes and contributions increased as well. Besides, the opportunities to early retirement without cuts have been gradually removed, pensionable age raised from 60 and 63 years to 65 years (Kreikebohm 2015, p. 182). The reform has passed the Parliament on November 9th 1989—just a few hours before the fall of the Berlin wall. This unexpected event has had severe consequences for the public pension system, for during the early 1990s, the pension entitlements of the persons formerly insured in the GDR social security scheme had been transferred into the West German system, based on fictitious contributions for a career with the average income of all insured persons. This had to be financed with the means of the pension insurance itself, since policy refused to raise taxes. This intensified the financial burden on the pension scheme (Kreikebohm 2015, p. 182). Still, the system was rather generous, offering an income replacement rate of 63.9% after 40 insurance years and 71.9% after 45 years. Retirement age was raised to 65 years, offering exceptions at 63 years for a small group of long persons with more than 35 insured years. In case of early retirement, the pension is permanently reduced by 3.6% per year. At the end of the 1990s, the government prepared another reform, which was intended to equally spread the burden among contribution payers and beneficiaries. The so-called demographic factor had been developed, relating the “current pension value” (¼ the result of indexation) not only to net income, but also to the life expectancy of those aged 65 years and older (Ruland 2001, p. 3506). After the elections in 1998, the new government suspended this concept.

2.3.4

2000s: Three-Pillar-Model and Sustainability Factor

In 2001, the new government developed a reform that brought about system shift by setting incentives for private and occupational schemes. The stability of the contribution rate became one of the most important aims of the pension system, which forced to abstain from the former goal of maintaining the living standard during work life. Indexation has been changed, once more, now relating to a “modified gross income”, which referred to the average gross income of the workforce reduced by

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the contribution rate to the statutory pension insurance (including employer and employee contribution) and the proportion of their income spent on private pension schemes (“Altersvorsorgefaktor”). Hence, pensions increase lower, either if the contribution to the statutory system is raised or if the insured persons invest a greater proportion of their income to private pension arrangements. This principle takes into account that high contributions for retirement arrangements lower the household income that is available for consumption. Since then, the pension level amounted to 70.7% for the standard pensioner with 45 contributory years at average income in 2020 and to 64.3% in 2030 (Kreikebohm 2015, p. 183). In order to foster private provision, tax subsidies have been introduced, which amount to 154.00 Euro per year plus 185.00 Euro per child per year, maximum 2100 Euro per year. The full tax subsidy is paid only if a person invests at least 4% of his/her income in a private pension arrangement. Besides, occupational arrangements have been fostered: employees have the right to transfer up to 4% of their income in entitlements for occupational pension (Ruland 2001, p. 3510), thus, however, lowering their contributory basis for the statutory scheme. In 2004, the demographic factor has been re-introduced, now called sustainability factor (“Nachhaltigkeitsfaktor”). Ever since then, pensions are indexed according to the modified gross income and the so-called pensioner-quote referring to the share of pensioners compared to the number of contribution-payers. Hence, the more pensioners, the lower the birth rate and the higher the unemployment rate, the lower the yearly increase of pensions (Sodan 2005, p. 562; Kreikebohm 2015, p. 185). Moreover, the standard pension level has been further reduced to 46% in 2020 and to 43% in 2030—a massive cutback! The maintenance the former standard of living can only be achieved with a combination of statutory, private and occupational schemes; statutory pension offers a mere basic security (Lenze 2019, p. 266). These measures shall lower the financial burden for the contributors in the pay-asyou-go system. If the contributions shall not raise beyond a certain rate, it is indispensable in terms of intergenerational solidarity that current pensioners contribute to it. Hence, if indexation leads to a lower rise of the current pension amount, it is not regarded as inequitable (Ruland 2000, p. 753).

2.3.5

2010s: Longer Working Life and Minimum Pensions?

In 2007 already, the pensionable age has been raised to 67, which will be gradually introduced from 2012 to 2029. The transition period had to be long in order to conform to the principle of protection of confidence and the rule of law. It is possible to receive pension benefits while continuing to work. There are no deductions from the pension if the person has reached pensionable age. However, before reaching the pensionable age, strict income ceilings used to apply until 2017: No deductions were due if the income did not exceed 450.00 Euro per month. A parttime pension (Teilrente) was awarded at a level of 1/3, 1/2 or 2/3 of a full pension. Depending on the level of pension, there were different income ceilings, which had been applied very strictly. If a pensioner has, for example, received a 2/3 pension,

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but exceeded the income ceiling by just 1 Cent, he would automatically downgrade to a 1/2 pension. This has been recognised as a disincentive for working in the pensionable age, therefore in 2017 the so-called “Flexi-Pension” has been introduced in order to foster the transition from work to pension (Eichenhofer 2019, p. 180). After the reform, there are no deductions from the pension for income up to 6300 Euro per year. Income above this ceiling is deducted from the pension, though not in full but at a rate of 40%.18 Even though the danger of old age poverty has increased after the recent reforms (Schmähl 2015, p. 193), Germany has not introduced a minimum pension. Pensions that do not suffice to cover the minimum of subsistence, can be augmented by social assistance benefits. In 2019, a minimum standard pension level of 48% has been established in the Pension Insurance Act. The provision will expire in 2025; it is closely linked to the contribution ceiling of 20% that has been introduced with the same act. The introduction of a minimum pension is currently under debate for all persons with long contributory periods of minimum 35 years whose pensions remain under the social assistance level. However, it has been questioned whether it is the task of the pension system to subsidise the negative outcomes of low wages on the employment market. Besides, one has to take into account possible free rider effects if minimum pensions are paid to formerly part-time workers in the same amount as for full-time workers (Kreikebohm 2015, p. 190). From a legal point of view, the proposal raises the question of equal treatment: how should one justify different levels of pensions—subsidised and not subsidised—for the same group of persons: employees paying contributions upon their income from work? The risk of poverty does not suffice as a justification, because it is addressed by the social assistance scheme. Rather, the principle of equivalence between contribution and benefit would be undermined (Papier 2019, p. 6). However, there is no constitutional obligation to stick to this principle.

3 Conclusions Pay-as-you-go-systems are based on the assumption that children are born and thus a sufficient number of contributors will grow up at any time. Its continuance relies on the wealth and the willingness of future generations (Müller and Burkhardt 1983, p. 74; Hebeler 2018, p. 849). The inclination to pay contributions for the pension insurance will decrease when today’s employees face the fear that their own pension entitlements will be (significantly) lower than those of today’s pensioners (Krüger 1996, p. 643). In order to maintain the acceptance of the system as such, the legislator will have to safeguard that the underlying principles of the statutory

18 http://www.deutsche-rentenversicherung.de/Allgemein/de/Inhalt/Allgemeines/FAQ/ gesetzesaenderungen/flexirente/01_faq_liste_hinzuverdienstgrenzen.html.

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pension scheme still correspond to reality (Schlegel 2008, p. 569; cf. also Hebeler 2001, p. 32). The German pension insurance act does not allow for cuts in current pensions of those who already receive these benefits, cf. Art. 306 SGB VI. Hence, only future pensioners will have to carry the financial burden of adverse developments (Cirsovius 2011, p. 1). Recent reforms have led to a rise of contributions as well as the pensionable age and a massive lowering of the guaranteed standard pension level for those currently economically active. The younger generation has to pay more, but will receive less. Due to the continuingly low birth rates, the problem will intensify in the future. These developments raise questions of justice, especially if the average pension level only slightly exceeds the level of social assistance benefits, thus questioning whether pension insurance is still capable to reflect lifetime earnings. This discussion came up again in the recent election campaigns: most of the eligible voters in Germany are older than 55 years, so the political parties are suspect to not sufficiently protect the interests of the younger generation and/or those with low incomes (Cf. Hebeler 2001, p. 27). This impression has been confirmed by the recent increase of benefits for current pensioners, e.g. the doubling of income points for child raising periods that have been completed before 1992 or the new rules on early retirement without deductions at the age of 63 after 35 insured years (Kreikebohm 2015, p. 186 et seq). Pension policy seems fixed to present, to the detriment of future generations, hence promoting intergenerational injustice (Kahl 2014, p. 18). One could argue that, over the past decades, social insurance became an insurance against the risk of remaining childless, with the childless not paying contributions to insure that risk (Lenze 2019, p. 271). The costs of financing pensions are socialised, if childless persons and parents pay the same contribution rate; the costs of childraising, however, are privatised, which leads to intragenerational redistribution between those who have children and those who do not (Seiler 2016, p. 645) and might trigger conflicts between these groups (Krüger 1996, p. 644). One solution could be to exempt the share of income that represents the minimum of subsistence for all family members—including children—not only from taxes, but also from social security contributions (Lenze 2019, p. 271). However, this could be only one element for making the pension system sustainable. Regarding the fear of poverty in old age, one has to bear in mind that the German pension system is not intended to prevent poverty; low earnings lead to low pension amounts (Papier 2019, p. 2). A rise in wages would therefore be crucial in order to accumulate more income points. Prolonging work-life is essential as well:19 social insurance is supposed to cover financial loss due to the materialisation of a social risk. Within the last decades, however, old age rather became a “risque heureux”.

19 Many member states have increased pensionable age in recent years and established disincentives for early retirement (Eichenhofer 2014, p. 206).

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It is inevitable to equally share the burdens of solidarity—and not just its advantages (Ruland 2000, p. 749). Otherwise, the basis of the “generational contract” will erode.

References Becker U (2018) Das Sozialrecht: Systematisierung, Verortung und Institutionalisierung. In: Ruland F, Becker U, Axer P (eds) Sozialrechtshandbuch, 6th edn. Nomos Publishing, BadenBaden, pp 51–82 BMAS - Bundesministerium für Arbeit und Soziales (2016) Alterssicherungsbericht 2016. https:// www.bmas.de/DE/Presse/Pressemitteilungen/2016/rentenversicherungsbericht-2016.html Cirsovius T (2011) Generationengerechtigkeit in der gesetzlichen Rentenversicherung und Korrekturmöglichkeiten. Die Sozialgerichtsbarkeit 2011:1–9 Eichenhofer E (2014) Europäische Einflüsse auf die Alterssicherung. Zeitschrift für Europäisches Sozial- und Arbeitsrecht 2014:203–208 Eichenhofer E (2019) Sozialrecht, 11th edn. Mohr Siebeck, Tübingen European Commission (2008) A renewed commitment to social Europe: Reinforcing the Open Method of Coordination for Social Protection and Social Inclusion, COM(2008) 418 final European Commission (2010a) Europe 2020: A strategy for smart, sustainable and inclusive growth, COM(2010) 2020 final European Commission (2010b) Green Paper towards adequate, sustainable and safe European pension systems, COM(2010) 365 final European Commission (2012) White Paper. An Agenda for Adequate, Safe and Sustainable Pensions, COM(2012) 55 final European Commission (2018) Recommendation for a Council Recommendation on the 2018 National Reform Programme of Germany and delivering a Council opinion on the 2018 Stability Programme of Germany, COM(2018) 405 final Hebeler T (2001) Generationengerechtigkeit als verfassungsrechtliches Gebot in der sozialen Rentenversicherung. Nomos, Baden-Baden Hebeler T (2018) Nachhaltigkeit der Sozialsysteme unter verfassungsrechtlichen Gesichtspunkten. Neue Zeitschrift für Sozialrecht 2018:848–852 Janda C (2018) Armutsbekämpfung im Recht: Welche systematische Verankerung gibt es und welche Änderungsvorschläge bieten sich an? Deutsche Rentenversicherung 2018:386–398 Kahl W (2014) “Soziale Gerechtigkeit” oder Generationengerechtigkeit? Zeitschrift für Rechtspolitik 2014:17–21 Köhler-Rama T (2019) Das schwierige Verhältnis von Bedarfs- und Leistungsgerechtigkeit in der gesetzlichen Rentenversicherung. Die Sozialgerichtsbarkeit 2019:80–84 Kreikebohm R (2015) Die Lebensstandardsicherung der gesetzlichen Rentenversicherung als auslaufendes Modell? Die Sozialgerichtsbarkeit 2015:181–192 Krüger J (1996) Generationensolidarität oder Altenmacht - Was trägt (künftig) den Generationenvertrag? Zeitschrift für Sozialreform 1996:625–656 Lenze A (2001) Die Urteile des Bundesverfassungsgerichts zur Pflegeversicherung - Konsequenzen für die Rentenversicherung und für den Prozess der europäischen Sozialrechtsharmonisierung. Europäische Grundrechtezeitschrift 2001:280–286 Lenze A (2019) Der demografische Wandel - eine Herausforderung für die soziale Sicherheit oder “alles halb so wild”? Die Sozialgerichtbarkeit 2019:265–271 Müller JH, Burkhardt W (1983) Die 3-Generationen-Solidarität in der Rentenversicherung als Systemnotwendigkeit und ihre Konsequenzen. Sozialer Fortschrift 1983:73–77 Papier HJ (2019) Mindestsicherungselemente im System der Alterssicherung: Spielräume und Grenzen aus verfassungsrechtlicher Sicht. Deutsche Rentenversicherung 2019:2–7

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Ruland F (2000) Solidarität und Individualität - Ein allgemeines Thema konkretisiert am Beispiel der Rentenversicherung. Deutsche Rentenversicherung 2000:733–757 Ruland F (2001) Schwerpunkte der Rentenreformen in Deutschland. Neue Juristische Wochenschrift 2001:3505–3511 Ruland F (2019) Neue Regeln für die Rentenanpassung und die Festsetzung des Beitragssatzes in der gesetzlichen Rentenversicherung. Die Sozialgerichtsbarkeit 2019:193–199 Schlegel R (2008) Solidarität - ein Rechtsbegriff? Die Sozialgerichtsbarkeit 2008:565–569 Schmähl W (2015) Die wachsende Bedeutung der Dynamisierung von Alterseinkünften für die Lebenslage im Alter. In: Fachinger U, Schmähl W, Absicherung im Alter, Diskurse und Perspektiven, LIT Publishing Münster Schulte B (2009) Die rechtlichen Rahmenbedingungen der Offenen Methode der Koordinierung und ihr Einsatz in den unterschiedlichen Aktionsfeldern. In: Devetzi S, Platzer HW, Offene Methode der Koordinierung und Europäisches Sozialmodell. ibidem Publishing, Stuttgart Seiler C (2016) Richterlicher Eigensinn im Sozialversicherungsrecht. Neue Zeitschrift für Sozialrecht 2016:641–645 Sodan H (2005) Verfassungsrechtliche Determinanten der gesetzlichen Rentenversicherung. Neue Zeitschrift für Sozialrecht 2005:561–568 Waltermann R (2018) Sozialrecht, 13th edn. C.F. Müller Publishing, Heidelberg Zacher HF (1997) Solidarität. In: Deutscher Verein, Fachlexikon der sozialen Arbeit, 4th edn. p 830

Beyond the Formal Principle of Intergenerational Sustainability in the Italian Social Security System Michele Faioli

Abstract Equilibrium between financing and social security rights, aimed at protecting the intergenerational pact, holds the potential to shape a new doctrine: the intergenerational pact in the Italian social security system is based on Article 38 and Article 81 of the Italian Constitution. Article 38 regulates the social security rights’ frame. Article 81 states the legal mechanism grounding the social security financing schemes. This essay intends to explore a topic previously not fully addressed in scholarly commentary: how Article 81 of the Italian Constitution is becoming the unifying principle for a process through which the Italian constitutional case law is brought into alignment with mainstream European attitude to consider the social rights entitlements in combination with the budget equilibrium and the intergenerational pact. Such combination is majoritarian, not only related to acts of judicial will, because directly arising from Article 9 TFEU. Indeed such combination is accepted because the Italian Constitutional Court’s insights about the budget equilibrium and the intergenerational pact are consistent with long-term changes in industrial and market attitudes. As these attitudes evolved, so did the social meaning of the budget equilibrium and the intergenerational pact.

The main items of this essay were developed on the basis of the Italian Report, concerning the Italian social security system and the legal concept of sustainability, I carried out for the 2018 Congress of the International Academy of Comparative Law – Japan (http://www.congre.co.jp/ iacl2018/). M. Faioli (*) Università Cattolica, Milan, Italy e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_3

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1 Introduction. The Intergenerational Pact in the Italian Social Security System. Interlocking Between Article 81 and Article 38 of the Italian Constitution The intergenerational pact in the Italian social security system is based on Article 38 and Article 81 of the Italian Constitution. The specific normative vision of such intergenerational pact is defined by Article 81 of the Italian Constitution, which completes the legal scheme of Article 38 of the Italian Constitution: Article 81, as amended in 2012 (in relation to the European measures to face the financial crisis1), fixes that the State can not incur debts in a future perspective (save in exceptional circumstances); article 38 provides with a broad definition of social security rights, along with, on one side, the related material scope (old age, unemployment, sickness, etc.) and, on the other, the personal scope (for workers, within a relation career/ contribution/benefits, or for citizens, within a tax based relation between social needs and benefits). Article 81 of the Italian Constitution is the legal mechanism grounding the social security financing schemes, in view of the intergenerational solidarity and the mandatory equilibrium of the Italian State budget. Indeed Article 81 defines the legal scheme by means of the State can impose social security contributions. Article 81 refers to what extent such contributions should be fixed because it is the legal basis of the relation between the Notional Defined Contribution (NDC) mechanisms,2 that reshaped the Italian system as of 1995, and the Italian pay-as-you-go pensions schemes. Article 81 interlocks Article 38: the first completes the second constitutional norm, with a broader ratio for the legal basis of the Italian social security system. The first norm is related to resources and financing (Article 81), the second norm to benefits and institutions (Article 38). The first norm (Article 81) obliges to have a financing system that must be framed within and between the generations, in view of the budget equilibrium and the intergenerational pact. The second norm (Article 38) creates social rights that should be necessarily based on such equilibrium, given the Italian choice for the pay-as-you-go scheme. Indeed, such pay-as-you-go scheme is based on the intergenerational pact (i.e. active workers paying for retired workers). As rights have their own costs, even social rights have their own costs. Better, such costs are higher than the (normal) rights’ costs: social rights’ costs are significantly linked to the intergenerational aspect of the social security system. Therefore equilibrium between financing and social security rights, aimed at protecting the intergenerational pact, holds the potential to shape a new doctrine. The Italian Constitutional Court has continued to invoke sustainability of the social security

1 On the relations between labor, social security and Fiscal compact see Barnard (2012), p. 98; Treu (2015), p. 597; Deakin (2018), p. 589; Sciarra (2015), p. 757. 2 See the definition that Boeri and Galasso (2010), p. 3, elaborated on the NDC regime.

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system and of intergenerational solidarity in constitutional cases, which get around Article 81 and Article 38. The problem is how exactly it can happen. This is still not fully developed. Therefore the main point of the following reasoning regards Article 81 and it own possible social security dimension, also beyond Article 38. Scholarly commentary about such issue has addressed the idea of social security contributions mostly as a matter of Article 38. This essay builds on that idea and extends it in a different direction.3 Here my focus is on constitutional case law interpretation of Article 81 in combination with Article 38, not only doctrine. Rather than addressing social security contributions regime as a scheme arising from Article 38, this essay intends to explore a topic previously not fully addressed in scholarly commentary: how the Article 81 of the Italian Constitution’s cases served as the unifying principle for a process through which the Italian constitutional jurisprudence was brought into alignment with mainstream European attitude to consider the social rights entitlements (Article 38) necessarily in combination with the budget equilibrium and the intergenerational pact. This is developed to go beyond the formal principle of intergenerational sustainability in the Italian social security system. Case law and principles arising from the Italian Constitutional Court affirms that such interlocking between Article 81 and Article 38 is not only necessary for current relations between generations working and living in the same historical context (intra-generational solidarity—see the cases of the Italian Constitutional Court judgments Nos. 70 of 2015 and 250 of 2017; more broadly Constitutional Court judgments Nos. 2 of 1994 and 6 of 2015), but even for forthcoming relations, i.e. intergenerational relations (see the case fixing the idea of the “social security intergenerational circle” in Constitutional Court judgment No. 173 of 2016). In exploring the role of Article 81 of the Italian Constitution, this essay draws on two paths. The first path explores how laws take into consideration the intergenerational pact. The second path explains judicial review and constitutional interpretation as a process that is shaped not only by precedent and doctrine, but also by the arguments of social movements addressing what young people and new generations are asking for the future (see, for instance, the proposal of April 11, 2019, arising from the social and political movements, which is aimed at introducing in the Italian Constitution the equilibrium and sustainable development as a fundamental right4). This creates links among judicial interpretations, public understandings, and constitutional culture. The intergenerational pact may be examined also in relation to the recent Italian social security reforms. The Italian pension system faced with several reforms. Act No. 335/1995 redefined the Italian pension system by reforming the previous

3 See such key concept was partially elaborated in Santoro Passarelli (1948), p. 177. More recently, Sandulli (2019), p. 1. See also my essay on this topic Faioli (2018), p. 138. 4 See https://piueuropa.eu/wp-content/uploads/2018/11/generazioni.pdf; see also http://asvis.it.

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regime:5 within the pay-as-you-go system, it introduced the defined-contribution scheme (the above mentioned NDC). This means that the benefits are calculated by taking into account contributions paid during the professional career, under a rate of return, and a gender-neutral transformation coefficient (periodically reviewed) in view of the life expectancy. Act No. 335/1995 introduced a scheme that determined a reduction in the level of the pension benefit, also with the purpose of guaranteeing long-term financial sustainability of the Italian pension system. Act No. 335/1995 fixed a single type of old-age pension benefit to replace the multiple forms of pensions (e.g. seniority pension, old-age pension, special anticipated forms of pension, etc.). Act No. 247/2007—and later Act No. 214/2011—modified the eligibility requirement to access the seniority pension by increasing retirement age with the aim of accelerating the abolition of such a pension scheme, and it suspended the automatic adjustment mechanism of pension benefits exceeding eight times the minimum pension (hereinafter, also “equalization” or “indexation”). Act No. 214/2011 suspended for two years the automatic equalization/indexation mechanism of pension benefits exceeding three times the minimum pension income paid by INPS (see Article 24, para. 25, of Act No. 201/2011 –). This is aimed at (i) balancing the expenditure for public pension schemes with the social security contributions paid by workers in activity; (ii) guaranteeing the long-term sustainability of the Italian pension system. The measure consisting of the temporary suspension of the automatic equalization mechanism of pension benefits exceeding three times the minimum pension income paid by INPS, introduced by Act No. 214/2011, has been found unlawful by the Italian Constitutional Court, as it violates the constitutional principles of proportionality and adequacy of pension benefits with subsequent detriment to the purchase power of the pension income, as well as with irreparable damage to workers’ expectations in relation to the time following the termination of their working life.6 The intergenerational pact may be also related to the interpretation that the Italian Constitutional Court stated in the last decades. In this viewpoint, the Italian Constitutional Court stated that there are possibilities for the state to restrict certain freedoms or rights in the name of protection of the future generation. Under a consolidated orientation of the Constitutional Court case law, the legislator has the discretionary power to set the rules for an adequate pension benefit based on the availability of economic and financial resources, guaranteeing a minimum level of protection for individuals. Through judgment No. 223 of 2012, the Constitutional Court ruled that the seriousness of the financial situation that the government had to face could justify the adoption of exceptional measures with the aim of reconciling, on the one hand, the need to stabilize the budgetary situation and, on the other, the

5

See the historical frame in Schoyen and Stamati (2013), p. 79. More recently Act No. 4/2019 reshaped the schemes related to the anticipation of the old age pension for some categories of workers, facilitating the access to the old age pension of a special and limited cluster of workers (i.e. born between 1952 and 1957). Such 2019 regulation does not properly take into consideration the long term sustainability of the Italian social security system. 6

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need to guarantee services and rights for individuals according to the constitutionally entrenched equality principle. There are examples of reduction of the pension benefit, justified by the government directly or indirectly in relation with the interests of the future generations. In reducing the pension level, the Italian legislator meets certain constitutional limits such as those imposed by Article 36, para. 1, of the Italian Constitution (i.e. fair wage principle). In this regard, the Italian Constitutional Court stated that the legislator has the discretionary power to set the rules for an adequate pension benefit based on the availability of economic and financial resources, guaranteeing a minimum level of protection for individuals (see Constitutional Court judgments Nos. 223 of 2012 and 316 of 2010). Against such a background, the Constitutional Court also stated in this latter judgment that the measure consisting of a temporary suspension of any equalization of the highest pension benefits (i.e. the measure introduced by Article 1, para. 19 of Act No. 247/2007) is lawful provided the principle of proportionality is observed. This is aimed at avoiding a detrimental effect on the State budget. This could be deemed a valid reason to jeopardize rights already accrued or the individual and/or collective sphere of consolidated rights. This essay proceeds in four paragraphs. The introduction (the present Para. 1) briefly examines the main aspects of the problem I intend to analyze. Para. 2 develops theoretical framing on the (new) social security functions of Article 81 within the intergenerational pact. Para. 3 sketches the (real and possible) impact of Article 81 on the Constitutional case law. Para 4 is related to the theories related to the necessary multidisciplinary approaches to sustainability in social security and the EU Social Pillar functions in buttressing sustainability in social security, evoking the function of Art. 9 TFEU.

2 Article 81 of the Italian Constitution Plays a Social Security Role from an Intergenerational Equality Perspective The case law of the Italian Constitutional Court sets out a fundamental system-wide tenet of the social security system: whereas lawmakers shall comply with the limitations set forth in Article 81 of the Italian Constitution, the Constitutional Court is all the more obliged to strike a balance between Article 38 and Article 81 Cost. This also implies a ruling on expenditure issues, that is related to the relevant parliamentary and governmental procedures to ensure budgetary balance.7

7 Cf. two Constitutional Court judgments issued in 2018, showing the painstaking interpretative approach the Constitutional Court in adopting in relation to the interaction between Article 81 Cost. and the social security system; in particular, cf. judgment no. 12 dated 30 January 2018 and Constitutional Court judgment no. 20 dated 2 February 2018, which stresses that the lack of a

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On other occasions, the Constitutional Court had already stated that budgetary balance is internally consistent and comprehensive, which underlies the application of the new principles, particularly that of sustainability of public debt (Constitutional Court judgment no. 88 dated 10 April 2014). This entails that institutions and citizens, in accordance with the founding principles of solidarity and equality, are responsible towards future generations (see also Constitutional Court judgment no. 264 dated 19 November 2012). In view of the Constitution, as reshaped by the 2012 constitutional reform (which became effective in 2014), it is possible to argue in favor of a social security role played by Article 81 Cost. Budgetary balance may entail reshaping social security rights through the adoption of measures restraining the rights of the generations that already receive a pension. The rules on pensions and the related case law should consider the intergenerational guarantee role played by Article 81 Cost., as amended following the 2012 constitutional reform: this provision prohibits incurring debts in a future perspective (save in exceptional circumstances), in view of the sustainability of the social security system and of intergenerational solidarity.8 Compared with the previous version, the current wording of Article 81 Cost. does not entail any further hurdles to defining hierarchies between constitutional rights; in this regard, the benchmarks are constituted by the importance of budgetary balance, on the one hand, and social security law, on the other; inasmuch as Article 81 Cost. does not eliminate the classic distinction between absolute rights and so-called “financially conditional rights”, it identifies a remedy for the problem of the financial burden entailed social security rights and for the related intergenerational iniquities, in line with the intention, voiced at EU level, to tackle our large public debt in a responsible way.9 In 2012 the budgetary balance principle became a constitutional principle. This means, also in relation to the rights enshrined in Article 38 Cost., converting the financial burden entailed by rights into monitoring procedures, in compliance with the international solidarity commitment set forth in Article 81 Cost. Such commitment would otherwise be negatively affected by public debt (in our case, the pension debt to be shouldered by future generations).10 Therefore, following the 2012 constitutional reform, it can be inferred that the annual budget law

detailed description of financial needs and savings is considered as a sign of the unreasonableness of the balance struck by lawmakers on a case-by-case basis. 8 See Sterpa (2015), p. 1. 9 Cf. the observations by Holmes and Sunstein (2000), p. 1 ff. 10 From an intergenerational perspective, the financial burden entailed by rights is monitored by the Government, the Parliament, the President of the Republic and, if called upon to balance rights, also by the Constitutional Court. Concerning intergenerational equity and Article 81 Cost., cf. the research by Lupo (2011), p. 1, according to whom the constitutional value undoubtedly underlying the budgetary balance principle is intergenerational equity. Cf. also the observations by Bozzao (2017), p. 1 ff.

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defines the scope of the national economic policy, in compliance with EU obligations concerning public debt and budgetary balance in structural terms.11 The social security role played by Article 81 Cost. (following the 2012 constitutional reform) triggers a reflection on the monitoring of the allocation of social security contributions.12 A piece of legislation restraining pension rights, with a view to overcoming the imbalance in relation to Article 81 Cost. could pass the Constitutional Court’s test of constitutionality only provided the financial effects of its provisions benefit the same social security fund, in compliance with a intergenerational approach protecting the interests of future pensioners, as well as in accordance with the principles enshrined in Constitutional Court judgment no. 173 dated 5 July 2016. More in detail, this ruling specifies that the measure shall be targeted at underpinning the pension system and at supporting the social security rights of the weakest groups, also in compliance with an intergenerational mutuality principle. Derogations can be implemented in relation to the principle of the protection of legitimate expectations with a view to guaranteeing the pension benefits already accrued.13 When approving new legislation on social security, lawmakers should be encouraged, also by constitutional case law, to demonstrate that social security savings (which represent a sacrifice today) are redistributed among other social security benefits, present (as per Article 38, para. 2, of the Italian Constitution) or future (pension entitlements of today’s young workers). This would allow social security savings to have a significant effect: if such savings were oriented towards structural expenditure, doubts could arise as to the choice made by lawmakers, as well as its effects;14 however, if such savings were oriented towards specific social security measures (present or future), this would mean the full implementation of the (new) social security role carried out by Article 81 Cost., which is aimed at protecting the pay-as-you-go system and, thus, the intergenerational pact. In this way, the most effective link possible between Article 81 and Article 38 Cost. would come to life, in full compliance with the principle of intergenerational social security solidarity, which will be required in a future perspective in order for a pay-as-you-go pension system to exist.

11

See the analysis by Gallo (2017), p. 9; also Pallante (2016), p. 2499, and Perez (2016), p. 758; moreover, for a critical analysis of the issue of the compatibility of social rights with Article 81 Cost., in the framework of the substantial equality principle, Carlassare (2015), p. 1. 12 In particular, Cinelli (2015), p. 441, who outlines this issue in a very effective way. 13 In this regard, Sandulli (2016), p. 687. 14 In this regard, cf. also the argument underlying Constitutional Court judgment no. 7 dated 11 January 2017, from which it can be inferred that the savings set out by provisions inspired by Article 81 Cost. are deemed to be unconstitutional in relation to Articles 3, 38, and 97 Cost. inasmuch as they set out that the sums stemming from the expenditure cuts envisaged by such provision are paid annually by the National Pension and Social Security Fund of Registered Accountants into a specific revenue heading of the state budget. Cf. the commentary by Mastroiacovo (2017), p. 52.

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3 Insights from the Constitutional Court’s Recent Case Law The Constitutional Court, through judgment no. 250 dated 1 December 2017, redefined the interpretative trends improperly developed by some lower courts (Turin, Genoa, La Spezia, Cuneo, etc., hereinafter also “lower courts”) between 2016 and 2017 in relation to Constitutional Court judgment no. 70 dated 30 April 2015. The same courts raised a question of constitutionality with regard to Article 24 of Decree Law no. 201 dated 6 December 2011, as amended in 2015.15 Lower courts, leveraging constitutional case law dating to 2015 and 2010, were wrong in considering the existence, within the Italian legal system, of a right for pensioners prevailing over any loss of purchasing power of the pension benefit, which albeit limited to short periods of time, is irreversible16’ by virtue of the principles of equality, reasonableness, and proportionality of the pension entitlements, and the principle of protection of acquired pension rights. Starting from this point, referring courts went as far as to consider the 2015 legislation not in compliance with the principle descending from the joint application of Articles 36, 38, and 3 Cost., which states the de facto/formal equality principle, as well as not in accordance with Article 36 Cost., since the very limited extent of the adjustment is in breach of the principle of proportionality between pension, which represents the protraction17—in the form of pension payments—of the salary received during a contract of employment and the salary received when carrying out the working activity. But, such power does not exist. Lower courts were wrong in suggesting that the Constitutional Court—in disregard of the social security provisions that, over time, have set the pension calculation mechanism in relation to the pay-as-you-go system (cf. the reforms since 1995 onwards)—has the power to assess which amount is to be considered as wage as per Article 36 Cost. and, in line with such amount, can assess the correctness of the equalization effect on a pension benefit that is, e.g., six or five times as high. Lower courts were wrong in considering all of this normal and, consequently, in framing such power of the Constitutional Court within the broader

15

Following Constitutional Court judgment no. 70/15, Article 24, paras. 25 e 25a of Decree Law no. 201/11 was modified by Decree Law no. 65 dated 21 May 2015 (turned with modifications into Law no. 109 dated 17 July 2015), by Article 1, para. 483 of Law no. 147 dated 27 December 2013, and by Article 1, para. 286 of Law no. 208 dated 28 December 2015. Cf. the analysis on case law conducted by Bozzao (2015), p. 362. Cf. also the two main orientations emerging from among social security law scholars; on the one hand, cf. the paper by Pandolfo (2015), as well as Sandulli (2015), p. 559; a different view has been expressed by Pessi (2015), p. 400. 16 See also judgment no. 316 dated 3 November 2010, the Italian Constitutional Court. 17 Since the very limited extent of the adjustment—in breach of the principle of proportionality between pension and pay, and of the principle of adequacy of the social security benefit—alters the principle of equality and reasonableness, causing unjustified discrimination against pensioners. In this regard, cf. the observations by Sgroi (2015), p. 1 and by Giubboni (2015), p. 1. Cf. also D’Onghia (2015a, b), p. 319; Garofalo (2015), p. 680.

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rule of reason.18 Indeed, through judgment no. 250/2017, the Italian Constitutional Court, acknowledging the completeness and comprehensiveness of the documentation behind the 2015 regulation,19 limits the scope of application of Articles 36 and 38 Cost. and, at the same time, allows Article 81 Cost. to play a role in this regard: social security and pension rights are subject to the procedures and effects of Article 81 Cost. Moreover, through judgment no. 250 of 2017, the Constitutional Court clarifies that a fair balance between rights and public expenditure can be struck through and in the framework of Article 38, para. 2 Cost. (judgment no. 156 of 1991), which only indirectly (judgment no. 361 of 1996) entails a connection with Article 36, para. 1 Cost., also with a view to providing a more specific content to the adequacy principle. Lawmakers make decisions in quantitative terms in reason of the more general budgetary balance principle as per Article 81 Cost. The Constitutional Court insists on this issue, and leverages one of its orientations on the matter, declaring that there is no entitlement to link pensions to salary, on a permanent basis (principle of fair balance of constitutional interests in the framework of economic and financial constraints as per judgment no. 220 dated 11 February 1988, and ordinance no. 531 dated 6 December 2002).20 The assumed correspondence between the working activity and the salary on which social security

18 Moreover, according to Constitutional Court judgment no. 250/2017, the rule of reasonableness, which should be referred to in the framework of the disputes concerning equalization, does not even coincide with the method at the basis of the proportionality test that is used at EU level to strike a fair balance between social rights and economic freedoms (see the argumentations of Portuese 2013, p. 612 ff.). The systemic misunderstanding of this issue is behind all problems relating to equalization or similar matters (cf. also more recently Constitutional Court judgment no. 259 dated 22 November 2017). This is why the use, by the Constitutional Court, of clearer language helps the system better understand the framework of individual pension rights. In this regard, the Constitutional Court, in 2017, purposely stressed that the application of the rule of reasonableness, which is exclusively aimed at assessing the goals and technical aspects of a social security legislative provision, should not be confused with the assessment of the adequacy of the measures adopted, on a case-by-case basis, by lawmakers in order to meet old people’s life needs. 19 In judgment no. 250/2017, the Constitutional Court maintains that ‘the provisions referred to are explained in detail in the “Report”, the “Technical Report”, and the “Assessment of Calculations” related to the draft act aimed at transposing such decree into law (Chamber of Deputies Draft Act no. 3134). These parliamentary acts include accounting data that confirm the approach adopted by lawmakers, in compliance with national and EU legislation’. 20 Constitutional Court judgment no. 250/2017 does no longer emphasize that the link between Article 36 and Article 38 Cost. becomes more and more pressing’ as life expectancy increases, along with the expectation, among those who receive a pension, to live a free and dignified life, pursuant to Article 36 Cost. (cf. specifically para. 8 of Constitutional Court judgment no. 70/2015, which was no longer included in 2017). The Constitutional Court did not conduct a critical review of the notion of adequacy, and did not take into consideration the ‘radical changes that affected the system: i) the alleged state of need epitomized by the term “old age”, whose demographic risk now covers a far longer time span than in the past; ii) the accrual of contributions, increasingly linked to extremely variable and flexible work-related situations, with a large-scale recourse to notional social security contributions, in the framework of an individual capitalization system; and iii) the adoption of a financial parameter based on GDP trends – which, among other things, have unexpectedly turned out to be negative’.

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contributions are calculated cannot be ensured by the pay-as-you-go pension system without budget balance. The 2017 constitutional case law shows us that the Italian social security framework does not feature a principle of pension proportionality determining a legal entitlement to the continuity of the value of salary.21 For this reason, it is not possible to set a quantitative limit on the notion of adequacy as per Article 38 Cost. on the basis of Article 36 Cost. Such case law also shows us that the Constitutional Court does not have the power to use—when legitimately assessing the reasonableness of a measure restricting pension rights—a parameter consisting of Article 36 Cost. As a consequence, the Constitutional Court’s power to autonomously assess whether a certain degree of automaticity (in our case, the equalization mechanism) is part or not of a sufficient and proportional wage, and therefore of an adequate social security benefit does not exist and could not be argued for by anyone: the Constitutional Court cannot help but considering that the amount of contributions stemming from an employment contract entitles a worker to pension benefits only provided that it is connected to the other elements that social security legislation classifies as co-essential (e.g.: old age, whose notion, along with the demographic risk, changes and will change over time; variable and flexible work-related situations that imply the payment of notional social security contributions into the relevant fund; and variations—including negative—in GDP).22

4 Multidisciplinary Approaches. EU Pillar on Social Rights and Article 9 TFEU The Italian case law evolution in attitudes toward intergenerational determines a new vision of Article 81’s social security functions. The Constitutional Court expanded the meaning of equilibrium in social security and intergenerational pact. This argumentation tries to illuminate the idea that equilibrium between financing and social security rights must be aimed at protecting the intergenerational pact. It means that sustainability of the social security system and of intergenerational solidarity in Constitutional Court cases should be implemented around Article 81 along with Article 38.

21

Except in the framework of the parameters and coefficients set by Law no. 335 dated 8 August 1995 and subsequent amendments, there is no entitlement to receive a pension benefit conceived as deferred pay or income to be paid over an extended period of time. 22 Such assessment power does not exist in relation to pensions, let alone in relation to pay. See Sandulli (2015), p. 515, who rightly holds that automatic wage mechanisms have since long stopped having a role; the Constitutional Court itself (see judgments nos. 124/1991 and 34/1985) acknowledges the legitimacy of the rules on the elimination of the pay adjustment mechanism, tackling a (at that time) very sensitive issue concerning the link between legislation and collective bargaining in relation to the underlying idea of public economic order.

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In addition, it suggests important questions for the academic dialogue. My focus on constitutional interpretation of Article 81, in combination with Article 38, highlights that social security financing regime is the unifying principle for the intergenerational pact in the Italian social security system. In this line, new queries may be posed. Do we want the Italian constitutional law to be more direct on the intergenerational pact? Do we want the European legal system to be more direct on the intergenerational pact? If so, to what extent such principle should be ordered within the Italian Constitution and the European legal system? Should the new generations trust the Italian Constitutional Court and the European legal system to interpret and construct new social meanings of intergenerational pact? How does judicial review relate to lower courts in order to let they also apply to questions of intergenerational pact? Recently some movements of young students, some political parties, citizens requested to specify, into Article 2 of the Italian Constitution (which guarantees the fundamental rights and requires the fulfillment of the social duties), that rights’ guarantees and social duties’ fulfillment should be also referred to, or projected for, the forthcoming generations.23 This was at the basis of the idea that, beyond the economic-financial approach, intergenerational pact means sustainability and sustainability is bargained within an intergenerational pact. It is a principle that refers to a development where the needs of the present are met without compromising the ability of future generations to meet their own needs, according to the Brundtland Report24 and the 2030 Agenda for Sustainable Development, adopted by all United Nations Member States in 2015. The concept of social needs should be necessarily related to social security rights protection. This clearly reflects the first and tenth UN sustainable development goals requiring combating poverty and reducing inequality: economic growth is not enough to reduce poverty, where growth is not inclusive. In this line, the European Institute of Social Security has recently stressed that, in order to provide with some preliminary answers, the labor and social security law scholars should develop new attitudes.25 In this paper, I would like to discuss and highlight at least two new attitudes that appear to be significant for the forthcoming researches. On one side, intergenerational pact and sustainability should not be addressed in the traditional narrow sense (financial/economic), yet it should be approached in a multidisciplinary manner (law, social sciences and economics). By bringing together leading these various disciplines it can be possible to interpret what sustainability can mean as a principle for social security and how these meanings possibly interrelate.

See, for instance, “+Europa” proposal in https://piueuropa.eu/wp-content/uploads/2018/11/ generazioni.pdf. 24 Sachs (2015), p. 1 ff. 25 See 2018 EISS workshop materials here—in http://eiss.be/eiss%202018%20presentations-2. html. 23

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On the other side, the dynamic features of sustainability may make it as one of the principles around which social models in the future should be designed, also according to the EU Pillar on Social Rights and the fundamental human rights to social security, as right to have access to it and as fair level of protection. The EU Social Pillar is a (preliminary attempt of) implementation of Article 9 TFEU (“In defining and implementing its policies and activities, the Union shall take into account requirements linked to the promotion of a high level of employment, the guarantee of adequate social protection, the fight against social exclusion, and a high level of education, training and protection of human health”). In particular, focusing on Article 9 TFEU, we noticed that it creates a horizontal social clause aimed at balancing different and conflicting interests, at EU level as well as at domestic level. Such EU social clause defines a European obligation: social issues should be taken into consideration in all EU policies and activities. It does not create a new competence, but a sort of horizontal obligation for all the European institutions. It is a sort of procedural safeguard for the whole policy spectrum aimed at balancing policies having possible detrimental effects the EU social acquis.26 Article 9 TFEU is not, and may not become, a legal basis for forthcoming legislation. It is a clause that states procedural schemes for boosting social policies. This determines that Article TFEU is binding only under the procedural viewpoint, but not under for substantive aspects. The consequences are quite limited: Article 9 TFEU is narrowed to the impact assessment activities that the European institutions carry out to verify whether or not European regulatory initiatives have/can have positive social effects/impacts. Unfortunately the procedural aspects of Article 9 TFEU is mainly linked to a priori impact assessment. But, observing the reality, such frame is not enough. Article 9 TFEU should also play a function for addressing measures towards better social performances. If we deem the intergenerational sustainability as a target, it should be measured ex post, rather then evaluated only ex ante by means of an impact assessment scheme. Therefore intergenerational sustainability should deserve more efficient ex post impact assessments. This may make Article 9 TFEU, in combination with domestic norms (as Article 38 and Articles 81 of the Italian Constitutions), the main key legal concept for the intergeneration sustainability and the intergenerational pact. Good examples were already implemented: the EU Social Pillar, in line with such idea, introduced the social scoreboard for recording ex post EU Member States’ benchmarks vs. the EU performances.27 The interpretation of Article 81 of the Italian Constitution, as unifying principle for a process of alignment with European attitude to consider the social rights entitlements necessarily in combination with the budget equilibrium and the 26 See in particular Aranguiz (2018), p. 341. There are also critical visions on the real EU Social Pillar functions. See, among others, Alexandris Polomarkakis (2019), p. 1, that argues that more legally binding provisions are necessary. 27 The Social Scoreboard has 12 headline indicators that can be used to measure and compare Member States’ performance in the Joint Employment. The performance is based on two different parameters. On the one hand, the level of the indicator as it is, and, on the other side, the progress made compared to the previous year.

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intergenerational pact, is majoritarian, not only related to acts of judicial will, because it is directly arising from Article 9 TFEU. Indeed such combination is accepted because the Court’s insights about the budget equilibrium and the intergenerational pact are consistent with long-term changes in industrial and market attitudes. As these attitudes evolved, so did the social meaning of the budget equilibrium and the intergenerational pact. In light of the above, we should face with a new idea of social security, related to intergenerational sustainability, no longer exclusively based on labor-related schemes.28 Such new idea should be related to forms of assessment, also ex post, that are carried out with the involvement of social partners and the related institutions (i.e. the European Economic and Social Committee and the national economic and social committees). In this way intergenerational sustainability can have a significant impact on the legal implementations. The ex post impact assessment will permit, step by step, to rethink and reform the design of labor-related social security schemes, observing the transforming reality in which (young and senior) workers carry out today and will be called to carry out tomorrow their activities.

5 Conclusions Beyond the formal principle of intergenerational sustainability there is a (still not fully used) horizontal European function, arising from Article 9 TFEU, in combination of article 81 of the Italian Constitution: such procedural safeguard, in the next future, should more efficiently facilitate adoption of legal tools and impact assessments, in compliance with the principle of budgetary balance, public finance targets, and the goal of protecting the basic levels of provisions concerning social rights, with a view to guaranteeing intergenerational solidarity. Equilibrium between financing and social security rights, aimed at protecting the intergenerational pact, holds the potential to shape a new doctrine: the intergenerational pact in the Italian social security system is based on Article 38 and Article 81 of the Italian Constitution. Article 81 of the Italian Constitution is the unifying principle for a process through which the Italian constitutional jurisprudence is brought into alignment with European strategy to deem social rights in combination with the budget equilibrium and, as a consequence, the intergenerational pact. Such combination is based on the majoritarian principle, not only related to acts of judicial will, because directly arising from Article 9 TFEU. This means that the combination social rights/budget equilibrium/ intergenerational pact is buttressed, on one side, by the Italian Constitutional Court, and, on the other, on forms of assessment, also ex post, that are carried out with the involvement of social partners and the related institutions (i.e. the European

28

See Schoukens et al. (2018), p. 219.

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Economic and Social Committee and the national economic and social committees). This is fully consistent with long-term changes in industrial, demographics and market attitudes. As these attitudes evolved, so did the social meaning of the budget equilibrium and the intergenerational pact. In addition, as such attitudes evolved, so did the meaning of the social security in our legal systems.

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Pandolfo A (2015) Gioco di oneri tra giudici e legislatore. Sole 24 Ore. Available via DIALOG. http://www.ilsole24ore.com/art/commenti-e-idee/2015-05-11/gioco-oneri-giudici%2D%2Delegislatore-080227.shtml?uuid¼ABdYwydD. Accessed 28 May 2019 Perez R (2016) Il ritorno del bilancio. GDA 6:6–758 Pessi R (2015) Ripensando al salario previdenziale: la sentenza n. 70/2015 della Corte costituzionale. MGL 6:6–400 Portuese A (2013) Principle of proportionality as principle of economic efficiency. Eur Law J 19:19–612 Sachs JD (2015) The age of sustainable development. Columbia University Press, New York Sandulli P (2015) Dal monito alla caducazione delle norme sul blocco della perequazione delle pensioni. GCost 2:2–559 Sandulli P (2016) La Corte costituzionale orienta il legislatore delle pensioni. A proposito delle sentenze nn. 173 e 174/2016. RDSS 4:4–687 Sandulli P (2019) Nuovi modelli di protezione sociale fra istanze risalenti e pretese recenti, profili di criticità e problemi di finanziamento. In http://aicp.it/newaicp/wp-content/uploads/2019/04/ 201904_Contributo-Prof.-Sandulli-vs-Studio-Pessi.pdf Santoro Passarelli F (1948) Rischio e bisogno nella previdenza sociale. RIPS 1:1–177 Schoukens P, Barrio A, Montebovi S (2018) The EU Social Pillar: an answer to the challenge of the social protection of platform workers? Eur J Soc Secur 20:3–219 Schoyen MA, Stamati F (2013) The political sustainability of the NDC pension model: the cases of Sweden and Italy. Eur J Soc Secur 15:1–79 Sciarra S (2015) Il diritto sociale europeo al tempo della crisi. Il Diritto dell’Unione Europea 4:4–757 Sgroi A (2015) La perequazione automatica delle pensioni e i vincoli di bilancio: il legislatore e la Corte costituzionale. Consulta on line. Available via DIALOG. http://www.giurcost.org/studi/ sgroi.pdf. Accessed 28 May 2019 Sterpa A (2015) Una “lettura intergenerazionale” della sent. n. 70 del 2015. Federalismi. Available via DIALOG. http://www.federalismi.it/nv14/articolo-documento.cfm?Artid¼29541. Accessed 28 May 2019 Treu T (2015) Le istituzioni del lavoro nell’Europa della crisi. DLRI 4:4–597

Les réformes des pensions en Belgique au regard du droit à la sécurité sociale et du principe de standstill prévu à l’article 23 de la Constitution belge Elisabeth Alofs and Guido Van Limberghen

Abstract En Belgique, différentes mesures ont été prises, visant à augmenter le taux d’emploi et l’âge effectif de départ à la retraite. La plupart des mesures sont également destinées à réduire les coûts budgétaires liés au vieillissement de la population, afin d’éviter que ces coûts soient rejetés sur les générations futures. A cette fin, les pouvoir publics belges ont apporté plusieurs modifications aux régimes des pensions. Dans cette contribution les auteurs analysent comment ces réformes des pensions s'articulent avec le droit à la sécurité sociale, garanti par l'article 23 de la Constitution belge, et l'obligation de standstill qui y est associée.

1 Introduction En Belgique, comme dans de nombreux États-providence, la responsabilité des soins aux personnes âgées est partagée entre la famille, les pouvoirs publics et le marché.1 Ce chapitre est consacré au système belge des pensions, un des régimes de droit public qui atténuent les risques de la vieillesse en apportant un soutien financier direct aux personnes âgées. En Belgique, l’âge effectif de départ à la retraite – c’est-à-dire l’âge moyen de sortie du marché du travail - est d’environ 61 ans2, ce qui est sensiblement inférieur à l’âge légal de la retraite de 65 ans (porté à 66 et 67 ans pour les pensions à partir respectivement de 2025 et 2030). En exécution de la Stratégie Europe 20203, la 1

Alofs et al. (2019), pp. 529–544. Selon les statistiques de l'OCDE (2018), l'âge moyen de sortie du marché du travail dans les pays de l'OCDE était de 65,4 ans pour les hommes et de 63,7 ans pour les femmes (http://www.oecd.org/ els/emp/average-effective-age-of-retirement.htm (consulté le 25 décembre 2019). 3 http://ec.europa.eu/eu2020/pdf/COMPLET%20FR%20BARROSO%20-%20Europe%202020% 20-%20FR%20version.pdf (consulté le 25 décembre 2019). 2

E. Alofs · G. Van Limberghen (*) Faculté de Droit et de Criminologie, Vrije Universiteit Brussel/Free University of Brussels, Brussel, Belgium e-mail: [email protected]; [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_4

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Belgique s’est en plus fixée comme objectif d’atteindre en 2020, un taux de participation au marché de l’emploi des travailleurs âgés de 55 à 65 ans de 50 %.4 Dans ce cadre, différentes mesures ont été prises, visant à augmenter le taux d’emploi et l’âge effectif de départ à la retraite, à encourager les employeurs à embaucher des travailleurs plus âgés et à inciter les travailleurs âgés à maintenir ou reprendre leur travail. La plupart des mesures sont également destinées à réduire les coûts budgétaires liés au vieillissement de la population, afin d’éviter que ces coûts soient rejetés sur les générations futures. Afin d'atteindre ces objectifs, les pouvoir publics belges ont apporté plusieurs modifications aux régimes des pensions. La question se pose de savoir comment ces réformes des pensions s'articulent avec le droit à la sécurité sociale, garanti par l'article 23 de la Constitution belge, et l'obligation de standstill qui y est associée.5 Cette contribution commence par une analyse du système belge des pensions, en accordant une attention particulière aux réformes de ces dernières années (Sect. 2). Elle abordera ensuite l'analyse de l’article 23 de la Constitution belge, du droit à la sécurité sociale prévue à cet article et de l'obligation de standstill qui y est associée (Sect. 3). Enfin, les récentes réformes des pensions seront confrontées au droit à la sécurité sociale et à l'obligation de standstill (Sect. 4) et on conclue (Sect. 5.).

2 Le système des pensions en Belgique 2.1

Les trois piliers

Le système des pensions en Belgique se compose de trois piliers: les pensions légales, les pensions complémentaires ou extralégales et l’épargne-pension individuelle.

4

https://ec.europa.eu/info/sites/info/files/2017-european-semester-national-reform-programmebelgiqueen.pdf; https://ec.europa.eu/info/sites/info/files/2017-european-semester-stabilityprogramme-belgiqueen_0.pdf (consulté le 25 décembre 2019). 5 Pour une analyse de la jurisprudence des cours internationales et supranationales sur ce point, voir: Goossens (2014–2015), pp. 803–824.

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La pension légale (i.e. le premier pilier) consiste des régimes obligatoires de pensions pour respectivement les travailleurs salariés,6 les travailleurs indépendants7 et les fonctionnaires.8 Ce traitement différent sur base de la catégorie professionnelle du titulaire de la pension est conforme au principe d’égalité et de non-discrimination.9 Le financement des pensions légales des travailleurs salariés et des indépendants repose sur le principe de la répartition. Cela implique que les cotisations versées par les assurés sociaux sont utilisées pour le financement des pensions actuelles. La pension de retraite des fonctionnaires, par contre, est considérée comme une rémunération différée qui, selon le cas, est payée par le Trésor de l’Etat ou par l’autorité publique les ayant employés. Les fonctionnaires paient cependant des cotisations pour le financement de la pension de survie.

6 Comprenant les personnes qui travaillent dans le secteur privé et ceux qui travaillent comme agent contractuel de la fonction publique. Pour la législation la plus importante en rapport avec le système des travailleurs: Arrêté royal n 50 24 octobre 1967 relatif à la pension de retraite et de survie des travailleurs salariés, Moniteur Belge 27 octobre 1967; Arrêté royal 21 décembre 1967 portant règlement général du régime de pension de retraite et de survie des travailleurs salariés, Moniteur Belge 16 janvier 1968; Loi 5 août 1978 de réformes économiques et budgétaires, Moniteur Belge 17 août 1978; Loi de redressement 10 février 1981 relative aux pensions du secteur social, Moniteur Belge 14 février 1981; Loi 20 juillet 1990 instaurant un âge flexible de la retraite pour les travailleurs salariés et adaptant les pensions des travailleurs salariés à l'évolution du bien-être général, Moniteur Belge 15 août 1990; Loi 26 juillet 1996 portant modernisation de la sécurité sociale et assurant la viabilité des régimes légaux des pensions, Moniteur Belge 1er août 1996; Arrêté royal 23 décembre 1996 portant exécution des articles 15, 16 et 17 de la loi du 26 juillet 1996 portant modernisation de la sécurité sociale et assurant la viabilité des régimes légaux des pensions, Moniteur Belge 17 janvier 1997. 7 Comprenant les personnes qui travaillent pour leur propre compte et leurs aidants. Pour la législation la plus importante en rapport avec le système des indépendants: Arrêté royal n 72 10 novembre 1967 relatif à la pension de retraite et de survie des travailleurs indépendants, Moniteur Belge 14 novembre 1967; Arrêté royal 22 décembre 1967 portant règlement général relatif à la pension de retraite et de survie des travailleurs indépendants, Moniteur Belge 10 janvier 1968; Arrêté royal 30 janvier 1997 relatif au régime de pension de travailleurs indépendants en application des articles 15 et 27 de la loi du 26 juillet 1996 portant modernisation de la sécurité sociale et assurant la viabilité des régimes légaux de pensions et de l’article 3, § 1er, 4 , de la loi du 26 juillet 1996 visant à réaliser les conditions budgétaires de la participation de la Belgique à l’Union économique et monétaire européenne, Moniteur Belge 6 mars 1997. 8 Comprenant les fonctionnaires qui sont nommés dans une fonction publique au niveau fédéral, régional, provincial ou communal. Pour la législation la plus importante en rapport avec le système des fonctionnaires publics: Loi générale 21 juillet 1844 sur les pensions civiles et ecclésiastiques, Moniteur Belge 30 juin 1844; Loi 5 août 1978 de réformes économiques et budgétaires, Moniteur Belge 17 août 1978; Loi 15 mai 1984 portant mesures d’harmonisation dans les régimes de pensions, Moniteur Belge 22 mai 1984. 9 Cela résulte de la jurisprudence de la Cour Européenne des Droits de l’Homme (Cour Européenne des Droits de l’Homme 25 octobre 2011, n 2033/44) et de la Cour constitutionnelle belge (Cour constitutionnelle 4 juillet 1991, n 17/91; Cour constitutionnelle 9 juillet 1992, n 54/92; Cour constitutionnelle 22 décembre 1993, n 88/93; Cour constitutionnelle 6 juin 1995, n 48/95; Cour constitutionnelle 20 septembre 2001, n 112/2201; Cour constitutionnelle 10 février 2011, n 205/2011).

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Les pensions complémentaires ou extralégales (i.e. le deuxième pilier) sont un avantage extralégal accordé par l’employeur (volontairement ou en exécution d’une convention collective de travail conclue au niveau interprofessionnel, du secteur ou de l’entreprise), qui prend le versement (de la plupart) des primes à sa charge. Ce système est basé sur la capitalisation et a pour but de constituer un capital, une rente de retraite, et/ou une rente de survie transmise à un bénéficiaire désigné en cas de décès de l’assuré. Les indépendants peuvent également souscrire une pension complémentaire. L’épargne-pension individuelle (i.e. le troisième pilier) offre aux épargnants la possibilité, à titre personnel et volontairement, de constituer un capital ou une rente de retraite. Sous certaines conditions, l’épargne-pension donne droit à une déduction fiscale calculée sur la somme versée. Les deux types d’épargne-pension sont l’assurance épargne-pension, auprès d’une compagnie d’assurance, et le compte d’épargne-pension, auprès d’une banque.

2.2

Les pensions légales

Nous commençons par une analyse de la pension de retraite (Sect. 2.2.1) et des pensions particuliers (Sect. 2.2.2), avant d’accorder une attention particulière aux réformes de ces dernières années (Sect. 2.2.3).

2.2.1

La pension de retraite légale

L’obtention d’une pension de retraite légale est soumise à trois conditions. Premièrement, le retraité doit avoir atteint l’âge de la retraite.10 A l’heure actuelle, cet âge est fixé à 65 ans tant pour les hommes que pour les femmes. Toutefois, l’âge de la retraite sera porté à 66 ans pour les pensions prenant cours en 2025 et à 67 ans pour les pensions prenant cours en 2030. Il est néanmoins possible d’accéder à une pension anticipée. L’âge de la pension anticipée est porté à 63 ans moyennant une carrière dont la durée est de 42 ans. Il y a cependant des exceptions pour les personnes ayant une longue carrière. Deuxièmement, le retraité ne peut exercer une activité professionnelle en dehors des limites légales de l’activité autorisée. Un cumul limité de la pension et d’un revenu de travail est autorisée, selon l'âge de la personne, le type d'activité professionnelle et le fait d'avoir ou non des enfants à charge. Ces limites ne s'appliquent plus depuis peu aux personnes de plus de 65 ans ou ayant une carrière professionnelle avérée d'au moins 45 ans. En plus, le retraité ne peut bénéficier d’un

10

Loi 10 août 2015 visant à relever l’âge de la pension de retraite et portant modification des conditions d’accès à la pension de retraite anticipée et de l’âge minimum de la pension de survie, Moniteur Belge 21 août 2015.

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revenu de remplacement, telle qu’une indemnité pour cause de maladie, d’invalidité ou de chômage involontaire, une allocation d’interruption de carrière ou de réduction des prestations ou une indemnité de prépension. Troisièmement, pour certaines bénéficiaires de nationalité étrangère, il existe une condition supplémentaire de résidence effective en Belgique. Le montant de la pension de retraite légale est calculé en fonction de trois paramètres, notamment: la durée de la carrière, les rémunérations et la situation familiale du retraité. Premièrement, le montant de la pension est influencé par la durée de la carrière. Les années de carrière qui sont prises en considération sont les périodes d’occupation effective, ainsi que les périodes qui sont assimilées aux périodes de travail (p.ex. les périodes de chômage involontaire, les périodes de formation professionnelle en vue de l’exercice d’une activité comme travailleur salarié. . .). Certaines périodes d’inactivité ne peuvent être assimilées que moyennant le paiement d’une cotisation (p.ex. les périodes d’études). Lors des réformes récentes, l’avantage de pension a été diminué pour certaines périodes d'inactivité, comme les périodes de chômage involontaire ou d’interruption de carrière. Une carrière de pension complète est fixée à 45 ans ou 14.404 jours de carrière. Quand un travailleur salarié ou indépendant a dépassé le nombre de 14.404 jours, les jours générant le revenu de pension journalier le plus faible sont écartés pour le calcul de la pension. Récemment, le principe de l’unité de carrière a été atténué. Dorénavant, il ne s’applique qu’aux périodes d’inactivité assimilées. Les périodes de travail effectif qui dépassent le nombre de 14.404 jours continuent à être prises en considération sans que des jours générant une pension plus faible soient écartés. Deuxièmement, les pensions sont calculées sur base respectivement des rémunérations (pour des travailleurs salariés) ou des revenus professionnels réels (pour les travailleurs indépendants) indexés; ils ne sont pris en compte que dans la mesure où ils ne dépassent pas un plafond légal. Pour les périodes d’inactivité assimilées aux périodes de travail, on tient compte des revenus fictifs qui sont, en général, dérivés des revenus réels obtenus dans des périodes d’activité préalables. Les pensions des fonctionnaires sont calculées sur base du traitement moyen des dix dernières années de la carrière ou de toute la durée de la carrière si celle-ci est inférieure à dix ans. Troisièmement, le taux de la pension varie en fonction de la situation familiale du retraité. Plus particulièrement, le montant de la pension se présente comme un pourcentage des revenus pris en compte pour le calcul de la pension. Le taux de ménage de 75% est accordé si le retraité a son conjoint à charge. Le conjoint est à charge quand il a cessé toute activité professionnelle en dehors des limites autorisées et quand il ne jouit pas d’un revenu de remplacement. Le taux isolé de 60%, étant un taux résiduaire, est attribué à tous les retraités qui ne peuvent bénéficier du taux ménage. Ce taux est appliqué aux bénéficiaires célibataires, aux bénéficiaires mariés dont le conjoint n’est pas à charge et aux bénéficiaires étant en ménage avec leur partenaire dans le cadre d’une cohabitation non-conjugale. Par ailleurs, la pension de retraite des fonctionnaires ne dépend pas de leur situation familiale. Pour une carrière complète, ceux-ci reçoivent une pension égale à 75% de leurs revenus de référence,

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ce qui revient à la pension au taux de ménage pour les travailleurs salariés et indépendants. La pension des travailleurs salariés et indépendants est plafonnée de deux façons: d’une part en ce qui concerne le montant des rémunérations, d’autre part en ce qui concerne la durée de la carrière à prendre en compte. La pension des fonctionnaires ne peut pas excéder 3/4 du traitement de référence. Finalement, le système belge accorde au retraité qui a accompli une carrière suffisamment longue, le droit à une pension minimum garantie, dont le niveau dépend de la catégorie professionnelle.

2.2.2

Les droits de pension particuliers

Le système belge des pensions légales connaît (que pour des travailleurs et indépendants) des droits de pension particuliers en cas de séparation de fait ou de séparation de corps et en cas de divorce. En cas de séparation de fait ou de séparation de corps, la pension au taux de famille d’un époux sera, sous certaines conditions, divisé entre les deux époux séparés (i.e. un droit dérivé pour le conjoint ‘à charge’). En cas de divorce, l’époux divorcé et non-remarié peut avoir droit à une pension de retraite individuelle et propre s’élevant à 37,5% de revenus de son ex-époux. Cette pension de divorce vise à couvrir les lacunes éventuelles, nées pendant le mariage, dans la carrière de pension de l’époux divorcé. Elle peut donc être cumulée avec la pension de retraite qu’il perçoit pour sa propre carrière professionnelle. En plus, le système belge des pensions légales connaît une pension de survie, payée sous certaines conditions au conjoint survivant d’un assuré social décédé. La pension de survie s’élève à 60% des revenus du conjoint décédé. Pour pouvoir bénéficier d’une pension de survie le bénéficiaire doit avoir atteint l’âge minimum de 47 ans et six mois11 et doit en principe avoir été marié avec le défunt pendant au moins un an au moment du décès.12 Si le conjoint survivant ne remplit pas la condition d’âge, celui-ci a droit à une allocation de transition pendant 12 mois (sans charge d’enfant) ou pendant 24 mois (avec charge d’enfant). La pension de survie et l’allocation de transition sont suspendues en cas de remariage et non attribuée en cas de crimes contre le conjoint décédé qui rendent le conjoint survivant indigne d’hériter. Le système de pension belge est donc très familialiste, toujours (au moins partiellement) fondé sur le modèle du soutien de famille (masculin).

11

Ce seuil d’âge est progressivement porté à 55 ans d’ici 2030. Cette condition est également remplie si le mariage est directement précédé par une cohabitation légale et la somme de ces deux périodes est d’au moins 1 ans. La condition d’un an de mariage n’est pas applicable si un enfant est né du mariage, si un enfant est à charge au moment du décès ou si le décès est dû à un accident ou une maladie professionnelle. 12

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2.2.3

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Les réformes des pensions légales13

Comme dit précédemment, les pouvoirs publics ont procédé à plusieurs ajustements des régimes des pensions légales au cours des dernières années. Les éléments les plus marquants de ces réformes des pensions, déjà mentionnés plus haut, sont le durcissement des conditions d'âge et de carrière pour l'octroi des pensions de retraite et des pensions de retraite anticipée (section “Une augmentation de l’âge légal de la retraite et une limitation du droit à la retraite anticipée”), la réforme des pensions de survie (section “La réforme des pensions de survie”) et le mouvement initié pour réduire les pensions des fonctionnaires (section “La réduction initiée des pensions des fonctionnaires”). En outre, les réformes des pensions comprennent diverses mesures visant à rendre le travail plus rémunérateur dans le cadre des assurances sociales de pension (section “Mesures relatives à la pension et au travail”).

Une augmentation de l’âge légal de la retraite et une limitation du droit à la retraite anticipée14 Outre le relèvement de la limite d'âge de la pension de retraite à 67 ans en deux étapes (en 2025 et en 2030), le législateur belge a relevé progressivement l'âge d'octroi des pensions de retraite anticipée de 60 à 63 ans et a fait également passer la durée de carrière requise de 35 à 42 ans. Les personnes qui, à un moment donné, remplissaient les conditions d'âge et de carrière en vigueur à ce moment-là pour bénéficier d’une pension de retraite anticipée conservaient cet avantage, même si elles décidaient de faire valoir leur droit à la pension de retraite anticipée plus tard.15 En outre, les personnes ayant accompli une carrière de 44 ou 43 ans, peuvent faire valoir un droit à la pension de retraite anticipée à l’âge respectif de 60 ou de 61 ans. La réforme des pensions de survie16 Le législateur relève progressivement l'âge d'octroi des pensions de survie à 55 ans dans la quasi-totalité des régimes de pension.

13

Martel et al. (2016), pp. 289–348. Voir aussi: Schoukens (2016), p. 234 sqq. Stevens (2015), pp. 377–416. 15 Art. 90 en 107/1 Loi 28 décembre 2011 portant des dispositions diverses, Moniteur Belge 30 décembre 2011; art. 84 loi 29 mars 2012 Loi-programme (I), Moniteur Belge 6 avril 2012. 16 Loi 25 avril 2014 portant réforme de la pension de survie des travailleurs indépendants, Moniteur Belge 6 juin 2014; Loi 5 mai 2014 portant modification de la pension de retraite et de la pension de survie et instaurant l'allocation de transition dans le régime de pension des travailleurs salariés et portant suppression progressive des différences de traitement qui reposent sur la distinction entre ouvriers et employés en matière de pensions complémentaire, Moniteur Belge 9 mai 2014; art. 90 sqq. Loi 15 mai 2014 portant des dispositions diverses, Moniteur Belge 19 juin 2014. Alofs and Van Limberghen (2015a), pp. 129–175; Alofs and Van Limberghen (2015b), pp. 34–40. 14

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Pour les conjoints survivants qui ne remplissent pas la condition d'âge (majoré), le paiement de la pension de survie n'est plus différé jusqu'à ce qu'ils atteignent cet âge, mais suspendu jusqu'à ce qu'ils perçoivent leur pension de retraite ou atteignent l'âge de la pension de retraite, même s'ils sont en incapacité permanente de travail ou s’ils ont des enfants à charge (les exceptions précédentes à la condition d’âge en cas d’enfants à charge ou d’incapacité permanente de travail ont donc été supprimées). Dans ce cas toutefois, une allocation de transition est accordée pour une période de 12 mois ou, s’il y a des enfants à charge, de 24 mois. Les bénéficiaires qui ne perçoivent pas de revenus professionnels à la fin de cette période auront subséquemment accès à l'assurance chômage17 ou à l'assurance invalidité ou parentale si elles sont en incapacité de travail ou se trouvent dans une période de protection de la maternité.18 Le législateur profite de la réforme des pensions de survie pour stipuler que les conjoints survivants n'ont pas droit à une pension de survie ni à une allocation de transition, s'ils sont indignes de succéder à leur conjoint décédé en raison d'infractions précisées dans le Code pénal. Il s’agit, d'une part, du cas où le (ex-)conjoint survivant a tué ou a tenté de tuer le conjoint décédé et, d'autre part, d’infractions graves contre la personne du défunt qui n'ont toutefois pas causé sa mort. La réduction initiée des pensions des fonctionnaires19 Le montant de la pension d'un fonctionnaire dépend principalement du nombre d'années de service ouvrant droit à la pension et du traitement de référence légal. Les réformes semblent avoir initié un mouvement de réduction du montant des pensions des fonctionnaires, comme le montrent les exemples suivants. Ainsi, le traitement de référence n'est plus égal au traitement moyen des 5 dernières années de carrière, mais au traitement moyen des 10 dernières années de carrière.20 Il en résulte une pension moins élevée pour de nombreux fonctionnaires qui n'atteignent le salaire le plus élevé (basé sur l'ancienneté) qu’au cours des cinq dernières années de leur carrière. En outre, des modifications ont été apportées aux fractions de carrière qui font partie de la formule de calcul du montant de la pension des fonctionnaires. Par défaut, la fraction de carrière 1/60 est utilisée pour calculer la pension de retraite des fonctionnaires. Les fonctionnaires bénéficiant d'une fraction de carrière plus avantageuse atteignent plus rapidement leur carrière de pension complète. Le 17 Art. 38, § 3 Arrêté royal 25 novembre 1991 portant réglementation du chômage, Moniteur Belge 31 décembre 1991. 18 Art. 86 § 1, 4 Loi relative à l’assurance obligatoire soins de santé et indemnités coordonnée le 14 juillet 1994, Moniteur Belge 27 aout 1994; art. 205 § 3/1 Arrêté royal 3 juillet 1996 portant exécution de la loi relative à l’assurance obligatoire soins de santé et indemnités, coordonnée le 14 juillet1994, Moniteur Belge 31 juillet 1996. 19 Janvier (2015), pp. 417–468. 20 Art. 105 Loi 28 décembre 2011 portant des dispositions diverses, Moniteur Belge 30 décembre 2011.

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législateur a toutefois déjà ramené à 1/48 toutes les fractions de carrière plus avantageuses. Le dernier accord gouvernemental annonçait que pour tous les fonctionnaires la fraction de carrière serait apportée à 1/60. Le cas échéant, les fonctionnaires risquent d’atteindre pas toujours la carrière de pension complète et de bénéficier donc d'une pension moins élevée. Enfin, les fonctionnaires bénéficiaient encore de ladite ‘bonification pour diplômes’, ce qui signifiait que, sous certaines conditions, les périodes d'études étaient considérées comme des années de service conférant des droits à une pension. Les travailleurs salariés et les indépendants ne recevaient une pension pour leurs années d'études qu’en versant une cotisation. Cette bonification pour diplômes allouée aux fonctionnaires a été remplacé par un nouveau système de régularisation des périodes d'études moyennent le paiement d’une cotisation. Le nouveau système s’applique aux travailleurs salariés et indépendants aussi bien qu’au fonctionnaires.21

Mesures relatives à la pension et au travail Enfin, le législateur a récemment pris plusieurs mesures pour mieux récompenser le travail dans le cadre des régimes des pensions légaux. Il s’agit en particulier de l'assouplissement des règles en matière d’activité autorisée pour certaines catégories de retraités et les sanctions prévues à cet effet; la diminution de la pension pour certaines périodes d'inactivité assimilée aux périodes de travail; la possibilité (pas encore entrée en vigueur) de prendre sa retraite à temps partiel; la possibilité pour les retraités de gagner un salaire d’appoint jusqu’à un certain montant sans devoir payer des cotisations ou des contributions sociales sur ces revenus; les règles modifiées relative à l'unité de carrière, et la différenciation des pensions minima en fonction de la durée de carrière. Ces mesures, dont certaines sont en faveur et d'autres en défaveur des retraités, ne sont pas abordées dans cette contribution.

3 Article 23 de la Constitution belge 3.1

Le droit à la sécurité sociale22

La Constitution belge garantit le droit de mener une vie conforme à la dignité humaine (art. 23, première alinéa de la Constitution belge). A cette fin, le législateur compétent garantit les droits économiques, sociaux et culturels fondamentaux du

21

Loi 2 octobre 2017 relative à l'harmonisation de la prise en compte des périodes d'études pour le calcul de la pension, Moniteur belge 24 octobre 2017. 22 Sur l’élaboration de l'art. 23 de la Constitution belge (à l'origine art. 24bis de la Constitution belge), voir: Stroobant (1994), pp. 207–227; Stroobant (2010), pp. 19–57.

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citoyen et détermine les conditions de leur exercice (art. 23, deuxième alinéa de la Constitution belge). Un certain nombre de droits fondamentaux spécifiques doivent être garantis en particulier, dont le droit à la sécurité sociale23 (art. 23, troisième alinéa, 2 de la Constitution belge). Le constituant impose donc au législateur (formel) l'obligation de garantir un certain nombre de droits fondamentaux, dont le droit à la sécurité sociale, sans toutefois préciser le contenu de ces droits.24 Le législateur compétent dispose donc d'un large pouvoir d'appréciation en la matière, lui permettant de préciser le contenu de ces droits fondamentaux, y compris le droit à la sécurité sociale.25 La Cour constitutionnelle de Belgique a confirmé ce large pouvoir d'appréciation en statuant qu'elle ne peut rejeter les mesures prises par le législateur pour garantir le droit à la sécurité sociale que si elles procédaient d’une appréciation manifestement déraisonnable.26 Le législateur n'est pas tenu de garantir les droits fondamentaux visés, dont le droit à la sécurité sociale, de la même manière pour chaque individu. L'article 23 de la Constitution belge ne s'oppose donc pas à ce que ces droits fondamentaux soient limités et modulés pour certaines catégories de personnes, pour autant que cette différence de traitement soit raisonnablement justifiée.27 L'article 23, deuxième alinéa de la Constitution belge précise que les pouvoirs publics doivent garantir les droits fondamentaux énumérés ‘en tenant compte des obligations correspondantes’.28 Le constituant a ainsi voulu souligner que, d'une part, des obligations correspondantes peuvent être imposées aux titulaires des droits sociaux et d’autres droits fondamentaux et que, d'autre part, ces droits fondamentaux doivent être respectés par la communauté dans son ensemble et non par les seuls pouvoirs publics. En d'autres termes, les citoyens doivent accepter d’avoir des obligations envers la société et leurs concitoyens s'ils veulent revendiquer ces droits fondamentaux.29 Par conséquent, les droits socio-économiques fondamentaux 23

Le droit à la sécurité sociale est également garanti par l’article 9 du Pacte international relatif aux droits économiques, sociaux et culturels, l’article 12 de la Charte Sociale Européenne révisée et l’article 34 de Charte du 12 décembre 2007 des droits fondamentaux de l'Union européenne. 24 Cour constitutionnelle 1 octobre 2015, nr. 133/2015, B.6.1. (sur le droit à l'assistance sociale); Cour constitutionnelle 14 janvier 2016, nr. 4/2016, B.8.2. (sur le droit à l'assistance sociale). 25 Cour constitutionnelle 27 novembre 2002, n 169/2002, B.6.2. (sur le droit à l'assistance sociale); Cour constitutionnelle 26 avril 2007, n 66/2007, B.10.2. sqq. (sur le droit à la sécurité sociale); Cour constitutionnelle 27 juillet 2011, n 135/2011 (sur le droit à l'assistance sociale); Conseil d'Etat 6 décembre 2011, n 216.702, n 33 (sur le droit à l'assistance juridique); Bossuyt (2010), pp. 60 et 67. 26 Cour constitutionnelle 26 avril 2007, n 66/2007, B.10.4. 27 Cour constitutionnelle 27 juillet 2011, n 135/2011, B.8.1.; Cour constitutionnelle 33 mai 2014; n 83/2014, B.18.2; Cour constitutionnelle 23 janvier 2019, n 3/2019, B.13.2. 28 Cour constitutionnelle 28 avril 2016, n 62/2016, B.6.3. 29 Voir notamment: Rapport (ARTS et NELIS) fait au nom de la Commission de la révision de la constitution, Documents parlementaires Sénat, Session Extraordinaire 1991-92, n 100-2/4, 16 sqq. Voir aussi: Stroobant (1994), pp. 222–223; Stroobant (2010), p. 45 sqq. Voir aussi: Cour constitutionnelle 10 juillet 2008, n 101/2008, B.33.2. (sur le droit au logement); Cour constitutionnelle

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peuvent être limités par des mesures qui sont nécessaires dans l'intérêt général et ne sont pas disproportionnées par rapport à l'objectif visé.30 Bien que l'article 23, deuxième alinéa de la Constitution belge prévoie que le législateur compétent fixe les conditions d'exercice (notamment) du droit à la sécurité sociale, le législateur peut confier au Roi (et au Gouvernement) l'élaboration plus détaillée du droit à la sécurité sociale qu'il organise. Ceci est d'autant plus vrai lorsque l'objet de l’habilitation donnée au Roi concerne une matière particulièrement technique et complexe.31 Par conséquent, un ‘principe de légalité modérée’ s'applique ici: le législateur peut confier ou transférer au Roi certaines compétences relatives à l'exécution de l'article 23 de la Constitution belge, mais doit déterminer les limites dans lesquelles ces compétences peuvent être exercées.32

3.2 3.2.1

L’obligation de standstill33 Mise en contexte

Contrairement à l'article 12 de la Charte Sociale Européenne révisée,34 l'article 23, alinéa 3 de la Constitution belge n'exige pas que le droit à la sécurité sociale soit progressivement porté à un niveau supérieur.35 Toutefois, lors de l'introduction de l'article 23 de la Constitution belge en 1994, il a été souligné que, bien qu'il n'ait pas d'effet direct,36 cet article impose une obligation de standstill aux pouvoirs 27 juillet 2011, n 135/2011, B.8.3.1 sqq. (sur le droit à l'assistance sociale); Cour constitutionnelle 1er octobre 2015, n 132/2015, B.12.1 (sur le droit à la protection d'un environnement sain). 30 Cour constitutionnelle 20 février 2002, n 41/2002, B.4.2. (sur le droit au travail); Cour constitutionnelle 20 octobre 2004, n 160/2004, B.4. (sur le libre choix de l'emploi); Cour constitutionnelle 4 mars 2008, n 40/2008, B.16. (sur le droit au travail) ; Cour constitutionnelle 28 avril 2011, n 56/2011, B.8.1. et B.8.2. (sur le libre choix de l'emploi); Cour constitutionnelle 30 juin 2014, n 95/2014, B.6.2. (sur le droit à l’assistance sociale); Cour constitutionnelle 19 mars 2015, no 40/2015, B.17.2. (sur le droit à des conditions de travail équitables et le droit au développement culturel et social). 31 Cour constitutionnelle 17 avril 2008, n 64/2008, B.32.1 et B.32.2. 32 Cour constitutionnelle 18 février 1998, n 18/98, B.6. 33 Voir aussi: Goossens (2014–2015), pp. 803–824; Schoukens (2016), pp. 223–238; et les analyses de la jurisprudence de Theunis (2012, 2014) dans ‘Tijdschrift voor bestuurswetenschappen en publiek recht’. 34 L'Art. 12 de la Charte Sociale Européenne révisée stipule que les parties s'engagent à œuvrer en faveur d'un relèvement progressif des normes de sécurité sociale. 35 Cour constitutionnelle 17 avril 2008, n 64/2008, B.22 et B.40. 36 Voir notamment: Exposé des motifs sur la révision du titre II de la Constitution par l'insertion d'un article 24bis relatif aux droits économiques et sociaux (Stroobant et Taminaux), Documents Parlementaires Sénat, Session Extraordinaire 1991-92, n 100-2/3, 4 et 9-13; Rapport (Arts et Nelis) fait au nom de la Commission de la révision de la constitution, Documents Parlementaires Sénat, Session Extraordinaire 1991-92, n 100-2/4, 5, 13 sqq., 84 sqq. Voir aussi: Stroobant (1994), pp. 220–221; Stroobant (2010), p. 42 sqq.

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publiques.37 Ce principe de standstill implique l'obligation de maintenir les avantages des normes en vigueur et interdit de porter atteinte au niveau de protection juridique (en l'occurrence sociale) acquis dans l'ordre juridique en offrant une protection légale considérablement inférieure. Initialement, le principe de standstill imposait au législateur l'obligation de ne pas porter atteinte aux droits fondamentaux garantis par la législation en vigueur à la date d'adoption ou d'entrée en vigueur de l'article 23 de la Constitution belge,38 soit respectivement le 31 janvier 1994 et le 22 février 1994.39 Depuis les années 2000 toutefois, la Cour constitutionnelle ne compare plus les nouvelles règles avec le niveau de protection offert au moment de l'adoption de l'article 23 de la Constitution belge, mais plutôt avec le niveau de protection applicable avant la modification ou la réforme législative en cause.40

3.2.2

Violation du principe de standstill?

Selon la Cour constitutionnelle41 et le Conseil d'État42, un certain nombre de conditions doivent être réunies avant qu’il ne puisse être question de violation du principe de standstill. 37 Exposé des motifs de la révision du titre II de la Constitution par l'insertion d'un article 24bis sur les droits économiques et sociaux, Documents Parlementaires Sénat, Session Extraordinaire 199192, n 100-2/3, 13; Rapport (Arts et Nelis) fait au nom de la Commission de la révision de la constitution, Documents Parlementaires Sénat, Session Extraordinaire 1991-92, n 100-2/4, 85 sqq. Voir aussi: Cour constitutionnelle 27 novembre 2002, n 169/2002, B.6.4. (sur l'assistance sociale); Hachez (2008), pp. 44–57; Stroobant (1994), p. 222. 38 Voir notamment: Cour constitutionnelle 27 novembre 2002, n 169/2002, B.6.5. (sur l'assistance sociale); Cour constitutionnelle 14 janvier 2004, n 5/2004, B.14.6 (sur le droit à l'assistance sociale). Voir aussi : Rapport (Arts et Nelis) fait au nom de la Commission de la révision de la constitution, Documents Parlementaires Sénat, Session Extraordinaire 1991-92, n 100-2/4, 85 sqq.; Bossuyt (2010), p. 62; Bouckaert (2003), p. 337; Stroobant (2010), p. 44. 39 Concernant la discussion de la date à prendre en compte dans l'évaluation du principe de standstill, voir Bouckaert (2003), p. 341; Maes (2005–2006), p. 1086. 40 Cour constitutionnelle 28 juillet 2006, n 123/2006, B. 14.3 (sur le droit à l'assistance sociale); Cour constitutionnelle n 132/2008, B.9. (sur le droit à l'assistance sociale); Cour constitutionnelle 28 avril 2016, n 62/2016, B.6.2; Cour constitutionnelle 8 mai 2019, n 64/2019, B.2.1. Voir aussi: Goossens (2014–2015), p. 805; Velaers (2019), p. 445. 41 Voir notamment: Cour constitutionnelle 27 novembre 2002, n 169/2002, B.6.6. (sur le droit à l'assistance sociale); Cour constitutionnelle 14 septembre 2006, 135/2006, B.10. (sur le droit à un environnement sain); Cour constitutionnelle 28 septembre 2006, n 145/2006, B.5.1. (sur le droit à un environnement sain); Cour constitutionnelle 20 juin 2007, n 87/2007, B.5. (sur le droit à un environnement sain); Cour constitutionnelle 1er septembre 2008, n 121/2008, B.11.1. (sur le droit à un environnement sain); Cour constitutionnelle 29 juillet 2010, n 94/2010, B.6.2. (droit à un environnement sain); Cour constitutionnelle 14 octobre 2010, n 113/2010, B.3.2. (sur le droit à un environnement sain); Cour constitutionnelle 27 juillet 2011, n 135/2011, B.5.2. (sur le droit à l'assistance sociale). 42 Voir notamment: Conseil d'État du 23 septembre 2011, n 215.309, 20 (sur le droit à l'assistance sociale); Conseil d'État du 6 décembre 2011, n 216.702, 33 (sur le droit à l'assistance judiciaire).

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Premièrement, il doit s’agir d’une réduction ‘substantielle’ de la protection43 avant que le principe de standstill ne soit violé. En d'autres termes, une régression ‘non substantielle’ est autorisée. La situation du citoyen après une réforme ou une modification de la loi doit donc être comparée à sa situation sous la législation antérieure, qui était en vigueur avant la réforme ou la modification de la loi. A cette fin, trois normes sont juxtaposées: 1 l'article 23 de la Constitution belge; 2 la norme qui indiquait le niveau de protection sociale avant la réforme ou la modification de la loi; 3 la ‘nouvelle’ norme (ou la proposition de norme) modifiant la norme mentionnée au point 2 .44 Deuxièmement, la Cour constitutionnelle rappelle que l'obligation de standstill n'empêche pas le législateur de toucher, dans le cadre de ses compétences, aux modalités de certains droits. Elle lui interdit d’adopter des mesures qui marqueraient un recul significatif du droit garanti, mais elle ne le prive pas du pouvoir d’apprécier de quelle manière ce droit sera le plus adéquatement assuré.45 Ainsi, la réduction de la protection dans l’un ou l’autre domaine peut être compensée par d'autres mesures, qui maintiendraient la protection au même niveau et ne violeraient pas le principe de standstill.46 Par conséquent, lors de l'évaluation de l’exécution des droits fondamentaux et d'une éventuelle violation du principe de standstill, une mesure ne peut pas être évaluée isolément, mais doit tenir compte de toutes les dispositions légales qui contribuent à garantir le droit à mener une vie conforme à la dignité humaine.47 G. Maes souligne également que le principe de standstill n'affecte pas le principe de la variabilité de la réglementation: ‘ce n'est pas un droit au standstill, mais un rempart contre une protection juridique inférieure’.48 Qu'il soit ou non question d’une réduction substantielle de la protection sociale qui n'est pas compensée par d'autres mesures, autrement dit, d’une violation du principe de standstill, dépend de la perspective à partir de laquelle le principe de standstill et les propositions de réforme sont évalués: du point de vue des pouvoirs publics ou du point de vue du citoyen.49 Une évaluation du point de vue des pouvoirs publics implique en effet que si le budget global consacré à la protection sociale est maintenu au même niveau mais réparti différemment, il n'est pas question d'une régression globale de la protection sociale. Enfin, il est admis que les droits socio-économiques fondamentaux et le principe de standstill qui y est associé ne sont pas absolus, mais relatifs, en ce sens que des circonstances exceptionnelles ou des raisons d'intérêt général peuvent justifier une

43

Critique concernant cette exigence: Hachez (2012), p. 11. Bouckaert (2003), pp. 340–341; Hachez (2012), p. 12; Maes (2005–2006), pp. 1081–1085. Pour une application, voir : Cour constitutionnelle 1 septembre 2008, n 132/2008, B.8. 45 Cour constitutionnelle 27 novembre 2002, n 169/2002, B.6.6. (sur le droit à l'assistance sociale); Cour constitutionnelle 14 janvier 2004, n 5/2004, B.14.6 (sur le droit à l'assistance sociale). 46 Sur la possibilité de compensation, voir: Maes (2005–2006), p. 1091; Velaers (2019), p. 446. 47 Cour constitutionnelle 26 avril 2007, n 66/2007, B.10.5. 48 Maes (2005–2006), p. 1082. 49 Voir aussi: Bouckaert (2003), p. 341; Maes (2005–2006), p. 1092. 44

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régression législative de la protection sociale.50 Même s’il est question d’un recul de la protection (même substantielle), des raisons d'intérêt général peuvent justifier ce recul. Le législateur jouit d'une grande liberté pour décider quelles mesures sont requises par l'intérêt générale. Dans ce contexte, on peut se référer à la viabilité financière du système de sécurité sociale, menacée en raison du vieillissement et de la dénatalité croissants. Ainsi, la Cour constitutionnelle est d’avis que il appartient au législateur d’apprécier dans quelle mesure il est opportun d’adopter des dispositions en vue de réaliser des économies dans le domaine des pensions de retraite et de survie; étant donné que ces pensions sont financées au moyen de deniers publics, la charge qui repose sur l’Etat doit pouvoir être modifiée lorsque l’assainissement des finances publiques ou le déficit de la sécurité sociale l’exigent.51 G. Maes52 estime également qu’une redistribution est autorisée, avec des procédures appropriées et sur une base raisonnable, lorsqu'une détérioration de la situation économique rend impossible le maintien des droits acquis. Finalement, M. Bossuyt53 souligne que les droits sociaux fondamentaux garantis par l'article 23 de la Constitution ont un contenu variable, compte tenu du temps, de l'évolution sociale et sociétale et des moyens financiers dont dispose les pouvoirs publics. Selon cet auteur, l'obligation de standstill ne doit pas être un frein à une politique adaptée et dynamique qui réponde aux besoins concrets de la société. Pour surveiller une éventuelle violation de l'article 23 de la Constitution belge, les plus hautes juridictions doivent procéder à une mise en balance des intérêts ou à une appréciation de proportionnalité.54 Une analyse de la jurisprudence de la Cour constitutionnelle montre que la Cour est prudente dans son appréciation et que le principe de standstill est appliqué avec la souplesse et la retenue nécessaires.55 Le principe de standstill, tel qu'il est défini et appliqué par les plus hautes juridictions, ne

50 Pour la jurisprudence de la Cour constitutionnelle dans ce sens, voir entre autres, sur le droit à un environnement sain: Cour constitutionnelle 14 septembre 2006, n 135/2006, B.10.; Cour constitutionnelle 28 septembre 2006, n 145/2006, B.5.1.; Cour constitutionnelle 20 juin 2007, n 87/2007, B.5.; Cour constitutionnelle 1er septembre 2008, n 121/2008, B.11.1.; Cour constitutionnelle 29 juillet 2010, n 94/2010, B.6.2.; Cour constitutionnelle 14 octobre 2010, n 113/2010, B.3.2.; Cour constitutionnelle 31 mai 2011, n 102/2011, B.3.2., ainsi que, sur le droit à l'assistance sociale: Cour constitutionnelle 27 juillet 2011, n 135/2011. Pour la jurisprudence du Conseil d'État en ce sens, voir notamment: Conseil d'État 23 septembre 2011, n 215.309, 20 (sur le droit à l'assistance sociale); Conseil d'État 6 décembre 2011, n 216.702, 33 (sur le droit à l'assistance juridique). Voir aussi: Bossuyt (2010), p. 67; Hachez (2012), p. 7 sqq.; Maes (2005–2006), p. 1089 sqq.; Velaers (2019), p. 445 qqs. 51 Cour constitutionnelle 8 mai 2014, n 78/2014, B.5.; Cour constitutionnelle 12 juin 2014, n 90/2014, B.5.; Cour constitionnelle 10 juillet 2014, n 103/2014, B.6.2.; Cour constitutionnelle 28 septembre 2017, n 104/2017; Cour constitutionnelle 30 novembre 2017, n 135/2017, B.19 ssq. 52 Maes (2005–2006), pp. 1081–1082. 53 Bossuyt (2010), pp. 64 et 67. 54 Voir aussi: Goossens (2014–2015), p. 811. 55 Dans ce sens également: Bossuyt (2010), p. 67; Bouckaert (2003), p. 337; Hachez (2012), p. 12.

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fait qu'empêcher le législateur de réduire substantiellement le niveau de protection existant, sans que cette régression soit justifiée par des raisons d'intérêt général.56 Néanmoins, ce principe oblige le législateur à rendre la prise de décision mieux informée et plus réfléchie, comme D. Dumont souligne.57

4 Les réformes de pension en Belgique, respectent-elles le droit à la sécurité sociale et l’obligation de standstill visés à l’article 23 de la Constitution belge?58 4.1

Une augmentation de l’âge légal de la retraite et une limitation du droit à la retraite anticipée

L’augmentation de l'âge de pension, ainsi que le relèvement de l’âge et l’allongement de la carrière requises pour l’octroi d’une pension de retraite anticipée impliqueront pour de nombreux assurés sociaux un report substantiel de la date à laquelle leur pension de retraite (anticipée) prendra cours. En effet, ces mesures privent les assurés sociaux concernés du droit de partir à la retraite pendant une période qui peut aller jusqu’à quatre années. Cependant, la Cour constitutionnelle59 ne l’estime pas nécessaire d’examiner si le relèvement de l’âge légal de la retraite (anticipée) et l’allongement des conditions de carrière y donnant accès, constituent un recul significatif, au motif qu’il suffit de constater que ce recul est justifié par des motifs d’intérêt général. En effet, le financement des pensions légales des travailleurs salariés et indépendants repose sur le principe de la répartition, selon lequel les cotisations de sécurité sociale versées par la population active servent à payer les pensions des retraités à ce moment-là. Les pensions de la population active seront à leur tour prises en charge par les générations suivantes. Le législateur peut justifier le relèvement de l'âge de la retraite entre autres par la croissance des dépenses des régimes de pensions en raison de l’âge moyen de sortie du marché du travail trop bas et de l'allongement de l'espérance de vie. Ce coût supplémentaire ne serait plus supportable pour la

Cour constitutionnelle 27 juillet 2011, n 135/2011, B.5.2. (sur le droit à l'assistance sociale); Cour constitutionnelle 30 juin 2014, n 95/2014 B.6.2. et B.36.2. (sur le droit à l'assistance sociale); Cour constitutionnelle 17 juillet 2014, n 107/2014, B.23. (sur le droit à la sécurité sociale, à la protection de la santé et à l'assistance sociale, médicale et juridique); Cour constitutionnelle 28 avril 2016, n 62/2016, B.6.2. (sur les droits économiques, sociaux et culturels); Cour constitutionnelle 1er octobre 2015, n 133/2015, B.6.2. (sur le droit à l'assistance sociale); Cour constitutionnelle 14 janvier 2016, n 4/2016, B.8.2. (sur le droit à l'aide sociale); Conseil d'État du 6 décembre 2011, n 216.702, n 33 (sur le droit à l'aide juridique). 57 Dumont (2019a), p. 601. 58 Martel et al. (2016), pp. 289–348. 59 Cour constitutionnelle 30 novembre 2017, n 135/2017, B.20.1-B.24.2. 56

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population active.60 Le relèvement de l'âge de la pension de retraite (anticipée) et de la durée de la carrière requise contribuent à l'objectif de réduire la retraite anticipée, à l'équilibre financier des finances publiques et à la viabilité à long terme des régimes de pension.61 Par ailleurs, l'ensemble des mesures relatives au relèvement de l'âge de la retraite et de la durée de carrière requise est proportionné à l'objectif poursuivi par le législateur. C’est ainsi que le législateur belge ne met pas en œuvre ces mesures d'un seul coup, mais progressivement pendant une phase transitoire. En plus, les personnes qui, à un moment donné, remplissaient les conditions d'âge et de carrière en vigueur à ce moment-là pour bénéficier d’une pension de retraite anticipée conservaient cet avantage, même si elles décidaient de faire valoir leur droit à la pension de retraite anticipée plus tard. En outre, il existe une exception pour les personnes qui n'ont pas atteint l'âge requis pour être admis à la retraite anticipée, mais qui ont accompli une carrière plus longue que la carrière requise. Elles peuvent toujours prendre leur pension de retraite anticipée (mais en aucun cas avant l'âge de 60 ans). Puis, la réforme répond aux attentes légitimes des assurés sociaux qui se réjouissent déjà d'une retraite anticipée imminente et tient compte des demandes de retraite déjà introduites. Enfin, le prolongement d’âge et de la durée de carrière entraîne dans de nombreux cas un montant de pension plus élevé, ce qui est à l'avantage du retraité. Partant, le législateur a recherché un équilibre qui n’est pas manifestement déraisonnable.62 Il en résulte que le relèvement de l'âge de la pension de retraite (anticipée) et l’allongement de la carrière donnant accès à la retraite anticipée ne violent pas le principe de standstill de l’article 23 de la Constitution belge.63

4.2

La réforme des pensions de survie: l’augmentation de l’âge minimum de la pension de survie

Le relèvement de l’âge d’octroi des pensions de survie (de 45 à 55 ans) implique pour les conjoints survivants un report important de la date d’entrée de leur pension de survie. En plus, les conjoints survivants qui n'ont pas encore atteint l'âge requis, ne recevront plus la pension de survie lorsqu'ils atteindront l'âge requis. En outre, le législateur supprime les exceptions à la condition d'âge pour les personnes qui ont 60 Voir, par exemple, l'exposé des motifs du projet de loi portant des dispositions diverses (I) et du projet de loi portant des dispositions diverses (II), Documents parlementaires Chambre 2011-12, n 2097/1, 57 sqq.; Rapport de la Commission des affaires sociales (Becq et al.) sur le projet de loi visant à relever l’âge légal de la pension de retraite, les conditions d’accès à la pension de retraite anticipée et l’âge minimum de la pension de survie, Documents parlementaires Chambre 2014-15, n 54-1180/004, 17, 62, 88. 61 Cour constitutionnelle 30 novembre 2017, n 135/2017, B.19 ssq. 62 Cour constitutionnelle 30 novembre 2017, n 135/2017, B.24.3. 63 Cour constitutionnelle 30 novembre 2017, n 135/2017, B.27.2.

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des enfants à charge ou qui se trouvent dans une situation d’incapacité permanente de travail. Dans tous ces cas, le paiement de la pension de survie est reporté jusqu'à ce que les personnes concernées perçoivent leur pension de retraite ou atteignent l'âge de la pension de retraite. Par conséquent, cette réforme entraîne une réduction significative du niveau de protection.64 Le relèvement de l'âge d’octroi de la pension de survie et la suppression des exceptions à la condition d'âge (au cas d’enfants à charge ou d’incapacité de travail) sont justifiés par le législateur par le fait que l'obligation de cesser (partiellement) l'activité professionnelle pour obtenir une pension de survie encourage les titulaires de ce droit à cesser ou à réduire leur activité professionnelle. Le législateur veut combattre ce piège d'inactivité et la perte pour l'économie qui en résulte.65 L'augmentation de l'âge et la suppression de l'exception à l'âge requis pour les titulaires ayant des enfants à charge contribuent sans doute à cet objectif. Cette réforme de la pension de survie est justifiée par des raisons d'intérêt général. On pourrait ajouter à cela que la réforme de la pension de survie apparaît proportionnée au regard des objectifs poursuivis. En effet, l’augmentation de l’âge de 45 à 55 ans ne se fait pas d'un seul coup, mais progressivement dans une phase transitoire. En outre, la pension de survie peut encore être versée au moment où le conjoint survivant atteint lui-même l'âge de la retraite. Cela est important pour ceux qui, pendant le mariage, ont cessé ou réduit leur propre activité professionnelle et n'ont donc droit qu'à une pension de retraite moins élevée; le cumul des deux prestations permet en effet de faire face à cette situation. En plus, il faut tenir compte de l’allocation de transition et de l'accès ultérieur au régime de chômage et au régime d’incapacité de travail. En outre, la réforme s'inscrit dans une politique générale visant à augmenter le taux d'activité de la population (âgée). En ce qui concerne la suppression de l'exception à la condition d'âge pour les titulaires ayant des enfants à charge, on peut se référer à l’assurance chômage qui ne permet les assurés sociaux de refuser un emploi convenable pour charge d’enfants que dans des circonstances exceptionnelles. Partant, l’article 23 de la Constitution n’est pas violé.66 Cette réforme concerne néanmoins aussi des personnes qui ne sont pas actives sur le marché de l’emploi ou n’y sont actives que de manière partielle et qui pourront effectivement se retrouver dans une situation de précarité que l’octroi d’une pension de survie a précisément pour objectif d’éviter. En relevant l’âge requis pour l’octroi d’une pension de survie à 55 ans,67 la réforme porte ainsi atteinte de manière disproportionnée à ces personnes, ainsi qu’à des personnes qui sont reconnues inaptes au travail, estime la Cour constitutionnel. Le risque de précarité qui leur

Cour constitutionnelle 30 novembre 2017, n 135/2017, B.53. Exposé des motifs du projet de loi portant modification de la pension de retraite et de la pension de survie et instaurant l'allocation de transition, dans le régime de pension des travailleurs salariés, Documents parlementaires Chambre 2013-14, n 3399/1. 66 Cour constitutionnelle 30 novembre 2017, n 135/2017, B.55.2. 67 La loi qui initialement augmentait l’âge pour l’octroi d’une pension de survie de 45 ans à 50 ans, n’a pas été l’objet d’un recours d’annulation. 64 65

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menace n’est pas raisonnablement justifié par rapport aux objectifs poursuivis par la réforme questionnée. Ainsi et sur ce point, la Cour estime que la réforme est incompatible avec le principe d’égalité et de non-discrimination.68 La réforme de la pension de survie est donc conforme au principe de standstill de l’article 23 de la Constitution belge, mais viole selon la Cour constitutionnelle le principe d’égalité et de non-discrimination en ce qu’elle relève de 50 à 55 ans l’âge requis pour l’octroi d’une pension de survie pour les personnes qui ne sont pas actives sur le marché de l’emploi ou n’y sont actives que de manière partielle et pour les personnes qui sont reconnues inaptes au travail.69 Bien que la Cour constitutionnelle ne se soit pas exprimée à ce sujet, le relèvement initial de l’âge pour l’octroi d’une pension de survie de 45 ans à 50 ans viole, à notre avis, également le principe d’égalité et de non-discrimination au moins en ce qui concerne les personnes qui sont reconnues inaptes au travail.70

4.3

La réduction initiée des pensions des fonctionnaires

Les réformes semblent avoir initié un mouvement de réduction du montant des pensions des fonctionnaires. L'impact réel de ces mesures est difficile à estimer en raison de la grande diversité des régimes de retraite des fonctionnaires et variera considérablement d'un cas à l'autre. Dans certains scénarios, la carrière pour une retraite complète sera prolongée de manière significative. Dans certains cas, les fonctionnaires ne pourront même plus atteindre la carrière donnant droit à la pension maximale.71 Cette réforme entraîne potentiellement une réduction importante du niveau de pension. Cependant, cet allongement de la carrière qui donne accès à la pension de retraite complète semble être justifié par des raisons d'intérêt général, ce qui est confirmé par la Cour constitutionnelle. En effet, le législateur considère qu’elle est nécessaire pour la viabilité financière à long terme des retraites.72 Cette mesure contribue sans doute à l'objectif de réduire les dépenses en vue de gérer le coût budgétaire du vieillissement de la population à long terme.73

Cour constitutionnelle 30 novembre 2017, n 135/2017, B.57.3. Cour constitutionnelle 30 novembre 2017, n 135/2017, B.58. 70 Voir Martel et al. (2016), pp. 289–348. 71 Voir les simulations dans Janvier et Janssens (2014), pp. 253–265. 72 Rapport sur le projet de loi portant des dispositions diverses, Documents parlementaires Chambre 2011-12, n 1952/11, 20. 73 Voir, par exemple, l'exposé des motifs du projet de loi portant des dispositions diverses (I) et du projet de loi portant des dispositions diverses (II), Documents parlementaires Chambre 2011-12, n 2097/1, 57 sqq. Cour constitutionnelle 17 janvier 2013, n 2/2013; Cour constitutionnelle 16 mai 2013, n 67/2013; Cour constitutionnelle 28 septembre 2017, n 104/2017. 68 69

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La bonification de temps pour diplôme accordée pour les périodes d’études, a été supprimée à l’égard des fonctionnaires et a été remplacée, aussi pour les travailleurs salariés et indépendants, par un nouveau système de régularisation des périodes d'études moyennent le paiement d’une cotisation. Cette mesure s’applique aux retraites qui prennent cours à dater du 1er janvier 2030. En outre, pendant la période transitoire la bonification de temps pour diplôme n’est réduite que progressivement, en fonction de la date à laquelle la retraite prend cours et du nombre d’années d’études requises pour le diplôme dont les fonctionnaires sont titulaires. Par ailleurs, les fonctionnaires peuvent dorénavant valoriser un diplôme de l’enseignement supérieur même si celui-ci n’est pas requis pour l’exercice de leur fonction. Selon la Cour constitutionnelle, cette réforme n’entraîne pas un recul significatif du montant de la pension pour la majorité des fonctionnaires. Elle est d’ailleurs justifiée par les objectifs d’harmoniser les régimes de retraite des travailleurs du secteur privé et des agents du secteur public, ainsi que d’assurer à long terme la viabilité des finances publiques.74 Finalement, les pensions des fonctionnaires ne sont plus calculées sur base de leur salaire moyen des 5 dernières années. Le salaire de référence est maintenant le salaire moyen des 10 dernières années. De nouveau, le législateur respecte en grande partie les droits acquis des personnes concernées. En effet, cette mesure ne s'applique pas aux personnes qui avaient déjà atteint l'âge de 50 ans au moment de son entrée en vigueur. D'autre part, le législateur considère que les jeunes fonctionnaires ont suffisamment de temps pour s'adapter au nouveau régime. La Cour constitutionnelle confirme que l'impact de ce changement en lui-même reste dans des limites raisonnables.75 Même si, dans certaines hypothèses, la combinaison des mesures prises conduirait à une réduction tangible des pensions, ces mesures n'apparaissent pas manifestement disproportionnées, compte tenu de la large marge d'appréciation dont dispose le législateur dans ce domaine et de l'impact des dépenses de retraite des fonctionnaires sur les finances publiques.76 En outre, le niveau plus élevé de la pension moyenne des fonctionnaires doit être pris en compte. En effet, leurs pensions sont sensiblement plus élevées que celles des travailleurs salariés et indépendants. Dans le stade actuel, la réforme de la retraite des fonctionnaires semble donc être conforme au principe de standstill de l’article 23 de la Constitution belge.

Cour constitutionnelle 24 octobre 2019, n 148/2019, B.23-B.24. Cour constitutionnelle 17 janvier 2013, n 2/2013; voir aussi: Goossens (2014–2015), p. 810. 76 Cour constitutionnelle 10 juillet 2014, n 103/2014. Voir aussi: Cour constitutionnelle 28 septembre 2017, n 104/2017. 74 75

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5 Conclusion En Belgique, différentes mesures ont été prises, visant à augmenter le taux d’emploi et l’âge effectif de départ à la retraite. La plupart des mesures sont également destinées à réduire les coûts budgétaires liés au vieillissement de la population, afin d’éviter que ces coûts soient rejetés sur les générations futures. A cette fin, les pouvoir publics belges ont apporté plusieurs modifications aux régimes des pensions. Les éléments les plus marquants de ces réformes des pensions sont le durcissement des conditions d'âge et de carrière pour l'octroi des pensions de retraite et des pensions de retraite anticipée, la réforme des pensions de survie et le mouvement initié pour réduire les pensions des fonctionnaires. Cette contribution a analysé comment ces réformes des pensions s'articulent avec le droit à la sécurité sociale, garanti par l'article 23 de la Constitution belge, et l'obligation de standstill qui y est associée. Le principe de standstill, tel qu'il est défini et appliqué par les plus hautes juridictions belges, ne fait qu'empêcher le législateur de réduire substantiellement le niveau de protection existant, sans que cette régression soit justifiée par des raisons d'intérêt général. En effet, des raisons d'intérêt général peuvent justifier un recul même substantielle de la protection qui est assurée par les régimes de pension. Les juridictions accordent au législateur une grande liberté de décider quelles mesures doivent être prises dans l'intérêt générale. Dans le contexte des pensions, on peut se référer, en premier lieu, à la viabilité financière du système de sécurité sociale, menacée en raison du vieillissement et de la dénatalité croissants. Même si, dans certaines hypothèses, la combinaison des mesures prises conduirait à une réduction tangible des pensions, ces mesures n'apparaissent pas manifestement disproportionnées, compte tenu de la large marge d'appréciation dont dispose le législateur dans ce domaine et de l'impact des dépenses sur les finances publiques. On peut conclure que les réformes des pensions en Belgique ne violent pas le principe de standstill associé à l’article 23 de la Constitution belge.

List de références Alofs E, Van Limberghen G (2015a) De hervorming van het overlevingspensioen en het belang daarvan voor de notariële praktijk. In: Alofs E, Casman H, Van Den Bossche A (eds) Liber Amicorum André Michielsens. Wolters Kluwer, Mechelen, pp 129–175 Alofs E, Van Limberghen G (2015b) De hervorming van het overlevingspensioen in het kader van de bescherming van de langstlevende echtgenoot: van overlevingspensioen naar overgangsuitkering. Tijdschrift voor Familierecht:34–40 Alofs E, Swennen F, Vandenbosch A-S (2019) Eldercare in Belgian public and private law: who cares? In: Antokolskaia M, Miles J, Parkinson P, Rogerson C, Vonk M (eds) Family law and family realities. Eleven International Publishing, The Hague, pp 529–544 Bijnens D, Schollen P, Theunis J (2015) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2013. Tijdschrift voor Bestuurswetenschappen en Publiek recht:67–112

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Bijnens D, Schollen P, Theunis J (2016) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2014. Tijdschrift voor Bestuurswetenschappen en Publiek recht:126–172 Bijnens D, Portagent S, Theunis J (2017) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2015. Tijdschrift voor Bestuurswetenschappen en Publiek recht:114–165 Bijnens D, Fransen D, Portagent S, Theunis J (2018) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2016. Tijdschrift voor Bestuurswetenschappen en Publiek recht:131–175 Bossuyt M (2010) Artikel 23 van de Grondwet in de rechtspraak van het Grondwettelijk Hof. In: Rauws W, Stroobant M (eds) Sociale en economische grondrechten. Artikel 23 Gw.: een stand van zaken na twee decennia. Intersentia, Antwerp, pp 59–67 Bouckaert S (2003) De verplichte materiële dienstverlening aan kandidaat-vluchtelingen en de toets door het Arbitragehof aan het grondrechteninstrumentarium in het algemeen en aan het standstillbeginsel in het bijzonder. Tijdschrift voor Vreemdelingenrecht:326–345 Dumont D (2019a) Le principe de standstill comme instrument de rationalisation du processus législatif en matière sociale. Un plaidoyer illustré (première partie). Journal des tribunaux:601–611 Dumont D (2019b) Le principe de standstill comme instrument de rationalisation du processus législatif en matière sociale. Un plaidoyer illustré (seconde partie). Journal des tribunaux:621–628 Goossens L (2014–2015) Het grondrecht op sociale zekerheid en sociale bijstand: dammen tegen de afbouw van een sociale welvaartsstaat? Rechtskundig Weekblad:803–824 Hachez I (2008) Le principe de standstill dans le droit des droits fondamentaux: une irréversibilité relative’. Bruylant, Brussels Hachez I (2012) Le principe de standstill: actualités et perspectives. Revue Critique de Jurisprudence Belge:6–18 Janvier R (2015) (R)evolutie in de ambtenarenpensioenen: meer of minder gelijk voor welke wet? In: Van Regenmortel A, De Meyer L, Vervliet V (eds) Actuele problemen van het socialezekerheidsrecht. Die Keure, Bruges, pp 417–468 Janvier R, Janssens J (2014) De toekomst van de pensioenen in de overheidssector. Die Keure, Bruges Maes G (2005–2006) Het standstillbeginsel in verdragsbepalingen en in art. 23 GW: progressieve (sociale) grondrechtenbescherming. Rechtskundig Weekblad:1081–1094 Martel B, Pertry V, Van Limberghen G (2016) Pensioen: hervorming en grondrecht. In: Van Regenmortel A, Verschueren H (eds) Grondrechten en sociale zekerheid. Die Keure, Bruges, pp 289–348 Schoukens P (2016) The right to social security in the Belgian constitution. Studia z Zakresu Prawa Pracy I Polityki Splecznei (Studies on Labour Law and Social Policy):223–238 Stevens Y (2015) Recente pensioenhervormingen voor werknemers en zelfstandigen: meer of minder verantwoordelijkheid voor de eigen pensioenopbouw? In: Van Regenmortel A, De Meyer L, Vervliet V (eds) Actuele problemen van het socialezekerheidsrecht. Die Keure, Bruges, pp 377–416 Stroobant M (1994) Ontstaan en draagwijdte van artikel 23 Grondwet houdende toekenning van sociale grondrechten. Revue de Droit Social:207–227 Stroobant M (2010) Sociale en economische grondrechten in de Belgische Grondwet. Wordingsgeschiedenis van artikel 23: het Akkoord van ‘Le Ry d’Ave’ Rochefort. In: Rauws W, Stroobant M (eds) Sociale en economische grondrechten. Artikel 23 Gw.: een stand van zaken na twee decennia. Intersentia, Antwerp, pp 19–57 Theunis J (2012) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2011. Tijdschrift voor Bestuurswetenschappen en Publiek recht:589–637 Theunis J (2014) De toetsing aan grondrechten door het Grondwettelijk Hof. Overzichten van rechtspraak 2012. Tijdschrift voor Bestuurswetenschappen en Publiek recht:131–169 Velaers J (2019) De Grondwet. Een artikelsgewijze commentaar. Deel I. Die Keure, Bruges

La Solidarité Entre Générations Au Sein Du Système De Retraite Français Laure Camaji

Résumé La France a engagé un processus de réforme des retraites depuis une trentaine d’années. Les réformes successives poursuivent des objectifs assez différents : assurer la pérennité financière du système de retraites entre 1993 et 2014, accroître la lisibilité des pensions et accompagner les mobilités professionnelles en 2019. Néanmoins, elles sont guidées par une même boussole : un « pacte entre les générations » structure le système de retraites français. Au fil des lois, la technique financière de la répartition est entrée dans le champ normatif et a été associée à la notion de solidarité. Devenue une référence normative en matière de retraites, la solidarité entre les générations revêt plusieurs sens dans les textes et la jurisprudence. Toutefois, cet argument est principalement mobilisé par les juges pour conforter les choix opérés par le pouvoir normateur. Les atteintes aux pensions de retraite restent peu discutées par les juges français, bien que des ressources argumentatives existent.

1 Introduction : l’évolution des retraites françaises À l’instar des autres pays européens, les évolutions socio-démographiques et le nouvel environnement économique ont conduit la France à engager un processus de réforme des retraites depuis une trentaine d’années. Initié au début des années 1990, il s’inscrit dans un contexte politique marqué à la fois par la limitation des dépenses publiques et la difficulté de réformer un système doté d’une très forte légitimité sociale1. La France a fait le choix de préserver le modèle d’assurances sociales fondé en 1945, financé en répartition par des cotisations proportionnelles au salaire. Face aux difficultés apparues dans les années 1980, les gouvernements ont d’abord choisi de

1 Pour une mise en perspective des réformes françaises avec celles menées en Europe, voir Palier (2014).

L. Camaji (*) Université Paris-Saclay, laboratoire IDEP, Sceaux, France e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_5

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recourir à l’option politique qui faisait consensus à l’époque : l’augmentation des cotisations retraites. Puis, les réformes successives (1993, 2003, 2010, 2014) ont adapté le système de manière progressive. Il a été procédé à l’allongement de la durée de cotisation, à la modification du calcul du salaire de référence ainsi qu’à la désindexation des pensions sur les salaires au profit d’une revalorisation sur les prix. L’âge légal de la retraite a également été reculé en 2010. Ainsi, les ajustements paramétriques ont été longtemps privilégiés pour maintenir l’équilibre financier des régimes. Ces réformes se sont traduites par un renforcement du caractère contributif des retraites. Elles ont permis de modérer l’évolution du montant des pensions. Les retraites ont continué de croître en euros constants sous l’effet noria2, mais à long terme, ces réformes produiront une baisse de la pension moyenne de l’ensemble des retraités relativement au revenu d’activité moyen jusqu’en 20703. Bien que le système de retraite reste vulnérable aux aléas de croissance à long terme4, ces adaptations ont conduit à absorber les chocs démographiques à moyen terme et à rétablir son équilibre financier. En dépit de ces projections confirmant la pérennité du système français, une évolution décisive se dessine actuellement. Envisagé dès la réforme de 2010 comme une perspective à débattre, le passage de pensions en annuités vers des retraites à points est aujourd’hui entré dans une phase préparatoire5. Ce changement majeur, qualifié de réforme systémique6, participe d’un réaménagement plus profond. En effet, l’objectif principal de la réforme est de créer un régime universel appelé à se substituer aux multiples régimes professionnels aujourd’hui existants. Dans ce nouveau régime unique, commun à l’ensemble des assurés sociaux, les règles seront les mêmes pour tous, alors qu’aujourd’hui les taux de cotisations et le mode de calcul des pensions diffèrent d’un régime à un autre7.

2 L’effet noria désigne le remplacement des anciennes générations de retraités par des nouveaux retraités aux pensions en moyenne plus élevées. 3 Projections réalisées par le Conseil d’orientation des retraites (COR 2018, p. 58). 4 D’après le dernier rapport du Conseil d’orientation des retraites (COR 2018, p. 64), le solde financier du système de retraite, après avoir atteint un déficit de 0.7% du PIB en 2010, resterait faiblement négatif pour s’établir à -0.2% du PIB jusqu’en 2022, puis se redresserait jusqu’à atteindre l’équilibre en 2036 ou 2040 selon les scénarios économiques envisagés (sauf en cas de croissance des revenus d’activité inférieure à 1.5% à long terme). Voir également l’analyse de France stratégie, organisme d’études et de prospective, d’évaluation des politiques publiques et de propositions placé auprès du Premier ministre (France stratégie 2017). 5 Le projet porté par le Gouvernement a été présenté publiquement en décembre 2019. Les citations reproduites dans le paragraphe sont extraites du site internet de la réforme (voir https://www. reforme-retraite.gouv.fr/). Au moment où nous écrivons, le projet n’a pas encore été définitivement adopté par le Parlement. La phase finale de discussion parlementaire a été suspendue en même temps que l’annonce des mesures de confinement de la population face à la pandémie de Covid-19. 6 Le terme « systémique » ne serait pas pertinent pour qualifier la réforme de 2019 à venir, puisqu’il « évoque un changement de système. [. . .] Un changement de système consisterait à passer à la capitalisation ou à la privatisation. [Or], l’enjeu est de définir des règles en modifiant les paramètres de la formule actuelle du calcul des montants de retraite », selon Antoine Bozio, économiste, in Sénat (2018), p. 54. 7 Il faut relativiser ces différences, car une convergence des régimes est à l’œuvre depuis 1993.

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L’exigence, selon le Gouvernement, est de faire évoluer un système jugé désormais « trop complexe, générateur d’injustice [qui] pénalise les mobilités professionnelles ». La simplification s’appuie sur une nouvelle règle de calcul des pensions : « un euro cotisé donne les mêmes droits, quel que soit le montant où il a été versé et quel que soit le statut de celui qui a cotisé ». La migration des régimes par annuités vers un régime par points est donc adossée à une refonte de l’organisation d’ensemble. Elle vise à dépasser les logiques de statuts professionnels qui constituaient le cœur du modèle fondé en 1945.

2 De la retraite par répartition à la solidarité entre les générations dans le système de retraite français : l’affirmation progressive d’une norme juridique Les réformes successives poursuivent des objectifs assez différents – assurer la pérennité financière du système de retraites entre 1993 et 2014, accroître la lisibilité des pensions et accompagner les mobilités professionnelles en 2019. Néanmoins, elles sont guidées par une même boussole : un « pacte entre les générations » structure le système de retraites français. Il s’incarne dans une modalité spécifique de financement : la répartition. La réaffirmation de ce choix en ouverture de chaque séquence législative pose le cadre politique général ; c’est bien pour assurer la permanence de ce modèle social que des changements s’imposent aux citoyens. D’abord simple technique financière, la répartition a été transmuée, au fil des lois, en une composante fondamentale de la solidarité qui est à l’œuvre dans l’institution de la Sécurité sociale française. En témoignent les premières phrases des exposés des motifs des projets de loi8. Érigée en amont de la réforme de 2003 comme un « 8

« Pour que la France puisse préserver son modèle social, au cœur du pacte républicain, des réformes structurelles sont nécessaires. Parmi ces réformes, trop longtemps différées, celle de l’avenir du système de retraite tient une place essentielle. Le principe de la répartition caractérise notre système. Ce principe relève d’un choix de société, fondé sur la solidarité entre les Français et entre les générations. Ce choix de société, le Président de la République et le Gouvernement se sont engagés, par la réforme, à en assurer la permanence » (2003) ; « Le présent projet de loi vise à rééquilibrer et pérenniser le modèle français de retraites par répartition fondé sur la solidarité. Cette solidarité est au cœur de notre pacte républicain et elle s’exprime aussi bien entre actifs et retraités qu’entre personnes d’une même génération, pour tenir compte des aléas de la vie. » (2010) ; « Notre système de retraite par répartition est un des piliers du modèle social français, auquel nos concitoyens sont fortement attachés. Il est au cœur du pacte républicain qui rassemble les différentes générations. Ce pacte entre les générations suppose une confiance partagée : confiance dans le fait que le système de retraite permettra à chacun, lorsque son tour viendra, d’en bénéficier ; confiance dans le fait que le système est juste et que les efforts sont partagés par tous. C’est pour rétablir la confiance dans l’avenir de notre système de retraite que le Gouvernement a engagé, il y a maintenant plus d’un an, une concertation sur ses évolutions. » (2014) ; « l’enjeu consiste à renforcer les solidarités inter- et intragénérationnelles. Le président du COR a par ailleurs indiqué les principes sous lesquels se place notre système de retraite : la lisibilité, la transparence, la solidarité et sa solidité en adéquation avec les objectifs macro-économiques. » (Allocution de Jean-

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principe général de la réforme des retraites », la technique de la répartition a été dotée d’une valeur législative dans le texte finalement adopté. Elle est ainsi entrée dans le champ normatif : « La Nation réaffirme solennellement le choix de la retraite par répartition au cœur du pacte social qui unit les générations. Le système de retraite par répartition assure aux retraités le versement de pensions en rapport avec les revenus qu’ils ont tirés de leur activité. » (art. L.111-2-1 CSS9). Logée en ouverture du Code de la sécurité sociale, dans les « généralités » exposant l’organisation de la sécurité sociale, la formule occupe une place qui pourrait lui conférer un rôle dans l’interprétation des dispositions normatives de sécurité sociale, la rapprochant d’un principe législatif. Elle est aussi porteuse de la philosophie du système de sécurité sociale français. Elle est complétée par des objectifs jouant le rôle d’instruments de pilotage du système de retraite dans la durée10. La mise en exergue de la technique de la répartition a certainement pour fonction primordiale d’asseoir la légitimité des réformes. Arrimées à la poursuite et à l’approfondissement de la solidarité, les réformes acquièrent une forme d’autorité politique dont le Gouvernement ne peut faire l’économie, tant le système de retraite français entretient des liens intimes avec l’idée - ou l’institution - démocratique11. Cet impératif s’exprime bien dans le Livre Blanc sur les retraites de 1991. Ce rapport du Premier ministre a sans doute inspiré toutes les réformes postérieures des années 1990 et 2000. Livrant aux citoyens la situation de l’ensemble des régimes de retraite et leurs perspectives d’évolution, son ambition était de poser les termes du débat et de préparer la première réforme d’envergure qui sera finalement adoptée en 1993. Sous-titré « Garantir dans l’équité les retraites de demain », il proposait différentes options pour faire face aux effets du vieillissement démographique. Il s’ouvrait par une ambition politique : « La France a fait en 1945 le choix de la solidarité en organisant son système de retraite sur la base de la répartition. Confirmer ce choix fondateur entraîne des obligations fortes. La répartition repose sur un contrat implicite entre les générations. Il importe donc d’en expliciter les termes, d’en vérifier l’application et de s’interroger sur les conditions de son actualisation dans la justice sociale. »12.

Paul Delevoye le 19 avril 2018 en clôture du colloque du Sénat consacré à la réforme des retraites, Sénat 2018, p. 65). 9 Initialement inscrite à l’article 1er de la loi de 2003, la formule a été codifiée à l’article L.161-17 A du Code de la sécurité sociale par la loi de 2010 (dans la partie du Code dédiée aux retraites), puis réécrite et transposée à l’article L.111-2-1 par la loi de 2014 et placée dans les dispositions inaugurales du Code relatives à l’organisation de la sécurité sociale. Elle est très probablement amenée à être modifiée avec la réforme à venir. 10 Le Conseil d’orientation des retraites, instance indépendante et pluraliste d’expertise et de concertation créée en 2000, est chargé par la loi depuis 2014 de vérifier l’atteinte de ces objectifs. Le suivi des indicateurs structure son rapport annuel et sert de base aux recommandations de modification des paramètres du système. Les objectifs sont détaillés infra. 11 Borgetto and Lafore (2000) and Bec (2014). 12 Premier ministre (1991).

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La technique de la répartition et l’idée de solidarité sont donc associées dans la description des retraites françaises depuis le début des années 1990, tant sur le plan politique que juridique. Rapportée à l’échelle temporelle du système des retraites, la valeur donnée à ce mode de financement est récente. En effet, sa pleine adoption en 1945 était alors surtout justifiée par des considérations économiques13. Les dévaluations monétaires qui s’étaient succédé au cours de la première moitié du XXème siècle avaient révélé les faiblesses du financement par capitalisation, technique sur laquelle reposaient les retraites françaises depuis les années 1910. Le choix de la répartition était essentiellement dicté par la recherche d’une sécurisation économique des retraites ; il avait également l’avantage considérable de permettre le service de pensions de vieillesse sans attendre la constitution d’un capital. Aujourd’hui, cette modalité exprime davantage un modèle de société qu’il s’agit de promouvoir ou de sauvegarder. L’invocation de la solidarité entre les générations a pour effet de rattacher le mode de financement des retraites au principe de solidarité affirmé au premier article du Code de la sécurité sociale (« La sécurité sociale est fondée sur le principe de solidarité nationale. », art. L.111-1 CSS). Comme l’observe Alain Supiot, la signification du principe de solidarité dans le champ de la sécurité sociale va bien au-delà de son rôle d’organisation des assurances sociales : il fonde les droits sociaux et une citoyenneté sociale14.

3 La pluralité de sens de la solidarité entre les générations dans le droit français des retraites Quel(s) sens donner à la notion de solidarité entre les générations dans le droit français des retraites ? L’idée de solidarité est protéiforme. Ici, elle est certainement mobilisée dans le sens objectif de l’interdépendance entre membres d’une société (ou entre générations)15. Ce sens commun lui est attaché dans l’institution de la Sécurité sociale française (Supiot 2015b). En effet, la mécanique de la répartition tient ensemble au moins trois générations – lesquelles se trouvent de ce fait découpées par le dispositif en cause. Sa viabilité repose sur une croyance fondamentale, en forme de pari politique : en payant les pensions des retraités actuels, les actifs renouvellent le pacte conclu par ceux qui les ont précédés et comptent sur le fait que la génération postérieure fera de même pour eux16. 13

Sur l’évolution des retraites françaises, voir Bichot (2019). Supiot (2015b) ; sur le principe de solidarité comme mesure du pouvoir des régulateurs en matière de protection sociale, voir Vacarie (2019). 15 Selon la classification des sens différents et complémentaires de la notion de solidarité établie par Malamoud (2015). 16 Décrit dans le registre des sciences économiques, « le financement en répartition [se comprend] comme un substitut à l’émission de dette publique : les actifs achètent des droits futurs pour leur retraite en finançant les retraites actuelles, honorant ainsi la dette implicite vis-à-vis des générations retraitées, qui ont-elles-mêmes contribué pour leurs parents » (Bozio 2010). 14

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Considérée dans ce sens organisationnel, la solidarité entre générations ne véhicule pas d’idée d’équité ou de réduction des inégalités entre les générations. L’interdépendance entre les générations est mécaniquement réalisée tant que la technique financière n’est pas remise en cause. En d’autres termes, elle semble n’exiger que la seule pérennité financière des régimes. Tel est d’ailleurs le dessein premier des réformes adoptées en France entre 1993 et 2014 : elles sont principalement guidées par la recherche de l’équilibre financier à court et à long terme. Dès lors, une question surgit : puisque la justice produite par le système n’est pas intrinsèque au type de financement, où se situe-t-elle ? La solidarité entre les générations, invoquée dans la loi sous les traits du « pacte social qui unit les générations », est-elle porteuse de certaines valeurs ? Si l’interrogation est vaste17, il faut remarquer que le législateur français a posé quelques repères au fil des réformes. En effet, plusieurs objectifs sont assignés au système de retraite depuis 2003. De surcroît, ils sont inscrits dans la loi, ce qui leur confère une force normative18. Trois objectifs principaux ressortent : la pérennité financière du système de retraite, un niveau de vie satisfaisant pour tous les retraités et un traitement équitable (entre générations, entre sexes, entre régimes)19. D’après le Conseil d’orientation des retraites, « l’équité s’apprécie elle-même au travers de quatre dimensions : le montant des pensions de retraite et, plus largement, le niveau de vie des retraités, la durée de la retraite, la durée de la carrière pendant laquelle sont prélevées les cotisations et, enfin, le taux de prélèvement finançant les retraites. Alors que ces deux dernières dimensions permettent d’apprécier l’effort de financement des assurés en activité, les autres dimensions permettent d’apprécier ce que le système apporte aux assurés une fois retraités. » (COR 2018, p. 6). Ces objectifs apportent certainement de la substance à l’idée de solidarité entre les générations dans le système de retraite français. En effet, ils se présentent comme son développement ou son approfondissement, puisqu’ils énoncés à la suite du « choix de la retraite par répartition au cœur du pacte social qui unit les générations » (article L.111-2-1 CSS). Il convient aussi de les resituer dans la finalité des régimes, qui est de servir des pensions de retraite. A la différence des assurances et des produits d’épargne du secteur marchand, ce but ne saurait être atteint par une institution de sécurité sociale s’il ne procure pas une relative sécurité – c’est-à-dire une certaine stabilité de revenus pour les retraités actuels et une prévisibilité des ressources pour ceux qui les suivront. L’impératif de la pérennité financière des régimes ne prend pleinement son sens qu’en ce qu’il vient au soutien d’une recherche de garantie des pensions présentes et à venir. Ainsi que le précisent les

17

Voir, dans cet ouvrage, en particulier l’introduction d’Eri Kasagi ; Fulchiron (2013) et AttiasDonfut (1995). 18 Article L.111-2-1 du Code de la sécurité sociale. 19 Cette synthèse des objectifs, dégagée par le Conseil d’orientation des retraites, est communément partagée. Elle est susceptible d’être discutée. Comme le signale le COR, « des marges d’interprétation existent » (COR 2018, p. 5).

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objectifs législatifs, la fonction essentielle du système est « d’assurer aux retraités actuels et futurs un niveau de ressources satisfaisant, sécurisé et anticipé »20. Explicités par les textes et interprétés à la lumière de la mission assignée au système de retraite, ces dimensions de la solidarité entre les générations constituent autant de considérations présidant à l’évolution des régimes. Se manifestent-elles dans le droit sous une forme plus contraignante que la seule proclamation solennelle d’objectifs et du choix de la répartition ? Le contexte de ces dernières décennies rend cette interrogation plus prégnante. En effet, bien que l’adaptation permanente aux nouveaux contextes politique, social et économique soit inhérente au fonctionnement d’un système de retraite, il est manifeste que le sens de l’évolution a changé : la tendance de la dernière période est à minorer les droits à retraite, voire à les remettre en cause. Si les pensions futures sont concernées au premier chef, les pensions en cours de versement sont également impactées. Les atteintes prennent de multiples formes. Dans ce contexte, l’idée de solidarité entre les générations invite à mettre à nu les ressorts de la garantie – ou la fragilité – des droits des assurés sociaux. La notion est-elle convoquée dans le droit, soit comme soutien, soit comme gardefou ? Afin de mieux l’identifier, l’étude est circonscrite aux hypothèses de baisse et de transformation des pensions de retraite.

4 Les atteintes aux droits à retraite : mesures-phares des dernières décennies en France Au cours de la période récente, la réponse apportée par les pouvoirs publics aux enjeux du vieillissement démographique et de l’évolution du marché du travail a principalement consisté à limiter la progression des dépenses de retraite en part du PIB21. Bien que la masse financière ait continué de progresser du fait de l’allongement des carrières, de la croissance des salaires et de la durée de vie, le montant et la durée de service des pensions ont été contenus de manière conséquente depuis 1993. Ces modérations ont été obtenues par le jeu des réformes dites « paramétriques » déjà évoquées ci-dessus. Afin de faciliter leur mise en œuvre, la transition n’a bien souvent pas été immédiate. Les réformes ont été conçues pour monter en charge sur plusieurs années ou des décennies. Elles ont principalement concerné les pensions à venir, c’est-à-dire les retraites non encore liquidées. Par exemple, dans les régimes de retraite de base des salariés et des fonctionnaires, la durée d’assurance nécessaire pour obtenir une pension à taux plein a été progressivement augmentée à partir de 1993 pour les nouveaux retraités : fixée à 37.5 années en 1993, elle devrait atteindre 43 ans pour la génération 1973 dans la plupart des régimes. Le calcul du salaire annuel moyen de

20

Selon la formule du COR (2018), p. 6. L’édification de l’Union économique et monétaire européenne a significativement contribué à la transformation des modèles sociaux nationaux, selon Beauvironnet (2019).

21

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référence a aussi été modifié ; longtemps déterminé au regard des dix dernières années, il repose désormais sur les 25 meilleures années. Le recul de l’âge légal de la retraite a quant à lui été acté en 2010. Augmentant par paliers, la mesure a pris son plein effet en 2018. Les pensions futures ont aussi été touchées par la suppression de dispositifs de retraite particuliers ou de certains éléments de pension, comme les départs anticipés de fonctionnaires parents de trois enfants (supprimés par la réforme de 2010) ou la bonification pour enfants (modifiée à plusieurs reprises entre 2003 et 2010 dans l’ensemble des régimes). Les réformes des retraites n’atteignent pas uniquement les pensions futures. Elles sont susceptibles de concerner les pensions liquidées, c’est-à-dire celles qui sont en cours de versement. Il est vrai que ces mesures sont rares. Le législateur français privilégie de longues périodes transitoires. Toutefois, des mesures décisives affectent les retraités. Tel est le cas du changement des règles d’indexation des retraites. La mesure est peu spectaculaire, mais c’est un levier important d’économies dont l’effet est immédiat. En France, les pensions en cours de service dans le secteur privé ont été indexées sur les prix à partir des années 1980, alors qu’elles variaient auparavant avec les salaires (il en a été de même pour les salaires portés aux comptes, c’est-à-dire ceux sur la base desquels la pension est calculée). Ce principe a été confirmé par la loi de 1993 et étendu en 2003 aux pensions de la fonction publique. La modification des conditions de cumul avec les revenus d’activité impacte également les pensions en cours de versement. Plus directement, dans les régimes fonctionnant par points, il suffit de baisser la valeur de service du point pour minorer le montant de la pension en cours de service. Certains régimes ont eu recours à une telle mesure ces dernières décennies22. Le mode de revalorisation des pensions peut également être touché (par exemple, à l’occasion du transfert du régime complémentaire des banques vers le régime de retraite complémentaire des salariés en 1993). Enfin, certains régimes de retraite de base et complémentaires sont amenés à disparaître ou à fusionner. Les pensions de retraite sont nécessairement affectées puisqu’une transposition des droits acquis doit être réalisée dans le régime d’accueil. En France, des régimes dits « spéciaux » ont été fermés et les assurés sociaux transférés vers le régime général des salariés ; de la même façon, des régimes de retraite complémentaire propres à certains secteurs ont migré vers le régime de retraite complémentaire des salariés. La conduite de ces réformes n’est pas évidente. En effet, au niveau politique, la fusion des régimes, tout comme le basculement vers un régime par points, exigent de veiller à la conservation des droits accumulés par les assurés sociaux. Toutefois, sur le plan juridique, les droits à retraite, les cotisations sociales et les points ne se coulent pas dans la notion de la propriété individuelle23. Qu’elles soient futures ou

22 À titre d’exemple, le pouvoir réglementaire a modifié la valeur de service du point dans les régimes de retraite complémentaire des médecins conventionnés (1999), des chirurgiens-dentistes (2007) et des auxiliaires médicaux (2008). Le contentieux suscité par ces mesures est examiné ci-dessous. 23 Camaji (2008), pp. 227 et s.

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déjà liquidées, les pensions de vieillesse sont vulnérables aux réformes24. La liquidation de la retraite ne suffit pas à protéger les pensions de toute modification ultérieure. Bien que les juges français dégagent un principe d’intangibilité des pensions liquidées, ils ne lui donnent pas une telle portée25 : « il se borne à interdire [aux caisses] de modifier le montant qu’elles ont notifié en invoquant une erreur de calcul, au-delà des délais de recours » (Attali-Colas 2019b). Ainsi, le montant et les éléments de la retraite sont cristallisés du fait de la liquidation, mais ce figement de la pension ne vaut qu’à droit constant. Les pensions non liquidées sont a fortiori plus fragiles, car avant la liquidation de la pension de vieillesse, aucune prestation sociale n’est calculée ni servie. L’assuré social se trouve dans une situation d’attente. Pour autant, toute garantie d’un droit à retraite n’est pas à exclure. Comme nous le verrons ci-après, des principes juridiques tels que le principe de sécurité juridique ou les droits fondamentaux de la personne sont des ressources susceptibles de protéger le service, ou même l’espérance, d’une pension de vieillesse. Qu’en est-il de la référence normative de la solidarité entre les générations ?

5 La solidarité entre générations en matière de retraite, une référence normative autonome mobilisée par le juge ? Deux interprétations principales se dégagent des textes. Bien souvent, la solidarité entre les générations est confondue avec la technique du financement par répartition. De la sorte, elle est « détachée des niveaux de vie » et « se traduit nécessairement par une solidarité des jeunes pauvres vers les vieux riches » (Langlois 2016). Une deuxième interprétation, plus dense, prend le visage du traitement équitable entre les générations ainsi que de la garantie d’un niveau de ressources satisfaisant, anticipé et sécurisé. Le juge relaie-t-il cette palette de sens ? Les contentieux portés devant les juges français ont jusqu’à présent principalement concerné les atteintes aux pensions liquidées. Quelles que soient les formes de mise en cause (baisse de la valeur du point, suppression d’un élément accessoire de pension, nouvelle contribution portant sur les pensions de retraites), la violation de principes supra-législatifs a été systématiquement écartée. Les juges ont confirmé l’application des mesures aux pensions en cours de service. À cette fin, ils convoquent la nécessité de rétablir l’équilibre financier du régime26, laquelle est 24

Voir l’analyse juridique (succincte) du secrétariat général du COR de la faisabilité technique et juridique du passage éventuel à un régime par points ou en comptes notionnels, Secrétariat général du COR (2009). 25 Pour de plus amples développements, voir Attali-Colas (2019a, b), Camaji (2008) et Langlois (2000). 26 CE 26 mars 2010, n 323201 (abaissement de la valeur du point dans le régime de retraite complémentaire des auxiliaires médicaux) : « les stipulations de l’article 1er du premier protocole additionnel à la convention européenne de sauvegarde des droits de l’homme et des libertés fondamentales ne font en principe pas obstacle à ce que le législateur adopte de nouvelles

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rapportée au fonctionnement d’un régime par répartition dans plusieurs affaires27. La préservation de l’équilibre financier des régimes est érigée en motif d’intérêt général justifiant une baisse des pensions de retraites. Dans les affaires rapportées, le juge ne contrôle pas la réalité de la sauvegarde du régime. Il ne discute pas non plus le choix d’abaisser les pensions plutôt que d’augmenter les cotisations des actifs, ou de jouer sur les paramètres de calcul des pensions à venir. En d’autres termes, les juges se gardent d’apprécier les choix qui ont été faits par les gestionnaires des régimes par répartition. Il est vrai, cependant, que l’atteinte aux pensions liquidées demeurait mesurée dans les affaires en cause : le montant des pensions n’était pas beaucoup amputé, ce qui dispensait sans doute les juges d’apprécier une éventuelle disproportion. Aucune décision d’une juridiction française n’a réellement mis en œuvre un contrôle au prisme de la solidarité entre les générations. Si la référence apparait dispositions remettant en cause, fût-ce de manière rétroactive, des droits découlant de lois en vigueur ; qu’il ne peut toutefois le faire qu’à la condition de ménager un juste équilibre entre l’atteinte portée à ces droits et les motifs d’intérêt général susceptibles de justifier cette atteinte ; qu’en l’espèce le législateur, qui a entendu préserver par diverses mesures la pérennité des régimes complémentaires de vieillesse des professions médicales et paramédicales, dont l’équilibre financier était gravement compromis, ainsi que l’équité entre les générations, n’a pas porté, en tout état de cause, une atteinte disproportionnée aux droits des bénéficiaires de ces régimes en prévoyant une révision, pour l’avenir, de la valeur de service du point de retraite applicable aux pensions et pensions de réversion déjà liquidées » ; Cass .soc. 23 nov. 1999, n 97-18980, arrêt dit AGIRC (contribution assise sur toutes les pensions de retraite dans le régime de retraite complémentaire des salariés Agirc) : « aucun texte légal ou réglementaire, ni aucun principe général n’interdisait de prévoir, afin de maintenir l’équilibre obligatoire du régime, la participation de l’ensemble des retraités au financement d’une contribution de solidarité en faveur de certaines catégories de cadres défavorisés par la situation économique ». 27 Cass. 2è civ. 17 avril 2008, n 07-12144 (abaissement de la valeur du point dans le régime d’assurance vieillesse des médecins): « l’arrêt retient qu’il incombe aux institutions de retraite complémentaire d’assurer en permanence l’équilibre financier des régimes qu’elles gèrent et qu’elles doivent, conformément à l’article L. 922-11 du code de la sécurité sociale, adapter leurs dispositions pour définir de nouvelles modalités assurant la sauvegarde des droits de leurs adhérents ; que le régime des avantages sociaux vieillesse supplémentaires (ASV) est un régime d’origine légale et obligatoire, fondé sur le principe de la répartition ; que la modification de la valeur du point de retraite, qui peut varier dans le temps en fonction de divers éléments et, notamment, de l’évolution du coût de la vie mais aussi de la nécessité d’assurer l’équilibre financier du régime, ne saurait être considérée comme la remise en cause des droits liquidés au profit de l’assuré, le nombre de points de retraite lui-même demeurant inchangé ; qu’ainsi l’application de la nouvelle valeur du point de retraite telle que fixée par le décret du 26 mars 1999 aux pensions déjà liquidées ne contrevient ni au principe d’intangibilité des droits liquidés ni au principe de non-rétroactivité des dispositions de nature réglementaire et ne constitue pas une atteinte injustifiée au droit de propriété » (1ère espèce) ; « n’est pas contraire aux dispositions de l’article 1er du premier protocole additionnel à la Convention de sauvegarde des droits de l’homme et des libertés fondamentales prescrivant le respect des biens l’application immédiate d’un texte réglementaire modifiant la valeur du point de retraite d’un régime de retraite par répartition dont les prestations sont versées chaque année au moyen des cotisations recouvrées, dès lors que cette application immédiate est commandée par la nécessité d’intérêt général consistant à assurer l’équilibre financier de ce régime et qu’elle ne revêt pas un caractère disproportionné » (2ème espèce, n 0712143).

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explicitement dans quelques arrêts de la Cour de cassation (ou sous la forme de « l’équité entre générations » ou de « la solidarité »), elle ne semble pas asseoir un réel contrôle du juge. Elle a plutôt vocation à conforter la compétence du pouvoir normateur de déterminer et de faire évoluer les paramètres d’un régime par répartition. En témoigne un arrêt de 2010 : le législateur a entendu préserver l’équilibre financier du régime ainsi que « l’équité entre générations »28. L’invocation de l’équité entre générations paraît souligner la responsabilité du pouvoir normateur d’assurer la pérennité d’un régime par répartition ; la référence a donc une vertu pédagogique, explicative. La solidarité entre générations est également citée dans des affaires concernant l’exclusion de certaines catégories d’assurés du bénéfice de la pension29. L’idée de solidarité entre générations semble être sollicitée dans le même sens : elle tend à décrire le fonctionnement d’un régime par répartition et la fonction de la cotisation sociale dans ce type de régimes, afin de les distinguer des retraites par capitalisation. Un dernier arrêt peut être cité. Dans une décision de 200130, l’idée de solidarité revêt les caractères d’une norme que la Cour de cassation

CE 26 mars 2010, n 323201, précité. Dans un litige concernant le régime de retraite complémentaire des salariés cadres, la Cour de cassation valide la mesure en relevant qu’un régime par répartition « qui repose sur la solidarité entre les professions et les générations, ne fait pas dépendre les droits des retraités de leur épargne personnelle, mais de la capacité contributive des actifs et de leurs employeurs » (Cass. soc. 22 juin 2000 n 99-15501). En l’espèce, un avenant à la convention collective nationale avait exclu du bénéfice de la pension de retraite complémentaire certaines catégories de travailleurs exerçant plusieurs activités (l’exclusion concernait ceux qui relevaient d’un régime spécial de sécurité sociale pour leur retraite de base). Leur affiliation au régime complémentaire était maintenue pour l’activité relevant de ce régime, mais ils étaient exonérés de leurs cotisations personnelles. Les cotisations patronales restaient dues sans contrepartie. Dans un arrêt de 2013, la Cour de cassation rappelle la nature d’un régime par répartition pour confirmer la décision de la caisse du régime de retraite des masseurs-kinésithérapeutes de refuser de liquider la retraite complémentaire d’un assuré n’ayant pas apuré sa dette de cotisations (Cass. 2è civ. 28 nov. 2013 n 12-27029). L’assuré soutenait que le refus de liquidation de la pension constituait une violation du droit au respect des biens, énoncé par l’article 1er du protocole n 1 de la CEDH : dès lors que l’intéressé était privé de tout droit à pension, et non pas seulement de la prise en compte des années pour lesquelles il n’avait pas acquitté toutes les cotisations exigibles, la réglementation était disproportionnée au regard du but légitime poursuivi. La Cour de cassation ne retient pas cette analyse. Elle énonce que « selon l’article 10 des statuts relatifs au régime de retraite complémentaire de la CARPIMKO, pour bénéficier de la retraite complémentaire, les affiliés doivent avoir versé toutes les cotisations exigibles et avoir l’âge prévu par les articles 11 et 12 ; [. . .] ne constitue pas une atteinte au droit de propriété le régime de retraite complémentaire de la CARPIMKO, fondé sur la solidarité entre générations, les pensions de retraite reçues par les retraités étant directement financées par les cotisations sociales prélevées sur les revenus des actifs, lesquels ne peuvent pas s’en déclarer propriétaires ; [. . .] la cour d’appel a exactement déduit de ces énonciations que la demande de pension de retraite complémentaire devait être rejetée ». 30 Cass. soc. 31 mai 2001, n 98-22510. Cette affaire concernait le transfert du régime de retraite des banques vers les régimes de retraite complémentaire des salariés. L’accord réalisant le transfert prévoyait le maintien du niveau des pensions atteint par les pensionnés avant le transfert et créait un « complément bancaire » de manière à harmoniser le montant avant transfert et le montant tel que calculé en fonction des règles de l’AGIRC et de l’ARRCO. Cependant, le mode de revalorisation des pensions bancaires aux fins de calcul du complément entraînait une érosion progressive de la 28 29

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mobilise pour contrôler certaines mises en cause des droits à retraite. Elle mentionne le « principe de solidarité » pour contrôler la validité d’un avenant à la convention collective faisant évoluer les droits des pensionnés dans le régime de retraite complémentaire des salariés. Toutefois, ce principe est plutôt convoqué pour conforter la compétence des partenaires sociaux que pour soutenir le contrôle par le juge des modalités choisies par les gestionnaires. Dans cet arrêt, la solidarité est érigée en exigence de justification du pouvoir de gestion d’un régime conventionnel de retraite fonctionnant par répartition. Les contours du contrôle et la teneur du principe ne sont pas explicités par la Cour ; les modalités choisies par les partenaires sociaux pour réaliser le transfert du régime bancaire sont jugées conformes aux règles légales sans être discutées. Il est donc difficile de cerner les limites aux atteintes aux droits à pensions que pourrait impliquer le principe de solidarité. Il semble plutôt légitimer l’évolution des paramètres du régime, en considération de la responsabilité des gestionnaires d’assurer l’équilibre financier du régime. Comme le relève l’avocat général dans ses conclusions, le principe de solidarité est « le principe fondateur des régimes de retraite par répartition qui repose précisément sur une solidarité entre générations et fonctionne dans la recherche constante d’un équilibre entre un service décent des prestations pour les retraités et des cotisations supportables pour les actifs ». Ces décisions de justice montrent que la solidarité entre les générations n’est pas invoquée comme une norme autonome fondant un contrôle du juge. Elle est plutôt mobilisée comme un motif de nature à écarter la violation de principes supralégislatifs. De plus, le sens qui lui est donné est assez pauvre, puisque cette idée est soit assimilée à la technique de la répartition, soit confondue avec l’argument financier de l’équilibre des régimes. Cependant, le débat relatif à la sécurisation juridique des pensions est-il épuisé ?31 Il est indéniable que le principe de sécurité juridique et les droits fondamentaux de la personne ouvrent d’autres espaces de discussion dont les juges ont la faculté de se saisir.

pension initiale, de telle sorte que la nouvelle pension n’évoluait que peu ou pas. Les pensionnés soutenaient que l’accord violait un principe d’intangibilité des pensions liquidées. Ecartant cette notion, la Cour de cassation valide la mesure conventionnelle au motif, notamment, qu’elle « garantit » « le principe de solidarité ». 31 L’expression de « sécurisation juridique » est empruntée à Attali-Colas (2019a, b).

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6 Des principes supra-législatifs au soutien d’une certaine intangibilité des pensions de retraites Le principe de sécurité juridique est d’apparition récente dans la jurisprudence française et communautaire32. Il soutient une exigence de prévisibilité du droit et conduit à un contrôle strict de la rétroactivité de la loi. Il peut aussi exiger du législateur qu’il justifie son intervention ou qu’il l’accompagne de tempéraments, lorsqu’il est porté atteinte à des situations légalement acquises que le sujet de droit pouvait tenir pour stables. En matière de retraite, les juges français invoquent ce principe pour affirmer l’intangibilité du nombre de points acquis dans les régimes par points33. Par extension, le principe pourrait servir de fondement à l’intangibilité des éléments de calcul de la pension (nombre de trimestres validés, assimilation de périodes non travaillées à des périodes cotisées dans les régimes par annuités, salaire de référence). Cependant, à la lecture des arrêts, la portée du principe ne semble pas s’étendre à d’autres éléments constitutifs des pensions (par exemple : le mode de revalorisation des retraites, les majorations et les compléments de pension), ni au montant de la pension liquidée. En effet, ces changements ne sont pas analysés comme des mesures portant atteinte à l’acte de liquidation ; une rétroactivité n’est pas identifiée34. Une autre argumentation, fondée sur la protection de la confiance légitime que le sujet de droit place dans une situation légalement acquise, pourrait être retenue. L’acte de liquidation ne crée-t-il pas une confiance légitime de l’assuré social à percevoir une certaine pension de retraite ? Le Conseil constitutionnel a 32 La valeur normative de ce principe est incertaine en droit français : le Conseil constitutionnel n’a jamais reconnu son rang constitutionnel en tant que tel, mais il a consacré la valeur constitutionnelle de plusieurs aspects de ce principe qu’il rattache à la garantie des droits proclamée par l’article 16 de la Déclaration des droits de l’homme et du citoyen (voir les Cahiers du conseil constitutionnel n 30, Commentaire de la décision n 2010-4/17 QPC du 22 juillet 2010). Le Conseil d’Etat en fait un principe général du droit depuis 2006 et la CJUE l’érige au rang de principe général du droit communautaire avec le principe de confiance légitime. 33 Voir l’arrêt AGIRC, Cass .soc. 23 nov. 1999, n 97-18980 précité (« s’il incombe aux institutions de retraite complémentaire d’assurer en permanence l’équilibre financier des régimes qu’elles gèrent et que, si elles doivent, conformément à l’article L. 732-4 ancien du Code de la sécurité sociale, dont les termes sont repris par l’article L. 922-11 du même Code, adopter les dispositions pour définir de nouvelles modalités assurant la sauvegarde des droits de leurs adhérents, elles ne peuvent remettre en cause, quel que soit leur mode d’acquisition, le nombre des points acquis par les participants dont la retraite a été liquidée avant l’entrée en vigueur de l’accord de révision »). Voir aussi Cass. 2è civ. 17 avril 2008, n 07-12143 (« les nouvelles mesures ne portent pas atteinte aux principes de non-rétroactivité et de sécurité juridique puisque ni le nombre de points acquis ni le mode de calcul de la pension de l’intéressé n’ont été remis en cause pas plus que les sommes à lui verser jusqu’au 1er avril 1999 en application du régime précédent »). Toute la difficulté est de déterminer si cette intangibilité du nombre de points acquis s’applique aussi aux pensions non liquidées. À lire l’arrêt de 2008, il semble que oui. On pourrait en dire de même dans les régimes par annuités : on voit mal le juge valider la suppression d’années de cotisations avant ou après la liquidation. 34 La remise en cause des montants déjà versés par le passé n’est pas envisageable d’un point de vue juridique : aucun motif d’intérêt général ne semble à même de justifier une telle mesure rétroactive.

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rendu une décision intéressante à ce propos il y a quelques années35. Saisi de la suppression progressive du complément de pension dont bénéficient les retraités fonctionnaires installés en outre-mer, il semble admettre une certaine intangibilité du montant de la pension de retraite liquidée. Si le Conseil écarte la violation du principe de la garantie des droits, sa décision paraît établir une distinction entre le montant de la pension de base et les autres éléments qui viennent s’ajouter à cette pension de base, qualifiés d’accessoire de pension. Ainsi, des nuances de l’intangibilité des pensions liquidées fondée sur le principe de la sécurité juridique se dessinent. D’un côté, la Cour de cassation et le Conseil constitutionnel admettent une certaine intangibilité des pensions, dans le sens où les éléments de calcul de la pension (hors accessoires de pension) doivent être considérés comme cristallisés lors de la liquidation. De l’autre, le montant des pensions peut être minoré. Les droits fondamentaux sont également susceptibles d’assurer une protection de la jouissance des pensions de retraite. Deux normes sont aujourd’hui sollicitées en ce sens : le droit de chacun au respect de ses biens, reconnu par l’article 1er du protocole n 1 de la Convention européenne des droits de l’homme, et le droit fondamental à la sécurité sociale. Elles permettent d’envisager la garantie d’une certaine stabilité de la pension. Elles recèlent aussi l’exigence d’un certain niveau de pension de retraite, d’un certain degré de protection assuré par la sécurité sociale pendant la retraite. L’article 1er du protocole n 1 de la Convention européenne des droits de l’homme consacre un droit de chacun « au respect de ses biens »36. Il est aujourd’hui fréquemment avancé pour contester la mise en cause des droits à retraite. Cependant, il comporte deux limites. En premier lieu, le droit à retraite ne sera considéré comme un bien au sens de ce texte que dans certaines circonstances. En effet, puisque la naissance du droit à pension suppose de réunir des conditions légales ou conventionnelles, comment considérer que ce droit existe et constitue un bien à protéger lorsque l’évolution des conditions entraîne la suppression du bénéfice d’une pension de retraite ? La notion de droit à une pension de retraite inclut-elle la

Cons. Const., n 2010-4/17 QPC du 22 juillet 2010. La Cour européenne des droits de l’homme est venue donner un sens et une portée à cet article. Elle en fait depuis longtemps une interprétation large : cet article, « qui garantit en substance le droit de propriété, contient trois normes distinctes (James et autres c. Royaume-Uni, arrêt du 21 février 1986, série A no 98, pp. 29–30, § 37). La première, qui s’exprime dans la première phrase du premier alinéa et revêt une portée générale, fixe le principe du droit au respect de ses biens. La deuxième, figurant dans la seconde phrase du même alinéa, vise la privation de propriété et la subordonne à certaines conditions ; quant à la troisième, consignée dans le second alinéa, elle reconnaît aux Etats contractants le pouvoir, entre autres, de réglementer l’usage des biens conformément à l’intérêt général. La deuxième et la troisième, qui ont trait à des exemples particuliers d’atteintes au droit de propriété, doivent s’interpréter à la lumière du principe consacré par la première. » (voir, par exemple, CEDH Asmundsson Kjartan c. Islande, 12 oct. 2004, req. n 60669/00). 35 36

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jouissance d’une pension pour l’avenir ? Saisie d’affaires diverses37, la Cour européenne des droits de l’homme se montre mesurée38. Elle est encline à considérer la mise en cause des droits à retraite pour l’avenir comme une atteinte au droit au respect des biens. Cependant, elle ne le reconnait pas systématiquement. La notion « d’espérance légitime » restreint son analyse. Cette espérance naît, par exemple, de l’adhésion à un régime de retraite obligatoire, du versement de cotisations sociales, ou encore de l’engagement d’un employeur d’octroyer un avantage de retraite à ses anciens salariés. La seconde limite est plus forte. Cette norme européenne implique que soient mis en balance l’intérêt individuel à bénéficier de la pension de retraite et l’intérêt général. Seule la disproportion est sanctionnée. Tel est le cas d’une suppression brutale et totale d’une pension de retraite pour l’avenir, mais cette hypothèse est rare. Il faut donc remarquer qu’en l’état de la jurisprudence de la Cour EDH, l’intérêt général de sauvegarde de l’équilibre financier du régime suffit à valider les mesures. Le juge européen, à l’instar des juges français, se refuse à discuter l’argument. Cette norme se révèle ainsi largement incapable d’appréhender les révisions du droit à pension, et plus généralement le droit à pension de retraite lui-même. Le droit fondamental à la sécurité sociale, dont pourrait découler un droit fondamental à la retraite, confère-t-il une meilleure protection ? En l’état actuel du droit positif français, cette piste est tout aussi incertaine. En effet, cette référence normative est très peu sollicitée par les juges français. Aucun droit fondamental ou droit de l’Homme à la retraite n’a été reconnu jusqu’à présent dans la jurisprudence. D’une manière générale, les juges recourent peu à la référence au droit fondamental à la sécurité sociale. Le Conseil constitutionnel énonce une exigence de valeur constitutionnelle de la mise en œuvre d’une « politique de solidarité nationale en faveur des travailleurs retraités » dont il trouve le fondement dans une norme à valeur constitutionnelle (l’alinéa 11 du Préambule de la Constitution de 1946). Cependant, il ne lui donne pas de portée significative et laisse au législateur une très grande marge de manœuvre pour décider de la manière dont la solidarité nationale en faveur des travailleurs retraités doit se réaliser. Plus largement, le Conseil constitutionnel admet sans détour que le législateur est maître du niveau de protection sociale ; il ne

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Voir ainsi Cour EDH, 1er sept. 2015, Da Silva Carvalho Rico c. Portugal, req. 13341/14 (réduction du montant des pensions pour l’avenir du fait du contexte économique), Cour EDH, 22 oct. 2009, Apostolakis c. Grèce, req. 39574/07 (retrait de la pension de retraite à titre de sanction après une condamnation pénale), CEDH 1e Sect. 3 mars 2011, Klein c. Autriche, req. n 57028/00 (refus de service d’une pension de retraite à un assuré social ayant cotisé toute sa vie au régime, au motif de la perte de la qualité d’avocat au moment de la liquidation). 38 La Cour de cassation ne s’embarrasse pas de cette difficulté et admet beaucoup plus simplement l’applicabilité de l’article 1er du protocole n 1 (voir, sur la modification de la valeur du point par décret, Cass. 2è civ. 17 avril 2008, n 07-12143 précité). Comp. l’embarras du Conseil d’Etat, sur la même hypothèse de modification de la valeur du point, qui semble ne même pas admettre le jeu de l’article (« en tout état de cause », CE, 1ère ss., 26 mars 2010, n 323201). Cet embarras gagne aussi le Conseil constitutionnel (voir, à propos de la suppression progressive de l’indemnité temporaire outre-mer, la décision Cons. Const. n 2010-4/17 QPC du 22 juillet 2010 : il n’est pas certain que le montant de pension soit considéré comme une situation « légalement acquise »).

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consacre pas véritablement l’existence d’un seuil minimal de protection sociale en deçà duquel le droit à la sécurité sociale serait violé39. À la lecture des décisions du Conseil, la seule hypothèse qui donnerait sans doute lieu à sanction serait celle de la disparition pure et simple d’un régime de retraite. Dans un pareil cas, le législateur priverait l’exigence constitutionnelle de « toute garantie légale ». Mais cette hypothèse est la plus extrême40. Au terme de cette étude, des gisements argumentatifs sont disponibles pour discuter l’évolution des régimes de retraite. Bien qu’elle ne soit pas véritablement mobilisée par les juges, l’idée de solidarité entre les générations est sans doute encore plus féconde que l’appel aux droits fondamentaux car à la différence de ces derniers, la notion de solidarité saisit la « dynamique collective »41 de la sécurité sociale.

7 Annexes : présentation synthétique du système de retraite français En France, les prestations sociales versées au titre de la vieillesse-survie s’élèvent, en 2016, à 325.3 milliards d’euros. Elles représentent à elles seules près de la moitié de l’ensemble des prestations de protection sociale (soit 14.6% du PIB pour un total de 32.1%)42. En moyenne, le montant mensuel des pensions de droit direct est estimé à 1389 euros en 201643. Les pensions de la plupart des assurés sociaux sont composées d’une retraite de base et d’une retraite complémentaire. La distinction est mince entre ces deux composantes, car les régimes de base et complémentaires présentent des caractéristiques communes les assimilant à un premier « niveau » de pensions dans les comparaisons internationales. En effet, toutes ces prestations sont servies par des régimes obligatoires (interprofessionnels ou catégoriels) d’envergure nationale et sont financées en répartition. Ces dispositifs assurantiels sont renforcés par des allocations d’aide sociale au bénéfice des ménages âgés à faible revenu. Les retraites françaises sont donc principalement financées par les Administrations de Sécurité sociale, gestionnaires des divers régimes de retraite. En marge de ces institutions, des dispositifs facultatifs dits de « retraite supplémentaire », financés en capitalisation, complètent la retraite le cas échéant, mais leur poids est marginal (environ 4.8% des cotisations et 2% des pensions versées44).

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Voir not. Roman (2012) and Camaji (2010). Le Conseil constitutionnel n’encadre pas le choix du législateur de renforcer les conditions d’accès aux pensions de retraite, de minorer le montant des pensions, de supprimer un élément de pension. Il est d’ailleurs remarquable que dans sa décision relative à l’indemnité temporaire en faveur des retraités d’outre mer, le Conseil n’y fasse pas référence (QPC 22 juillet 2010). 41 Bec (2014), p. 227. 42 Drees (2018a), p. 56. 43 Drees (2018b), p. 56. 44 Drees (2018b), p. 189. 40

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Références Ouvrages et chapitres d’ouvrages Attali-Colas J (2019a) Contribution à l’étude de la sécurisation des retraites. PUAM, Aix-Marseille Attias-Donfut C (1995) Les solidarités entre générations. Vieillesse, familles. Etat. Nathan, Paris Bec C (2014) La Sécurité sociale. Une institution de la démocratie. Gallimard, coll. Bibliothèque de sciences humaines, Paris Borgetto M, Lafore R (2000) La République sociale. Contribution à l’étude de la question démocratique en France. PUF, Paris Bozio A (2010) Réforme des retraites : confusion ou conflit de génération ? In: Le choc des générations, Regards croisés sur l’économie, vol 7. La Découverte, Paris, p 116 Camaji L (2008) La personne dans la protection sociale. Recherche sur la nature des droits des bénéficiaires de prestations sociales. Dalloz, coll. Bibliothèque des thèses, vol 72. Paris Camaji L (2010) La justiciabilité du droit à la sécurité sociale en droit français. In: Roman D (ed) La justiciabilité des droits sociaux : vecteurs et résistances. Pédone, Paris, p 363 Fulchiron H (ed) (2013) Les solidarités entre générations – solidarity between Generations. Bruyant, Bruxelles Malamoud C (2015) En quête de l’idée de solidarité dans l’Inde ancienne. In: Supiot A (ed) La solidarité. Enquête sur un principe juridique. Odile Jacob, Paris, p 127 Palier B (2014) La réforme des retraites. 5èd. PUF, Paris Sénat (2018) Actes du colloque du Sénat sur la réforme des retraites, 19 avril 2018. https://www. senat.fr/fileadmin/Fichiers/Images/redaction_multimedia/2018/2018-06-Juin/Actes_du_ colloque_sur_la_reforme_des_retraites_2018.pdf. Accès le 20 avril 2019 Supiot A (ed) (2015a) La solidarité. Enquête sur un principe juridique. Odile Jacob, Paris Vacarie I (2019) Le principe de solidarité à l’épreuve du Pacte européen de stabilité et de croissance. In: Daugareilh I, Badel M (eds) La sécurité sociale : universalité et modernité. Approche de droit comparé. Pedone, Paris, p 495

Articles Attali-Colas J (2019b) La sécurisation juridique des pensions de retraite liquidées : entre réalisme et démystification. La lettre de l’Observatoire des Retraites 25 Beauvironnet E (2019) La Sécurité sociale au prisme de la discipline budgétaire européenne. Revue de droit sanitaire et social:273–286 Bichot J (2019) Brève histoire critique de notre assurance vieillesse, Revue de droit sanitaire et social : 318-329 Langlois P (2000) Les effets d’un accord révisant un régime complémentaire obligatoire. Droit social:412–416 Langlois P (2016) La solidarité entre générations en question. Semaine Sociale Lamy 1730 Roman D (2012) La justiciabilité des droits sociaux ou les enjeux de l’édification d’un Etat de droit social », La revue des droits de l’homme 1. https://journals.openedition.org/revdh/635/. Accès le 20 avril 2019 Supiot A (2015b) La solidarité en questions. Informations sociales 189:33–41

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Études et rapports officiels Conseil d’orientation des retraites (COR) (2018) Evolutions et perspectives des retraites en France. Rapport annuel Drees (2018a) La protection sociale en France et en Europe en 2016. Résultats des comptes de la protection sociale Drees (2018b) Les retraités et les retraites - édition 2018 France stratégie (2017) Comment réduire la sensibilité du système de retraite à la croissance ? Actions critiques. https://www.strategie.gouv.fr/. Accès le 20 avril 2019 Premier ministre (1991) Livre blanc sur les retraites. La Documentation française, Paris. Édité aussi sous : Collectif (1991) Demain, les retraites. Un contrat entre les générations. Gallimard, coll. Folio actuel, Paris Secrétariat général du COR (2009) Préparation au rapport sur les modalités techniques d’un passage éventuel à un régime par points ou un régime en comptes notionnels. Problématiques juridiques. Doc. n 4, réunion du 16 décembre 2009

Intergenerational Solidarity in the Spanish Social Security System Juan Antonio Maldonado Molina

Abstract The Spanish social protection system is impregnated by the principle of intergenerational solidarity. Its Social Security is based on the pay-as-you-go model, having introduced parametric reforms that try to compensate the generational imbalance, such as the ‘sustainability factor’ and ‘automatic balancing mechanism’. The contributory pension system maintains a high replacement rate of asset income (approximately 75%), with significant coverage. Nineteen percent of the population is over 65 years old, of whom 85% perceive some type of benefit. Along with the economic coverage, there is a highly consolidated social assistance System. With regard to long-term care, in 2007 a specific Public System was implemented complementing (not substituting) the family caregiving model, so family solidarity with support for dependents and their non-professional caregivers concur.

1 Introduction Like the majority of European Social Security Systems, the Spanish System was originally just a contributory or Bismarckian System, which evolved in time towards a mixed model with the incorporation of non-contributable level. Thus the Spanish Social Security System appears divided into two levels: (a) The contributory level, which is the main one, protects those with a labour or professional activity; and is essentially financed by those subjects obliged to

This work has been carried out within the Research Project “Active Aging and Working Life: mature workers and productive pensioners” (DER2017-85096-R), funded by the Ministry of Economy, Industry and Competitiveness. J. A. Maldonado Molina (*) University of Granada, Granada, Spain e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_6

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contribute (workers and employers).1 The number of people covered at this level is close to 19 million workers,2 while that of beneficiaries of benefits is around 9.5 million pensioners (to which we must add those receiving temporary benefits).3 The protection intensity at this level is quite high; in fact, the replacement rate of Spanish pensions is one of the highest in the OECD (approximately 74%).4 (b) The non-contributory level is residual, and implemented via Law 26/1990, this Spanish protection model does not respond to full universalisation of cover but rather is limited to a non-contributory assistance cover model. It is a relative ‘universalisation’ in that everyone is protected provided they prove a certain state of need. Thus, we find ourselves before a much more limited protection sub-system, both in terms of protected situations (solely invalidity, retirement, family dependents) and protection intensity, since the benefits are a legally established fixed amount whose protection intensity is highly reduced.5 Therefore, the Spanish system is essentially contributory, and based on intergenerational solidarity (distribution technique)6 (today’s assets are sustained by current liabilities). Looking at the financing sources in Spain, we see there is a clear financial imbalance with notable protagonism of incoming payments via contributions, whose weight is only proportionally reduced during periods of crisis, where the drop in employment reduces said contributions. There is consensus regarding the need to introduce reforms in the financing system, as the distribution system is no longer efficient since the parameters on which it was based have changed. The ratio of assets and liabilities will never again be that which was contemplated on estimating the income, since the employment rate cannot grow at the same rate as that of liabilities. The number of contributors alone does not offer us anything unless we

This block is financed via workers and employers’ contributions, essentially the latter, since employers contribute 70% the contributions collected, workers 25% and the remaining 5% by the Public State Employment Service. 2 http://www.seg-social.es/wps/portal/wss/internet/EstadisticasPresupuestosEstudios/Estadisticas/ EST8/EST10. 3 http://www.seg-social.es/wps/portal/wss/internet/EstadisticasPresupuestosEstudios/Estadisticas/ EST23/EST24/EST192. 4 http://www.oecd.org/pensions/public-pensions/OECDPensionsAtAGlance2013.pdf. Thus, the mean amount of the retirement pension (paid to 6,000,191 of the 9,695,870 pensioners is €1,129.66 a month (14 payments) (http://www.seg-social.es/wps/portal/wss/internet/ EstadisticasPresupuestosEstudios/Estadisticas/EST23/EST24/EST192). 5 According to January 2019 data, there are 454,719 pensioners altogether, with an average amount of €381.52 (retirement pension); and €422.52 (non-contributory invalidity) (http://www.imserso.es/ imserso_01/documentacion/estadisticas/pensiones_no_contributivas_jubilacion_invalidez/index. htm). 6 Distribution systems called pay-as-you-go (PAYG). Under this system current payments are financed by current income, or to put it graphically, what you receive with one hand is paid out by the other among those who at that time are in a situation of need. 1

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compare it against the number of benefit receivers. The growing number of liabilities is joined by a new model of labour relations, where precarious work has greater weight, all of which leads to the inefficiency of the current finance system based on a distribution model. Not only is there a growth in the number of liabilities but also an economic one which goes beyond employment data; and which should be the guiding light of financing, i.e. taking as a reference the improvement in financial resources to ensure the retirement pension system, which requires a greater weight to be given to financing via budgets and taxes.

2 The ‘Parametric’ Reforms of the Spanish Social Security Financial System 2.1

Causes of the Crisis

Just like all the systems using this financial model, its stability is threatened by demographic evolution and employment. In addition to structural problems (aging population), there also circumstantial ones derived from the economic crisis and motivated a series of cutbacks. As we might recall the two main triggers of the financial insufficiency of the Distributions systems, were: 1. One, the increase in life expectancy; and 2. Two, the ‘baby boom’ generation reaching retirement, which generated an enormous demographic ‘tsunami’ (i.e. the ‘grandparent boom’). In addition to these two demographic reasons there is a third one of an economic nature, labour precarity. Bear in mind the social protection Systems were built on a ‘worker’ (male) model base, with a series of characteristics which are no longer so common, i.e. a full-time indefinite labour contract, whereby application of the contributory principle did not create excessive distortions. However, the labour relations model has become muted,7 which has had a clear impact on the Social Security Systems.8 The impact clearly results from having a System which clearly supports the contributory channel as the financing model.

2.2

Parametric Reforms As a Solution

With a view to saving the system from the imbalance of assets/liabilities approaching, various alternatives have been sought, although with a limit, which is respect for the intergenerational solidarity principle. A ‘defined contribution’ system 7 8

ILO (2015) p. 4. In this respect we refer to our study Maldonado Molina (2018b).

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has been discarded for being so real it has no place in our country,9 or the EU.10 The ‘Notional Defined Contribution’ model has also been discarded, opting to continue with the ‘defined benefit’ one, although introducing parametric reforms, modifying some parameters automatically according to demographic or economic evolution (however, social pressure in 2018 interrupted this process):11 (a) Sustainability factor (b) Automatic balancing mechanism

2.2.1

Sustainability Factor

Law 27/2011, of 1st August about updating, adapting and modernising the Social Security System, introduced in its article 8 a new additional disposition in the LGSS [General Social Security Law—Spanish acronym] (59 LGSS 1994), signed the ‘Social Security System Sustainability Factor’ with the following drafting: With a view to maintaining proportionality among contributions to the system and benefits expected from the same likewise guaranteeing its sustainability; the essential system parameters will be revised from 2027 due to differences between life expectancy evolution at the population’s 67 in the year revision is performed and life expectancy at 67 in 2027. Said revisions will be done every 5 years, using competent official bodies to perform the same.’

A door was opened to a parametric reform, although without stipulating which parameters might be affected, and temporarily delay it until 2027. There were two important notes of this measure, i.e. time (it would become effective from 2027); and material, in that it would affect other basic parameters of the system: age, initial amount, revaluation, waiting period, but without specifying which parameter elements would be affected. However, this scenario was brought forward to 2014 (regarding revaluation) and 2019 (in the initial amount). Once developed, this 9 Neither article 41 nor any other constitutional precept alluding to the Social Security expressly includes support for the financial system or any other. Despite which the Constitution cannot be deemed neutral in this respect, since articles 1.1 (social justice as a value of a social democratic State of Law) and 40.1, which proclaims the principle of equal distribution of personal income, may lead to the conclusion that the distribution system (against capitalisation), is the one with the largest constitutional fit, i.e. it more clearly enables the principle of intergenerational solidarity to be effective. 10 Within EU scope the Constitution Project of July 2003 alluded to intergenerational solidarity, a question which links the social protection model to be fostered within the Union policy, implicitly meaning support for a distribution system instead of capitalisation. In the Treaty of Lisbon of 13th December 2007, whose article 1.4 amends article 2 of the Maastricht Treaty and EU Constitutional Treaty, it stated that: “(l)a Union will fight social exclusion and discrimination; and foster justice and social protections, equality of men and women; intergenerational solidarity and protection of children’s rights.” Thus, against capitalisation systems based on savings not on intergenerational solidarity; and therefore, with a less redistribution of income effect, the EU opted in favour of the distribution system convinced the targets of civilisation, equality and even the Social Security System efficiency were more feasible in this system. 11 Vid in extenso, Maldonado Molina (2018c), p. 116.

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model was not contemplated for retirement age but rather the initial amount and revaluation (Law 23/2013). This advancement of the parametric reform is due to new article 135 of the Constitution developed by Organic Law 2/2012, of 27th April, Budgetary Stability and Financial Sustainability, whose application scope included ‘Social Security Administrations’ (art. 2.1.d) OL 2/2012). And, in its article 18 point 3, that: ‘The Government in the event of projecting a long-term deficit in the pension system, will revise the system automatically applying the sustainability factor pursuant to the terms and conditions foreseen in Law 27/2011, of 1st August on updating, adapting and modernising the Social Security system’. Royal Decree-Law 5/2013, of 15th March, on measures favouring continuance of working life for the oldest workers fostering active aging. Moreover, its additional ninth disposition contemplated the creation of a committee of independent experts ‘to draft a report on the Social Security System sustainability factor, for remittance to the Toledo Pact Commission.’ The Expert Committee Report was published on 7th June 2013. Finally, Law 23/2013, of 23rd December regulating the Social Security System Sustainability Factor and Revaluation Index, it was decided to bring forward part of the provision which Law 27/2011 had contemplated for 2027, thus, introducing a parametric reform for the first time in the Spanish Social Security System, which we will develop later on. Hence, the Sustainability Factor affects retirement pensions with two notable differences regarding that foreseen in 2011: Time (from 2019); and material: only the initial amount. Thus, two new rules are contemplated, i.e. application of a sustainability factor to the initial retirement pension amount; and an automatic adjustment mechanism regarding pension revaluation. The deadline is no longer 2027 but 2019 (initially) for the retirement pension sustainability factor; and 2014 for the new revaluation formula. According to the Exposition of Reasons for the Law, its purpose is to maintain the proportionality between contributions to the system and expected benefits; thereby guaranteeing present and future generations will receive appropriate and sufficient pensions. This factor ensures the risk associated with increase in longevity and adjusts the intergenerational equity albeit regarding retirement pensions.12 The contributory retirement pension will no longer be fully determined in proportion to active income but rather the amount will oscillate according to the evolution of the pensioner’s life expectancy (i.e. the length of time he/she expects to be collecting said pension). In fact, the sustainability factor currently included in art. 211 LGSS 2015, would determine modifications in the initial determination of

12

As clearly stated in the Grounds of this Law, introduction of the sustainability factor is a qualitively different measure from the reforming measures previously undertaken; therefore, a specific change is not implemented in the legal pension regime but rather a rebalancing instrument or automatic adjustment thereof, according to life expectancy evolution, until now inexistent. Thus, the sustainability factor is an additional parameter to those already extant for calculating the initial retirement pension, which helps achieve an average amount of pensions compatible with the level of total expenditure aimed at these pensions and keeping financial system medium to long-term.

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retirement pensions caused from 2019 (date postponed by Budget Law to 2018, and 2023 maximum). The sustainability factor adjusts initial retirement pension so the total amount received throughout the life of a pensioner who accesses the pension system within a certain number of years; and who foreseeably will have a longer life expectancy will be equal to that perceived by somebody who retires before. Putting it concisely, it functions as follows: • How much life expectancy has increased at 67 will be calculated in a specific 5 year period (in 2019 [year initially foreseen] the life expectancy variation between 2012 and 2017; in 2024, the variation between 2017 and 2022; and so on). • That percentage is applied to the amount which would normally correspond to the worker, since it is understood that the resulting amount of applying the legal rules corresponds to a specific demographic situation; and should this vary, then the calculation initially foreseen should vary. The aim is to guarantee the contributory principle but without receiving more than paid in. The sustainability factor adjusts the initial pension so the total amount received throughout the life of a pensioner who accesses the pension system within a certain number of years; and who foreseeably will have a longer life expectancy will be equal to that perceived by somebody who retires before.13 However, Law 6/2018, of 3rd July of the PGE [General State Budgets—Spanish acronym] for 2018 redrafted the unique final disposition of Royal Legislative Decree 8/2015, establishing ‘Application of the sustainability factor regulated in article 211 for the Consolidated Text will be carried out once the Follow-up and Assessment Commission of the Toledo Pacts reaches an agreement regarding application of the measures necessary to ensure system sustainability. In any event; however, its coming into force shall be no later than 1st January 2023.’ Consequently, a delay was approved so it does not become effective until 2023, when an agreement should have been reached by the Follow-up and Assessment Commission of the Toledo Agreements. This Agreement may be to maintain the initially foreseen, amend or delete it directly, whereby it would not be effective in 2023 either, despite drafting of the PGE Law for 2018 appears to suggest the Government would not waiver its becoming effective.

2.2.2

Automatic Balancing System in Pension Revaluation

The Spanish Social Security System according to article 50 of the Constitution must ensure the purchasing power of pensions, which was articulated with the periodical revaluation of said pensions. Thus, they were increased annually pursuant to the increase experimented by the CPI.

13

Maldonado Molina (2017a), p. 76.

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However, in May 2010 among the extraordinary measures passed to reduce the public deficit with Royal Decree-Law 8/2010, the exceptional suspension of the contributory pension revaluation was agreed for 2011.14 As we shall see further on, this was just a preview of other more drastic revaluation measures, since in December 2013 a new revaluation technique was passed, which in practice means pensions have only been increased 0.25% regardless of the CPI increase. LGSS Article 58 was amended by Law 23/2013, of 23rd December, introducing a new formula no longer linked to CPI evolution, but rather dependent on the System financial evolution (with minimum and maximum limits). A new ground-breaking model was chosen in relation to what had governed our System for decades, going from adjustment according to the CPI to an automatic adjustment according to the system income and expenditure. Although it is not truly automatic, since we know there is unlikely to be any big novelties. Indeed, under no circumstance will the result obtained lead to an increase in pensions, i.e. at the very least below 0.25% and at maximum higher than the CPI percentage variation in the year prior to December of the year in hand, that is, over 0.50%. And given the System economic situation, nobody believes it will ever exceed 0.25%. This new formula became effective in 2014. During its first years of validity it passed under the radar since the economic scenario was deflation, so despite pensions being revalued 0.25% there was no loss of purchasing power. However, it was from 2017 when the senior citizens’ collectives became aware of what had been passed in December 2013, when the CPI started to greatly overtake the approved pension increase, leading to a loss of purchasing power among the pensioners’ collective. This led, as we all know, to an unexpected social response, i.e. for the first time in decades the pensioners’ collective took their protest to the streets. Social pressure forced the Government to increase the amount of pensions for 2018 and 2019. PGE Law 6/2018, of 6th July, obviously did not intend to suspend much less abolish LGSS article 56, since contrary to what happened with Law 23/2013, prior consensus was sought within the Toledo Pact, moreover it was an extended PGE Law.15 That is why, it only foresee some extraordinary increases included under the expression ‘additional pension increase’16 for 2018 and 2019, as a transitory measure, since (as the Statement of Reasons foresees), that was ‘without forgetting the Toledo Pact Commission of Follow-up and Assessment of Agreements, is responsible for analysing the situation of the Social Security System and

14

This measure was not applied to all pensions, since revaluation was maintained for the lowest pensions (benefits with complements for minimums and non-contributory pensions among others). 15 As the previous Government could not present the PGE Draft Bill for 2018 at least 3 months prior to expiry of those corresponding to 2017, so the previous were extended. Therefore, the 2018 PGE Law only regulates those dispositions which respect Constitutional Court doctrine over eventual contents, together with its necessary contents. 16 Fifty-first additional disposition of 2018 PGE Law 6/2018.

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establishing recommendations which guarantee its medium-/long-term financial sustainability’.17 Both questions were affected by RD-Law 28/2018, which revises the 2018 increase (going from a total of 1.7% instead of the 1.6% approved leading to a compensatory payment of 0.1%), and sets some ‘ad hoc’ rules for 2019, suspending application of LGSS article 58, unlike in 2018, where an additional increase over that foreseen by LGSS article 58 (which was not suspended) was passed, said rule is done away with. The first additional disposition of RD-L 28/2018, includes 2 measures reflecting the political desire to bury the revaluation mechanism included post-Law 23/2013: 1. Relevant and immediate, pension revaluation in 2019 will not be pursuant to such rules (‘that set forth in LGSS art. 58 and art.27 of the consolidated text of the Law on State Pensioners, will not be applicable’). The new relevant formula (for 2019 only), will be that foreseen in art.1 of Royal Decree-Law 28/2018, which will see in some detail now. 2. Structural (?), because in “6 months the Government will adopt the necessary measures to amend the articles cited and establish a revaluation mechanism for pensions which ensures their purchasing power is maintained preserving the financial and social sustainability of the Social Security System within the framework of social dialogue and pursuant to the recommendations of the Toledo Pact Commission of Follow-up and Assessment.” To be a solidarity System pensions must be revalued to the same extent as prices increase. It should be remembered its establishment responds not only to economictechnical demands (maintaining purchasing power), but also as a social justice measure, where pensioners are the creditors of a compensation pursuant to a country’s economic development, since life expectancy not only increases thanks to the effort of present generations but also of past ones.

3 Intergenerational Solidarity in the Spanish Social Security System 3.1

Retirement Pension Post-reforms

Law 27/2011, of 1st August on updating, adapting and modernising the Social Security System (effective as of 1st January 2013), meant a complete reformulation of the retirement pension, reforming 3 questions: 17 The PGE Law for 2018 does not admit to Law 23/2013 being unfair, but rather it explains the pension increases in the “context of economic growth and compliance with the goals of budget stability”; however, it admits it should be amended, referring to agreements reached in the Toledo Agreement Follow-up and Assessment Commission, which guarantee elimination of the Social Security System deficit. Meanwhile, it simply establishes: “a transitory pension increase regime for 2018, and where appropriate 2019.”

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• Ordinary retirement age • Early retirements • The amount, modifying both the regulatory base and applicable percentage (both elements serve to calculate the amount in relation to the employment accredited by the worker) With the three it seeks the same goal, i.e. reducing System costs, and guaranteeing its financial sustainability.18 Such reforms will be explained concisely.

3.1.1

Age Reform

Law 27/2011 reformulated retirement age, amending that used in our country since 1919. It was not simply an increase in retirement age, but that it was also to be determined via two criteria, i.e. one based on age, 67 (age when theoretically old age will have been reached, and therefore, following one of the classic pillars of old age protection); whilst the other refers to the time worked, up to age 65 if employment has been constant (consequently following another pillar, its coverage, in this case entitlement to rest). This leads to flexibilisation of the retirement age. Thus only one reference age is eliminated, whereas two are used depending on the period contributed by the worker. A new concept is resorted to, i.e. the so-called ‘employment career’, considered complete with 38 years 6 months paid up to the system (with transitory rules starting from 35 years paid up). Outside, that framework, retirement age is 67 (age reached progressively with transitory rules). The result is a postponement of the real age when working life is ended, moreover, it gives rise to a triple rupture of solidarity: (a) The intergenerational pact is affected because if mature workers continue active longer, generational replacement is hindered, occurring precisely when unemployment rates for young people are higher. This is an incongruence of the system, since it fosters keeping older people employed while the young are unable to enter the labour market. At this point, the system gives preferences to economic perspective over sociodemographic since a mature worker for the Social Security who does not retire means more income than for a young worker (because remunerations are higher) and fewer expenses (on reducing the number of years pension will be perceived). At the crux of the matter, it distrusts replacement, since it understands the post of a retiree will not usually be covered by a young personal, but rather amortised. However, this is an error in the medium and long-term, since the access of young people to the labour market is essential for any Pension System (provided it occurs with decent remunerative conditions), because it enables growth of the birth rate.

18

Likewise, the Economic Report accompanying the Draft Law, it states that all these measures would mean a saving of 0.1% GNP in 2015; 0.3% GNP in 2020; 1.4% GNP in 2030 and 2.8% GNP in 2040 for the Social Security System.

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(b) The generational pact among future pensioners and those who already are, since they are forced to work more years than previous generations. (c) Solidarity between men and women, since retirement age is linked to demonstrable employment, the fact is, men generally retire at 65 and women at 67. Indeed, with the current socio-labour structure, social cut-backs have an unequal effect on men and women. Clearly men with a complete working life will not see the amount of his pension reduced, so he will be able to retire at 65. However, an incomplete working life will be penalised; therefore, women are forced to keep working beyond 65. A different matter is that this reform has been foreseen using actuarial calculations, so the greater life expectancy of women has meant delaying her retirement age (an argument never evidenced by political powers, although economically it might have some support). The real retirement age has increased slightly, although per gender, said increase has been slightly higher in women than in men, since their working life is below 38½ years (see Table 1).19 To motivate delaying retirement beyond the ordinary retirement age, various increments in the pension percentage are contemplated for those who delay their retirement. Said percentages vary according to the period contributed to: • If you retire at 67 and accredit a contribution period under 25 years, the ratio is 2% per annum • If you retire at 67 and accredit a contribution period between 25 and 37 years, the ratio is 2.75% per annum. • If you retire at 65 or 67 and accredit a contribution period of 37 or more years, the incentive obtained is 4% per annum. They are weak motivations, which resulted in only 4.27% of those who retired did so delaying their retirement age,20 the majority of whom were self-employed.

3.1.2

Reformation of the Amount

The contributory retirement pension is calculated taking an amount as a salary base to be replaced (called the regulatory base), to which a percentage is applied. Prior to the reform, the regulatory base was calculated averaging the contributions paid in the last 15 years; and the percentage was obtained on the number of years paid with a bracket that started at 50% with 15 years paid, up to 100% with 35 years paid. The 2011 reform modified both elements, leading to a reduction in the pension amount. Thus the period comprising the regulatory base was increased to the last

19

Ministry of Employment, Migrations and Social Security (2019), p. 189. http://www.seg-social.es/wps/wcm/connect/wss/3aa925cb-ece2-4477-acbf-7e3f853d8977/ TOMO+III.-+INFORME+ECONOMICO-FINANCIERO-P.pdf?MOD¼AJPERES&CVID¼. 20 In 2017, 13,218 people which represented 4.27% of all pensioners that year. Source: Ministry of employment, Migrations and Social Security (2019), p. 190.

08 63.54 63.9 63.65

09 63.64 63.95 63.73

10 63.71 64.15 63.84

11 63.71 64.21 63.87

12 63.7 64.3 63.9

13 64.14 64.7 64.33

14 63.88 64.61 64.14

Source: Created by the author based on data published annually by the Social Security Administration

Men Women Total

Table 1 Effective retirement age in Spain 15 63.82 64.57 64.09

16 63.78 64.55 64.08

17 63.85 64.58 64.14

18 63.9 64.62 64.2

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25 years. Obviously despite the update mechanism of the bases, this measures causes a generalised reduction in the amount of the pensions, and we say generalised because if the increase in age does not affect with a long employment life, then the modifications of the regulatory base affect all the insured, since it is usually the bases which increase throughout the employment life. The second element used to calculate pension is percentage. Law 27/2011 amended percentages applicable to regulatory base, which went from 3% (first accredited 24) or 2% (25 to 35%), 2.27% on average from year 15 to year. This is without entering the transitory regime foreseen, once fully enforced it will lead to a reduction in pensions of those people whose working life is shorter (basically women).

3.1.3

Early Retirements

Together with this ordinary age reform, Law 27/2011 undertook an important reform of early retirements. Early retirements have not been considered an employment distribution tool for decades, since its virtues as a generational solidarity element have proven to be very reduced, serving solely to make companies or industrial sectors healthy in a crisis.21 Consequently the reforms regarding early retirement seek to discourage its use, since it ultimately means a denaturalised use of the protection mechanism which is activated to alleviate the state of need derived from stopping work; all of which leads to the premature extinction of an employment contract which drags old age protection to a field that is not its own, i.e. covering workers of advanced age. Yet, after a decade of reforms, the truth is it remains very similar to the foregoing:22 • Real retirement age. In 2007, the average retirement age was 63.57, and in 2017 64.14 years;23 an increase considerably lower than that experimented by life expectancy for same period, i.e. 2007 80.97 and in 2017 83.09.24 • The percentage of workers accepting early retirement has reduced although not significatively. In 2007, 44.83% of retirements were before age 65; and in 2017, 21

Gonzalo González (1989), p. 16. Maldonado Molina (2011), pp. 103–104. 23 Source: Ministry of Employment, Migrations and Social Security (2019), p. 189. http://www.seg-social.es/wps/wcm/connect/wss/3aa925cb-ece2-4477-acbf-7e3f853d8977/ TOMO+III.-+INFORME+ECONOMICO-FINANCIERO-P.pdf?MOD¼AJPERES&CVID¼. Evolution of the last 10 years was as follows: 63.5% (2007); 63.65% (2008); 63.73% (2009); 63.84% (2010); 63.87% (2011); 63.90% (2012); 64.33% (2013); 64.14% (2014); 64.09% (2015); 64.08% (2016); 64.14% (2017); 64.2% (2018). 24 Source: National Institute of Statistics http://www.ine.es/jaxiT3/Datos.htm?t¼1414. Evolution of the last 10 years was as follows: 80.97% (2007); 81.30% (2008); 81.66% (2009); 82.07% (2010); 82.25% (2011); 82.27% (2012); 82.78% (2013); 82.92% (2014); 82.70% (2015); 83.11% (2016); 83.09% (2017). 22

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43.14%.25 Thus the reforms undertaken did not resituate retirement age, neither legally nor in reality, meanwhile life expectancy continues to grow. In fact, there are two large early retirement options: i.e. voluntary and the other where the worker ceases to work for reasons not attributable to his/her will. In the event of voluntary early retirement, the minimum age is maximum 2 years prior to the ordinary one; and if not attributable to the worker, up to 4 years prior. In any event, it should be highlighted preferential treatment is given to those who retire early, when it is not attributable to the worker. In statistical terms, there are a larger number of voluntary early retirements, who are predominantly men.26 Partial early retirement, has also been reformed to make it unattractive. So while it has not been supressed (as requested in certain sectors), it has not come out unscathed, but rather retirement age has been increased (at 63 or 65 depending on your employment record); the minimum contribution period is increased to 33 years. Moreover, it requires the part of the working day not covered by the partially retired worker to be contributed 100%, meaning an extra cost for the employer, thus only a few allow a worker to retire using this formula. In Spain, use of partial early retirement is very reduced, and currently only 9.87% retire partially.

3.2

Minimum Limits Guaranteed

As with any contributory System, they have tried to mitigate the inconveniences deriving from the incidence of the contributory criteria via establishment of ‘guaranteed minimums’ with the aid of different techniques. It is the corrective technique which materialises the system internal solidarity and redistribution, surpassing the idea of commutative justice underlining that of distributive justice. Not all benefits come with a guaranteed minimum, only pensions, which are conditioned to the beneficiary not surpassing an income limit, which for 2019 are (annually and excluding the pension): 7,569.00 euros; or 8,869.00 euros when there is a dependent spouse. The minimum varies according to benefit and within each as well a different amount is set pursuant to the pensioner’s personal circumstances, i.e. whether there

25

Source: Ministry of Employment, Migrations and Social Security (2019), pp. 183, 185. http://www.seg-social.es/wps/wcm/connect/wss/3aa925cb-ece2-4477-acbf-7e3f853d8977/ TOMO+III.-+INFORME+ECONOMICO-FINANCIERO-P.pdf?MOD¼AJPERES&CVID¼. Evolution of the last 10 years was as follows: 44.83% (2007); 42.33% (2008); 41.39% (2009); 40.08% (2010); 40.53% (2011); 42.22% (2012); 38.25% (2013); 41.29% (2014); 43.97% (2015); 44.62% (2016); 43.14% (2017). 26 Source: Ministry of Employment, Migrations and Social Security (2019), p. 188. In terms of absolute figures, the number of early retirements among women represents 32% of total early retirements.

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is a dependent spouse, and at the same time differentiating the holder’s age. The minimum annual amount in the event of retirement is: • Holder aged 65 or over: 11,701.20 (with dependent spouse); 9483.60 (without spouse); 9000.60 (non-dependent spouse) • Holder under 65: 10,970.40 (with dependent spouse); 8871.80 (without spouse); 8386.00 (non-dependent spouse) This figure is clearly a declaration of solidarity, which has a great weight in Spain. So, according to Social Security data, 24.26% of pensioners receive the complement ensuring a minimum pension. In particular, 22.68% retirement pensioners receive the minimum pension.27

3.3

Work and Pension Compatibility

Under our Legislation, work-retirement compatibility was somewhat exceptional until quite recently, indeed until 2001 it was only contemplated in cases of partial retirement. However, that year (via RD-L 16/2001) compatibilization of receiving pension while working part-time was allowed, provided that during said situation, the pension was reduced proportionally to the part-time working day fulfilled by the pensioner who returned to work. The event foreseen in this case differs from partial retirement, since it does not aim to enable partial retirement, but rather open the door to those previously retired to return to active life part-time, i.e. the so-called flexiretirement (RD 1132/2002). The pension is reduced to the same proportion as that of work; furthermore, this new work enables the pensioner to improve his/her pension. With RDL 5/2013, of 15th March, the measures favouring working-life continuance of the older workers and fostering active aging, took another step forward so the pensioner can work without linking the amount of pension to be perceived to the part-time work. This so-called ‘Active Retirement’ enables unlimited working regarding the working day and remuneration. However, the amount of pension does not remain unaffected, but rather it is set at a single percentage, i.e. it will be 50% of the amount resulting from the initial pension (although for the self-employed with employees, he/she may continue working and receive 100% of his/her pension). Moreover, this new job will not enable him/her to improve his/her future pension, although on ceasing to be employed or he/she ceased their self-employment, he/she would go back to receiving their entire retirement pension. While working as an employee or a freelance, compatible with retirement pension, employers and workers shall only contribute to the Social Security for temporary incapacity and professional contingencies pursuant to the corresponding Social

27

Source: National Social Security Institute. https://w6.seg-social.es/ProsaInternetAnonimo/OnlineAccess?ARQ.SPM.ACTION¼LOGIN& ARQ.SPM.APPTYPE¼SERVICE&ARQ.IDAPP¼ESTA0001.

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Security regulatory legislation, although they will be subject to a special solidarity contribution of 8%, non-qualifying for benefits, which in employee systems is distributed between employer and employee, with the employer paying 6% and the employee 2%. It is subject to compliance with very strict requirements, since only those who have a received a pension of 100% can appeal, regarding both age variable (excluding early retirements), and employment record (demanding 100%), which is incoherent for prospective receivers, who should be those whose pension is insufficient forcing them to resort to work to improve their economic conditions, whereas it is restricted to those with 100% pension wanting to work. Therefore, it is not surprising only a very reduced number of people have chosen this option, and are essentially self-employed workers, since it allows them to receive 100% of their pension. Thus, in 2017, only 40,159 people (out of 309,709 new pensioners) chose this option, 33,704 of whom were self-employed.

4 State and Family Functions and Obligations Regarding Senior Citizens on the Poverty Line 4.1

The Family’s Residual Role

The action of public powers in promoting the well-being of senior citizens will be complementary to that provided by the family. The Spanish Constitution in article 50 using an archaic reference, reminds and underlines the existence of family obligations regarding senior citizens. The State appears in the background to cover those matters which either do not come under such family obligations (essentially food [arts. 142-153 Civil Law]), or when the obligation is inappropriate or not met. However, a subsidiary relationship is not established between family obligation and social protection (as on other occasions), but rather the Spanish Constitution article 50 considers public powers should provide economic sufficiency whereas relatives only have to endow the senior citizen with the means to achieve a situation of well-being.28 As to the rest, this constitutional interpretation is more in line with the current socio-economic moment, whenever a real promotion of senior citizen well-being is something requiring more than mere family support; therefore, the exception introduced, barely limits the action of the public powers. New social structures have made the family institution incapable of taking care of its elderly. The increase in numbers of the elderly and reduction in non-remunerated caregiver availability requires other economically viable and socially acceptable care alternatives be considered, i.e. options where the public sector must assume ever greater protagonism; and demographic evolution means the family is inoperative for these effects. The baby 28

Ribot Igualada (1999), pp. 41–42.

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boom generation is the one which has had the fewest children, so the elderly cannot stay with the families. Nevertheless, traditionally speaking and even today, the family is the main source of caregiving, where there is usually one person (chiefly a woman) who takes on most of the responsibility and is considered the main caregiver. However, social evolution has led to a weakening in family ties,29 resulting in a ‘new conceptualisation’ of the family institution, where intrafamily solidarity has fallen,30 which leads to a repositioning of old-age cover suppliers, whereby the State occupies an important role in covering social needs during old-age.31

4.2

Old-Age Assistance/Protection. Non-contributory Pensions

The Social Security assistance level protects those in the senior citizen collective, who without surpassing a certain income threshold are unable to obtain Social Security contributory cover (mainly because they do not meet the required employment contribution period). Old-age as such is not protected but rather old-age without economic means. Coverage is provided regardless of the reason for the lack of means or absence of labour insertion. They are protected thanks to values which currently prevail in society, like solidarity. Thus, we can state it is a ‘human right’ for all individuals to be enjoy retirement under the protection of public powers, to the same extent as entitlement to Social Security appears as another human right. In any event, under our Legal System senior citizen protection is constitutionally established covering not only ‘economic sufficiency for citizens’ during this stage in life, but also includes a system of social services to attend ‘their specific health, housing and leisure problems’ (article 50 of the Spanish Constitution). In Spain, assistance cover of old-age has been contemplated as subjective right since 1990, which until then had been covered by public welfare; so Law 26/1990 meant a qualitative leap in the panorama of public social protection. However, it only covers three contingencies and very restrictively so, since it is not a universal model but rather one of assistance. The amount of benefits is very reduced and the number of beneficiaries relatively reduced given the rigid requirements established by law. In addition to being over 65 and having resided at least 10 years in Spain, the main requisite is not to surpass the income limit. This requisite which is consubstantial in any assistance modality (classic ‘test of means’), means those requesting said benefits must prove their situation of need, understood as the perception of income below that stipulated by Law. This figure somehow functions as a ‘poverty 29

Abellán García (1991), p. 13. Leal Maldonado and Hernán Montalbán (1998). 31 Gonzalo González (1989), p. 9. 30

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threshold’, insofar as these pension types are configured as guaranteeing minimum income. There are two rules for determining the limit of economic resources, the main one being exclusively applicable to the requester; and an additional one acting (with the previous) in those cases where the beneficiary lives within a family unit. These limits are very narrow thus making the requesters’ accreditation very difficult, and consequently is the main reason for denying entitlement to this benefit. The main limit is set in the corresponding State Budget Law (for 2019, 5,488.00 euros per annum), and is also the amount of the annual pension. In January 2019, there was a total of 454,719 pensioners, with an average amount of €381.52 (retirement pension); and €422.52 (non-contributory invalidity).32

5 State and Family Roles and Obligations Regarding Dependent Senior Citizens 5.1

The Family As Caregiver of Dependents

In a European context, the Mediterranean countries still constitute an example and paradigm of the ‘family’ welfare model, whereby public policies assume families should undertake to provide their members with well-being.33 This model has numerous positive points, which are extremely well-known. On the one hand, people requiring long-term care positively value the care provided by their relatives. And on the other, the State has traditionally meant a way of offloading protection costs, with the family acting as an instant protection supplier. This synergy with social public protection means it is extremely important for the State to strengthen family benefits, since they act ‘as a self-protection medium’ of the system itself.34 In other words, the premise about taking care of the elderly who require long-term care is that it essentially falls on the family; moreover, this model is beneficial in guaranteeing the dependents’ welfare. However, this model should be corrected in two directions, i.e. preventing excessive weight to be chiefly supported by the woman assuming the role of caregiver. Therefore, the role of public powers in the provision cover, considering not only those cases where there is no other alternative, but also complementing those situations where there is a family caregiver. And secondly, support those who undertake the so-called family caregiving. Families are sometimes the providers of well-being and caregiving, which frequently cannot be replaced, so therefore, the State should officially recognise that activity.

32 http://www.imserso.es/imserso_01/documentacion/estadisticas/pensiones_no_contributivas_ jubilacion_invalidez/index.htm. 33 Esping-Andersen et al. (2002). 34 Gonzalo González (1998).

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Thus, it would go from being a family model where the State only intervenes in the absence of other caregiving scenarios, i.e. a model where the State acknowledges the social risk of long-term caregiving and acts at different levels. Traditionally, public powers only intervened in this field those cases of economic, social and relational vulnerability. A dependent situation was not protected as a risk in itself, but only when accompanied by vulnerability. Social changes in recent decades have meant the family can no longer assume caregiving situations at the same level; therefore, there has been a change in strategy whereby the action scope of public powers has been expanded, not simply as a family substitute but a complement. In other words, a dependent situation is now accepted as a social risk in itself. Although the Spanish model is still a family one, in that caregiving by public powers is incomplete, and by itself is insufficient, since there is still a family safety net to complement it. However, a specific protection System has been in force since 2007 where long-term caregiving is at the expense of the State. The lack of provision for non-professional caregivers was one of the triggers for starting-up the Dependents’ Systems, since together with the biological fact (increased life expectancy ergo increased number of dependents), converged in a social deed, which was an increase labour insertion for women resulting in less availability to attend a dependent within the family meaning public intervention in caregiving provision was compulsory. The volume of dependents (due to aging) has increased just when there is less availability of caregivers, obliging public powers to cover this non-professional assistance deficit. Aging determines the onset of a new risk, and the labour incorporation of women forces a redistribution of caregiving responsibility.35

5.2

State Protection. Law of Dependents and Non-professional Caregivers

The passing of Law 39/2006 of 14th December fostering personal autonomy and assistance for dependents, meant the start-up of a long-term caregiving system, called the System for Autonomy and Assistance for Dependents (SAAD—Spanish acronym). It works like a State financed autonomic system (covering services rendered by autonomic and local bodies, partly financed by the State depending on the number of beneficiaries, and with the occasional economic participation of the beneficiaries). It is universal and combines benefits in kind (which is the general rule) with economic

35

Jenson and Jacobzone (2000), p. 11. http://www.oecd-ilibrary.org/social-issues-migration-health/care-allowances-for-the-frailelderly-and-their-impact-on-women-care-givers_414673405257.

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benefits in those cases where the family assumes the role of caregiver; and is financed via the budgets. Two types of benefit are provide, i.e. services (residences, home help, telecare, among others); and economic, such as paying a compensation to the family caregivers. In a legal-technical sense they cannot be considered ‘workers’; however, in a sociological context they were close (and we are using the past tense deliberately) to that figure, since not only did they receive compensation (not a salary, but a compensation for the work), and they were registered with the Social Security and their contributions paid. The caregivers felt their activity was socially acknowledged, and by contributing to the Social Security, the perception was that their ‘work’ was recognised (since they were unable to seek employment because they were fully dedicated to caregiving).36 The Law of Dependents supported a professional assistance model, leaving cover to family caregivers as an exceptional situation. This model was chosen based on three reasons: it created employment; it guaranteed the quality of caregiving; and it released family caregivers, allowing them a breather. However, during the first years of the Law application, family caregivers were the protagonists. Although the Law stated that ‘providing care in a family environment’ would be exceptional, the reality was different. They were the features forming the SAAD backbone, and the explanation is twofold. On the one hand, it was the quickest way to make SAAD operational, since it benefited from an existing protection structure, i.e. the family, and legally ‘recognising’ as formal work what was in fact formal work; and on the other hand, because Spanish dependents preferred their relatives as caregivers. That is why one of the key measures of SAAD was to include non-professional caregivers in the System, via economic compensation for caregiving within the family environment. What is worth highlighting is that it assists two subjects, namely the dependent and, the caregiver, who is rewarded for his/her assistance by the System acknowledging his/her role; and he/she sees how they are provided with training programmes and measures to cover the rest periods (breather programmes). They were integrated in SAAD acknowledging their work as such, i.e. paying them, registering them with Social Security and contributing to it. In this sense, it was an act of social justice, since our country’s family tradition meant dependents preferred to place their care in the hands of family instead of other caregiving formulas; therefore, the relative who took up the role of caregiver (usually a woman), was unable to find employment. However, this option has two inconveniences in that it prevents caregivers from joining the labour market (and in this case, the absolute impossibility of balancing work and family life); and leaves the caregivers without protection since the Law of Dependents arose so ‘situations of dependence’ not only affected dependents but alludes to both dependents and their caregivers.

36

Maldonado Molina (2018a).

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Nonetheless, a serious of cutbacks in 2012 made to the cover provided by the State for dependents was reduced,37 also leading to the disappearance of many of these supports for family caregivers. After these reforms, the State again waives its responsibility for the care of dependents, establishing the bases so their cover is returned to a family (but as an unacknowledged non-professional sector), or private environment (for those with greater purchase power). These cutbacks have meant SAAD loses its main identity hallmarks, and reducing it to such an extent we can state this model is different from the one originally conceived.38 After the reform, the work done by relatives was no longer recognised (in fact, their Social Security contributions have not been paid since 2012, although they can be voluntarily covered provided they pay the contributions), thus losing what had been considered an achievement from a social justice viewpoint.39 So, out of the difference economic benefits foreseen under Law 39/2006, the one which underwent the most amendments due to the crisis was that of caregiving in a family environment with support for non-professional caregivers, to somehow become ‘outlawed’.40 Nevertheless, the reform has had a positive aspect in that it has encouraged the professionalisation of long-term caregiving, which is important, since it enables families to be released from the task of caring for their dependents, besides creating employment in the sector. Unfortunately, professionalisation has not materialised, meaning that really a step back has been taken where relatives have had to assume the assistance of dependents, but now, without the economic support received from 2007 to 2012. The non-professional caregiver role is regulated in article 12.2, 3 and 4 of RD 1051/2013, whereby this role may only be assumed provided the following requirements are met, i.e. a family relationship with the dependent,41 co-habit with the same,42 and caregiving capacity.43 The fact a family relationship or equivalent is demanded is to restrict this benefit to people who are non-profit-making caregivers.

37 If we consider the data published on 30th April 2013 by the Spanish Government in the 2013 National Reform Programme, “with application of these measures, expenditure was reduced by 599 million euros in 2012, estimating an additional reduction of 1,108 million in 2013 and a further 571 million euros in 2014” (p. 23). 38 Maldonado Molina (2014), p. 182. 39 Maldonado Molina (2015). 40 Maldonado Molina (2017b), p. 424. 41 The following could be considered caregivers: (1) the spouse or partner; (2) parentage, affinity, adoption and up to 3rd degree kinship; (3) guardians and administratively or legally appointed guardians with caregiving functions. This link of kinship is dispensed in exceptional cases, provided certain circumstances concur. 42 Relatives are required to live under the same roof as the dependent, being attended by them and having done so for one year prior to presenting the application. 43 The caregiver is required to have sufficient physical, mental and intellectual capacity to correctly carry out the care and assistance tasks him-/herself. Furthermore, he/she shall not have an acknowledged dependence situation.

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In other words, should this relative or equivalent have any kind of a contractual relationship in which the dependent compensated the caregiver, then we would be dealing with a ‘commercialisation of the relationship’44 ergo this would not be the case contemplated herein.

6 Conclusions The Spanish Social Protection System maintains an acceptable commitment to intergenerational solidarity principle, as reflected by: • A solidarity financing model, such as the pay-as-you-go • A pension system covering the needs of an elderly population, therefore, those who worked and receive a contributory benefit (professional solidarity), like those who do not meet the acknowledged employment record and have to resort to attendance benefits (national solidarity), thus also ensuring a protected minimum level in the contributory block. Ninety percent of the population is over 65 and 85% receive some kind of benefit albeit contributory or assistance. • A long-term caregiving system where the State supports the caregivers’ families, although the System has been weakened since the 2012 cutbacks due to the economic crisis. It attends the dependents, which are approx. two million people who receive some kind of economic or service benefit. However, the economic crisis has forced solidarity to change direction, since it is no longer question of assets showing solidarity with senior citizens, but rather since the crisis, they are the ones required to make sacrifices for society. Not only have senior citizens with their pensions served as an economic safety net for many families but they are also required to make a triple sacrifice: • Working beyond the age set by the ‘intergenerational contract’ set at the beginning of the twentieth century (Law 27/2011) • Perceiving lower pensions (Law 27/2011) • Paying part of the medicines which until RDL 12/2012 were free for them • Receiving less cover for long-term care and less support for family caregivers (RDL 20/2012) Social Security has been the major intergenerational solidarity programme arranged by the State, and on this basis social protection has been established until the beginning of the twenty-first century. However, the financial crisis (and values) uses old-age as an alibi to reconsider social protection for the elderly and dependents. Intergenerational solidarity is still formally talked about; however, orientation has changed, i.e. the intergenerational agreement has been broken by the State. On this question, only general society has the opportunity to reread intergenerational solidarity, with a humanistic vision where economy does not dictate.

44

Molina Navarrete (2007), p. 58.

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References Abellán García A (1991) El envejecimiento de la población española Guillemard A M, Envejecimiento, edad y empleo en Europa: Situación Actual y Perspectivas. Ministerio de Economía y Hacienda, Madrid, p XIII Esping-Andersen G, Duncan G, Hemerick A, Milles J (2002) Why we need a new welfare state. Oxford University Press, Oxford Gonzalo González B (1989) El debate sobre la edad de jubilación en Europa. Revista de Seguridad Social 42:7–19 Gonzalo González B (1998) «Familia y Seguridad Social hoy en España», Revista Tribuna Social., núm. 90 ILO (2015) World employment and social outlook 2015: the changing nature of jobs. https://www. ilo.org/global/research/global-reports/weso/2015-changingnature-of-jobs/WCMS_368626/ lang–es/index.htm Jenson J, Jacobzone S (2000) Care allowances for the frail elderly and their impact on women caregivers. OECD, Paris. https://doi.org/10.1787/414673405257 Leal Maldonado J, Hernán Montalbán MJ (1998) Los retos de la solidaridad ante el cambio familiar. Consejería de Sanidad y Servicios Sociales de la Comunidad de Madrid, Madrid Maldonado Molina JA (2011) La edad de jubilación, retiro y vejez. In: Monereo Pérez JL, Maldonado Molina JA (eds) La edad de jubilación. Comares, Granada Maldonado Molina JA (2014) El Sistema para la Autonomía y Atención a la Dependencia tras sus reformas. In: Prevención y Protección de la Dependencia: un enfoque transdisciplinar. Ed. Comares, Granada Maldonado Molina JA (2015) El reformado Sistema de Dependencia. Revista de Derecho Social 71:79–106 Maldonado Molina JA (2017a) La pensión de jubilación ordinaria. Concepto, requisitos y cuantía. Tratado de Derecho de la Seguridad Social. Laborum, Murcia Maldonado Molina JA (2017b) El Sistema de Atención a la Dependencia (SAAD). Configuración general y elementos caracterizadores. In: Tratado de Derecho de la Seguridad Social. Ed. Laborum, Murcia Maldonado Molina JA (2018a) Trabajo decente y cuidadores de personas dependientes. In: El Trabajo Decente. Comares, Granada Maldonado Molina JA (2018b) El trabajo a tiempo parcial y su impacto en el Sistema de Pensiones: especial referencia a la pensión de jubilación. Revista de Trabajo y Seguridad Social (CEF) 425:27–53 Maldonado Molina JA (2018c) ‘The sustainability factor in Europe and Spain’. e-Revista Internacional de la Seguridad Social (1). https://institucional.us.es/revistapsocial/index.php/ erips/article/view/171 Ministerio de Trabajo, Migraciones y Seguridad Social (2019) Informe Económico-Financiero del Proyecto de Presupuestos Seguridad Social (2019). http://www.seg-social.es/wps/wcm/connect/ wss/3aa925cb-ece2-4477-acbf-7e3f853d8977/TOMO+III.-+INFORME+ECONOMICOFINANCIERO-P.pdf?MOD¼AJPERES&CVID¼ Molina Navarrete C (2007) El régimen “cuasi-profesional” de cuidados de las personas dependientes. Revista de Derecho del Trabajo y de la Seguridad Social 297:33–78 Ribot Igualada J (1999) Alimentos entre parientes y subsidiariedad de la protección social, Colección Privado núm. 21. Tirant lo Blanch, Valencia

Le Principe de la Solidarité entre Génération Appliqué au Régime Brésilien de Sécurité Sociale Marcelo Leonardo Tavares

Abstract This paper aims to discuss the solidarity principle as one of the pillars of Brazilian social security protection. The goal is to analyze how solidarity underlies the fundamental rights, especially the social security rights, with an evaluation from the double perspective, the commutative solidarity and the distributive solidarity. The paper intends to demonstrate that distributive solidarity should be applied on a subsidiary basis in social security systems. The article begins with the presentation of the structure of the Brazilian social security system. Then it explores the potentiality of the two sides of the principle of solidarity applied to social security. It goes on to demonstrate the problem of inverted solidarity and ends with the defense of the principle of solidarity as one of the basics for the Brazilian Constitution to consider social security as a fundamental right.

1 Introduction Avant d’étudier la question de la solidarité intergénérationnelle appliquée à la sécurité sociale, il est important d’en savoir un peu sur le profil de la population brésilienne. Le Brésil (República Federativa do Brasil, en portugais) est le plus grand pays d'Amérique Latine (8.516.000 km2), qui porte un Produit Intérieur Brut (PIB) de 1.700 milliards d'euros en 2016, caractérisé par de grandes inégalités sociales et régionales. Le pays est une république fédéral présidentialiste ayant le gouvernement central (l’Union), 26 états fédéraux et plus de cinq mille municipalités, toutes des entités autonomes. Leurs pouvoirs sont coordonnés par la Constitution. La population est estimée à 210 millions de personnes (dont 84,7% habitent dans les zones urbaines et, pour 100 femmes, il y a 94,3 hommes). Brésil est le cinquième

M. L. Tavares (*) Université de l’État du Rio de Janeiro (UERJ), Rio de Janeiro, Brazil e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_7

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plus peuplé pays du monde, derrière la Chine, l'Inde, les États-Unis d'Amérique et l'Indonésie, ce qui correspond à 2,8% de la population mondiale.1 D’un côté, le taux de fécondité est faible (1,7 enfants par femme âgés de 15 à 49) et il y a une baisse du nombre de jeunes de 0 à 14 ans (de 26,5% en 2005 à 21,0% en 2015) et de 15 à 29 ans (de 27,4% en 2005 à 23,6% en 2015). D’outre côté, le vieillissement est accéléré dans la population. La taux d'adultes de 30 à 59 ans est passée de 36,2% à 41,0% entre 2005 et 2015, et des personnes âgées de 60 ans est passée de 9,8% à 14,3% dans ce décénie.2 Le processus de transition démographique brésilien montre la tendence de réduction de la population de 0 à 14 ans et une croissance de la population de 15 à 59 ans. Dans le premier temps (jusqu’à 2035), la population d’âge actif va croître, ce que les démographes appellent de bonus démographique. Après, la taux de la population âgée de 15 à 59 ans va diminuer. De plus, la baisse de taux de fécondité de 2,4 (2000) à 1,7 (2015) et l'augmentation de l'espérance de vie à la naissance à 74,8 ans (21,95 ans de ‘espérance de vie à soixante ans) force le vite changement de la pyramide des âges au cours des prochaines annés vers le vieillissement.3 En ce qui concerne les travailleurs, il y avait 158,2 millions de personnes à l’âge actif en 2015 (77,20% de la population) - entre 16 et 60 ans - dont 104,2 millions économiquement actifs. Parmi ceux-ci, 94 millions étaient occupés (taux d'occupation de 59,7% et taux de chômage de 9,4%). Parmi les 94 millions d’occupés, il y avait 67,9% de salariés, 4,1% d’employeurs, 28% de travailleurs indépendants.4 Les chiffres montrent un sérieux problème pour la population brésilienne: le faible niveau d'éducation de sa population active, ce qui aggrave l'accès à l'emploi et contribue pour l’activité informelle et aux mauvais services fournis. C'est aussi l'une des principales causes du nombre élevé de personnes qui n'ont pas de protection sociale. En 2015, il y avait 24,3 millions hors de la sécurité sociale. Alors, les principaux défis sociaux sont concentrés sur la continuité de la tendance à réduire les inégalités entre les plus riches et les plus pauvres. La perception générale indique que c’est un problème difficile à résoudre. Allié à cela, il doit y avoir un effort pour augmenter, en chiffres absolus, le revenu moyen des familles. Dans l'aspect démographique, le temps est propice à la mise en place de politiques publiques de réforme des règles de la sécurité sociale. Au cours des trente dernières années, deux changements législatifs ont été apportés à la Constitution, et le Congrès discute actuellement d'une autre réforme du système. Dans ce cadre, l’architecture de tout le débat parlementaire porte sur la question d’améliorer l’espace institutionnel. Les changements proposés dans la réforme doivent fournir des conditions pour l'application correcte du principe de solidarité

1

BRASIL. População, p. 45. BRASIL. Indicadores de População Ativa, pp. 100–103. 3 BRASIL. Taxa de Fecundidade, pp. 40–47. 4 BRASIL. Indicadores de População Ativa, pp. 106–108. 2

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au Droit de la Sécurité Sociale, à la fois sur l'aspect commutatif et sur l'aspect distribution du revenu aux plus pauvres, a fin de perfectionner le système.

2 Le système brésilien de sécurité sociale Au sens de la dimension fondamentale, la sécurité sociale vise à protéger les individus dans des situations liées à la dignité de leur existence.5 A travers l'action de l'Etat, la société s’engage à garantir le minimum social comme condition du maintien de l'accès démocratique aux moyens de développement individuel et collectif. En effet, sans ce réseau de protection, une partie de la population n’aurait pas de conditions de vie décente et serait reléguée au rang de pauvreté structurelle.6 Ainsi, tout le système de sécurité sociale doit reposer sur les principes de liberté, d'égalité des chances et de solidarité dans sa double dimension, commutative et distributive.7 Nous pouvons pernser encore que, si ces principes moraux inspirent le fonctionnement de la sécurité sociale brésilienne, comment cela se produit-il ? Il faut donc souligner que le lien entre ces principes moraux prévus dans la Constitution et la sécurité sociale brésilienne a été établi à partir de la structure du système de protection. Pour le comprendre, il est nécessaire de connaître le développement historique du régime. L’évolution de la sécurité sociale dans le monde peut être divisée en deux grands blocs: l’époque classique et l’époque moderne, intermédiés par une période de transition.8 Dans la période classique, la préoccupation des systèmes de sécurité sociale était l'atténuation de la rigueur de la condition de travail et l'objectif était la protection du travailleur: ils paraissent l'assurance-accident du travail et les maladies professionnelles, la retraite par âge et l'indemnisation par le fardeau de la famille. Par la suite, dans ce que nous considérons comme l'ère moderne de la sécurité sociale, l'expression "assurance sociale" a été appliquée à l'ensemble de la population et la protection s'est généralisée. En ce qui concerne cette première période, en 1883, en Allemagne, une assurance maladie obligatoire a été instaurée pour les travailleurs de l'industrie, au titre de la triple contribution de l'État, des travailleurs et des entreprises. Le projet a été rédigé par le chancelier du Reich, Otto Von Bismarck. L’assurance contre les accidents du travail et l’assurance invalidité et vieillesse sont crées en 1884 et en 1889. Ces protections sont destinées aux travailleurs par catégorie professionnelle, sous une

5

Moreau (2005), p. 32. Tavares (2003), p. 75. 7 Tavares and Souza (2016), p. 7. 8 Dupeyroux (2005), pp. 36–40. 6

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forme obligatoire, avec un montant fixe (destiné à remplacer la rémunération, moins proportionnellement) et non sur la caractéristique d'assurance commune.9 Le modèle de protection sociale institué par Bismarck reposait sur la protection de certains groupes, l'objectif étant de leur assurer un revenu similaire à celui qu'ils recevraient s'ils étaient en activité. Malgré les contributions de l’État et des entreprises, la protection sociale ne couvrait que quelques travailleurs et non la population tout entière. L'ère moderne commence par une véritable révolution dans le concept de sécurité sociale apporté par le plan de William Beveridge (Social Insurance and Allied Services). Fondé sur la recherche de la garantie de la dignité de la personne, le Plan a institutionnalisé l’assurance publique obligatoire, caractérisée par la généralité (destinée à protéger toute la population sous un régime universel et unique) et l’uniformité, avec des prestations standards et basée sur une politique de plein emploi. Le système prévoyait un traitement intégré de la protection sociale, ce qui entraînait l'unification du risque et la simplification des procédures bureaucratiques. Ces deux modèles sont encore adoptés aujourd'hui, avec quelques variantes, par la plupart des systèmes publics de sécurité sociale des pays d'Europe. Ils constituent également la base de la protection sociale au Brésil. Le pays a adopté pleinement le modèle de Bismarck à partir du décennie de 1920 et, à partir des années 1960, le système a été influencé par des idées de William Beveridge. Au cours des soixante ans d’existence, le système permettait de protéger une grande partie de la population urbaine. Depuis les années 1990, la sécurité sociale brésilienne a été influencée par les idées du rapport de La Banque Mondiale (BIRD) «Prévenir la crise de la vieillesse: des politiques pour protéger les personnes âgées et promouvoir la croissance».10 Ce rapport propose la structuration de la protection sociale en «couches», dont la «couche» zero est de l’aide sociale de veillesse et handicapés consistant en le paiement de la valeur minimum contre la misère. La première «couche», de sécurité sociale, tend vers l'universalité, avec paiement des prestations entre valeur minimale et valeur maximale sous responsabilité de l'État. Pour les travailleurs qui gagnent des salaires plus élevés, une protection complémentaire doit être mise à leur disposition (au Brésil, le système privé fermé), en plus de la possibilité d'une troisième «couche» de sécurité sociale comme une application financière (le système privé ouvert). Quand nous comparons la structure de la protection sociale brésilienne et le rapport de la BIRD, il faut attirer l’attention sur le fait qu’ il est possible d'apercevoir l'existence de deux branches de sécurité sociale: le public et le privé. Dans le public, au Brésil il y a le Régime Général de Sécurité Sociale (la premier «couche» du rapport). En outre, le systèmes privés complémentaires sont attachés aux employés

9

Das Neves (1996), p. 235. BIRD. Averting the old age crisis: policies to protect the old and promote growth, pp. 15–20.

10

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(le système privé fermé – «la deuxième couche» ) ou librement conçus comme un investissement financier (le système privé ouvert – «la troisième couche»). Le Régime Général de Sécurité Sociale est le principal système mis en place par le gouvernement central (l'Union) et vise à protéger les employés et non employés (inclus des travailleurs indépendents – commerçants et artisants, entrepreneurs individuels, membres des professions libérales etc), dans les zones urbaines ou rurales, par rapport aux risques sociaux liés à la santé, vieillesse, incapacité, de charges de famille, décès et emprisonnement. Le montant de la couverture varie entre 250 euros et 1500 euros. Il est presque universel, et il tend ainsi à la couverture de l'ensemble des travailleurs, même pas salariés. L'adhésion au système est obligatoire à qui travaille. Son financement est assuré par les entreprises et par les cotisations des travailleurs. L'Etat est responsable de la couverture des déficits. En décembre 2017, le Régime Général de Sécurité Sociale avait plus de 26 millions de prestations actives, maintenues par plus de 70 millions de contribuables individuels. Le revenu de ce système était de 94,59 milliards d'euros et la dépense de 130,83 millions d'euros.11 Ce régime est à la position de premier rang dans la protection sociale brésilienne. Le système adopte le modèle pay-as-you-go system: les revenus et les dépenses sont comptabilisés au même temps. Lorsqu'il y a un déficit, l'Etat doit faire des compléments financiers. La législation prévoit le payment d’un montant minimum de couverture pour les prestations, notamment pour les retraites et les pensions, même si un travailleur n'a pas perçu, durant sa vie active, le montant correspondant pour garantir la valeur minimum. Les prestations publiques du Régime Général, telles que les pensions, deviennent intangibles par la mise en œuvre des exigences énoncées dans la législation. Par la suite, le droit est acquis et le bénéficiaire ne peut plus être affecté par la modification de la législation. Ceci est garanti par la Constitution. La reconnaissance du droit acquis a fait l'objet de plusieurs décisions de la Cour Suprême. Comme ce système fonctionne dans le modèle pay-as-you-go, il s'agit d'un moyen efficace d'assurer le respect des règles stipulées dans la loi, une fois que les faits prévus s'y produisent. Au fils des ans, le régime général repose donc sur deux types de solidarité: la solidarité commutative entre travailleurs actifs et retraités, et la solidarité distributive entre la société et les retraités.

3 Les deux côtés du principe de solidarité La solidarité, en tant que valeur morale, peut être classée en deux types: le commutatif et le distributif. Dans la conception de la solidarité commutative, nous soulignons la préférence du sentiment d'appartenance de la personne à un groupe déterminé d'égaux, ainsi que

11

BRASIL. Anuário Estatístico, pp. 45–56.

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l'évaluation selon laquelle l'un doit protéger l'autre pour qu'il y ait une protection de soi en cas de nécessité. Le critère de la justice repose donc sur la possibilité d'échange. Pour que le sujet se considère comme détenteur de droits, il est nécessaire qu'il comprenne que les autres sujets de la collectivité ont aussi de droits. Ajouté à cela, la valorisation collective résultant de la solidarité commutative permet au sujet de reconnaître le prochain de la même manière qu'il se voit lui-même, c'est-à-dire, qu'il est également digne de considération et permet, ainsi, d'atteindre l'estime sociale. La valorisation susmentionnée concerne non seulement les individus, mais également les groupes de sujets, qui commencent à être fiers de leurs caractéristiques propres, qui sont le reflet des valeurs de leurs membres ou groupes individuels. Dans la solidarité commutative, les individus proposent donc de partager des valeurs et des objectifs communs. Ainsi, il existe une relation de symétrie, soit au sein du groupe, soit intergroupes.12 D'autre part, la solidarité distributive ne repose pas sur le sentiment d'appartenance à un groupe ou sur le critère d'échange de protection, mais plutôt sur la reddition à l'autre de moyens suffisants pour garantir sa dignité. Son fondement moral est lié à la protection de l'autre pour ce qu'il est, digne d'attention et de respect, et vise à réduire les inégalités entre les personnes. La solidarité distributive, liée aux droits fondamentaux, se distingue de la charité car il s'agit d'une action facultative, souvent déplacée sur une base religieuse, alors que cela implique une action dirigée. Ces deux approches du principe de solidarité ne s'opposent pas, mais se complètent. De plus, alors que la solidarité commutative présuppose au moins une égalité relative, la solidarité distributive part d'une réalité factuelle différente, celle de l'existence d'une inégalité au niveau qui justifie l'action en faveur des moins favorisés, indépendamment de la possibilité d'invoquer la réciprocité. La solidarité distributive contient la règle de la protection sans attendre un tel traitement de plein droit. La Constitution brésilienne fait allusion à la solidarité distributive en l'élevant à un principe de la République, parallèlement au principe de réduction des inégalités sociales (articles 3, I et III).13 Il faut reconnaître néanmoins que cette modalité de solidarité est liée à la dignité de la personne humaine et aux valeurs de liberté réelle et d'égalité des chances. Dans la sécurité sociale publique, les deux types de solidarité s'appliquent actuellement, la commutative étant une priorité par rapport à la distributive. Le régime général de sécurité sociale brésilien (RGSS), bien que fortement influencé depuis les années 1960 par le rapport Beveridge, conserve les caractéristiques structurelles du concept de Bismarck. Le système n’est pas universel, bien qu’il permette l’affiliation des assurés volontaires, son objectif est

12 13

Honneth, p. 182. BRASIL. Constitution.

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de protéger les travailleurs et son coût est supporté par la contribution de cotisations sociales spécifiques. En ce qui concerne un régime qui fonctionne dans un modèle économique de répartition, il y a bien sûr l'application du principe de solidarité présenté sous une double vision. Le système de retraite brésilien observe tout d’abord la solidarité commutative entre les participants, compte tenu de l’obligation de protection réciproque inhérente au modèle. Les travailleurs paient pour les prestations actuelles des inactifs, dans l'espoir qu'ils seront protégés de la même manière à l'avenir, dans le cadre d'un "pacte entre générations". Soulignant le rôle de la commutativité, il est observé que le calcul des avantages considère la moyenne arithmétique des valeurs sur lesquelles la contribution a été apportée, garantissant aux travailleurs des salaires liés au montant de la collecte pendant la période d'activité, avec quelques atténuations,14 bien que, dans certaines situations, il soit possible avoir accès à des prestations sans avoir fait de contribution minimale au système.15 Si les cotisations de sécurité sociale (article 195, I, "a" et II de la Constitution) ne suffisent pas à couvrir les dépenses, il incombe au État de maintenir ces avantages, afin d'éviter qu'un travailleur inactif ou sa famille tombe dans la misère. Dans ce cas, sous une forme subsidiaire, la solidarité sera appliquée du point de vue de la distributivité. Comme les contributions spécifiques ne seront pas sufit et que, pour garantir que le travailleur et sa famille ne soient pas menacés par la misère, le principe de solidarité dans la version distributive s'applique à titre subsidiaire. C’est la forme indirecte de financement de la sécurité sociale par la société. Selon le rapport Beveridge, l’un des avantages du tempérament dans le modèle de Bismarck était de renforcer l’application du principe de la solidarité distributive, en partageant le fardeau de la société avec la subsistance de ceux qui sont incapables de travailler et ne pourraient pas être maintenus uniquement par la commutativité du système. En fait, au Brésil jusqu'aux années 1960, la non-universalisation des assurés et des prestations, ainsi que leur financement mutuel, ont révélé que la répartition des risques était imprégnée d'un caractère de protection collective. Avec l'introduction du principe de solidarité distributive dans le système, il y a eu un saut qualitatif dans l'assurance sociale brésilienne, ce qui a amené toute la société à y participer, garantissant le versement des prestations même sans un soutien financier individuelle.

14

À titre d'exemple d'atténuation, il est possible pour une personne de contribuer au système pendant de nombreuses années et de ne percevoir aucun avantage, pour être décédée avant la retraite, sans avoir des bénéficiaires. 15 Imaginons le cas d'un employé décédé le premier jour de son adhésion au RGSS. La prestation peut être payée aux enfants, même pendant des années, sans base de contribution individuelle suffisante.

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La Constitution de 1988 a montré la préoccupation concernant l'élimination de la pauvreté et l'objectif explicite de réduction des inégalités sociales. Par ailleurs, l'application de la solidarité distributive a commencé à protéger les travailleurs de manière plus complète contre les risques sociaux, et non pas seulement à prévoir le paiement d'une indemnité partielle, qui compenserait la perte de capacité de travail de l'assuré. Avec cela, le principe de solidarité est passé à un nouveau niveau dans la loi de la sécurité sociale, avec l'amélioration de l'assurance sociale pour un modèle de sécurité sociale, nécessitant une action efficace de l'État pour protéger ses citoyens. Vu du point de vue de la justice distributive, ceux qui disposent des meilleures conditions sont appelés à agir en faveur de ceux qui ne disposeraient pas de conditions de subsistance suffisantes, par le biais d'une gestion de l'État, de manière subsidiaire. Tous les protégés peuvent recevoir au moins des avantages d'au moins le salaire minimum. Les changements mis en œuvre dans le Régime Général à partir des années 1960, et en particulier avec l'avènement de la Constitution de 1988, ont contribué à l'expansion de la protection et à la réduction des inégalités sociales. Par conséquent, la solidarité entre générations (commutative e distributive) est rémarquable au système public, maintenu par l'État, en faveur des travailleurs urbains et ruraux. La gestion est assurée par des mécanismes internes, sous le contrôle d'un organisme public.

4 Le problème de la solidarité inversée L'application du principe de solidarité dans la version distributive devrait être faite avec parcimonie dans la sécurité sociale, sous peine de favoriser la solidarité sociale inversée,16 dont la société, en particulier ses membres les plus défavorisés, est injustement obligée dans le fardeau fiscal de garantir des avantages à une partie de la population à revenu élevé. La situation est particulièrement grave dans les systèmes de retraite où (i) il n'y a pas de niveau de couverture maximum, ou où ce niveau est très élevé, et (ii) ils sont créés pour la protection de groupes spécifiques. En ce qui concerne le premier aspect, le fardeau indirect de la société pour couvrir des droits aux avantages sociaux ne devrait être exercé que pour garantir une 16 Le terme a été mis en évidence, dans son application à la sécurité sociale brésilienne, par Marcelo Leonardo TAVARES dans le cadre de la couverture du système de sécurité sociale des fonctionnaires:

Les agents n'ayant pas contribué de manière substantielle à la constitution d'un fonds suffisant au maintien des pensions et aux pensions calculées sur la base de la valeur de la dernière rémunération, l'État finit par couvrir le déficit avec les recettes publiques résultant de la perception des recettes qui pèsent sur toute la société, y compris les plus pauvres. (Tavares 2003, p. 267).

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protection minimale aux personnes, conformément à l'objectif de réduction des inégalités sociales de la République. Si un système de sécurité sociale maintient le paiement des prestations dans des valeurs élevées, l’action subsidiaire de la société n'est pas justifiée au regard de la solidarité distributive. Sinon, la solidarité ne sera pas une garantie de justice, mais d’injustice sociale. Il faut bien évaluer que cette usage de la solidarité expose les effets néfastes de la subvention de la société en faveur des riches et souligne un dysfonctionement du système. Un régime de sécurité sociale, quelque soit, ne marchera pas bien avec cette pratique innapropriée. En ce qui concerne le deuxième point, la solidarité distributive appliquée aux systèmes de sécurité sociale est liée au degré d’universalisation de la protection. Plus le groupe d’assurés est grand, plus justifiée est la distributivité. L'imposition d'une charge financière à l'ensemble du corps social, en particulier aux plus pauvres, pour donner des avantages sociaux à des groupes spécifiques peut indiquer la création et le maintien de privilèges sociaux. En effet, c’est la soi-disant solidarité inversée - dans laquelle une partie plus riche de la société reçoit l’aide des plus pauvres. On peut donc dire que la solidarité distributive devrait être appliquée de manière subsidiaire dans la sécurité sociale, tout en ayant moins d’influence sur les systèmes de protection sociale ciblés et des groupes spécifiques et offrant des avantages de grande valeur. L'aspect distributif de la solidarité aura un impact plus important sur les régimes universellement couverts qui maintiennent le paiement des prestations à des taux moins élevés. Le critère de la justice ne justifie pas le recours à la solidarité distributive dans les systèmes de sécurité sociale qui protègent des groupes spécifiques (foncttionaires) bénéficiant de la couverture d'avantages élevés, ce qui alourdirait la société. Sur ce sujet, la Cour Suprême du Brésil, dans l’arrêt ADI 3.105, a mis en évidence que, dans un système de retraite qui protège les personnes à revenu élevé, il convient de privilégier la solidarité commutative plutôt que la solidarité distributive.17 Exiger que la société subventionne ce système avant de le rééquilibrer au niveau interne, commutatif, implique une aggravation de la situation des plus pauvres. Dans ce cas, la solution de la justice nécessite de la composition financière et l'équilibre du système, en premier lieu parmi les participants, ceux qui sont le plus intéressés par le maintien de la capacité économique du régime. Sans nier l’importance de la subvention de l’état, le fait est que, avant tout, ce système doit sauver à soi même. D’outre part, en ce qui concerne le bien-être social, l'influence de la solidarité distributive dans le Régime Général est bien plus marquée que dans les régimes des fonctionnaires, précisément parce que les prestations sont offertes à un certain nombre d'assurés bien représentatifs de la population brésilienne (principe de l'universalité) et la valeur des pensions et des pensions est soumise à une limite

17

BRASIL. Supremo Tribunal Federal, ADI 3.105, pp. 30–35.

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inférieure à la rémunération des fonctionnaires (principes d'uniformité et de nécessité). De toute façon, la compréhension du principe de solidarité est donc fondamentale pour la solution de diverses questions juridiques concernant la sécurité sociale et d'autres droits sociaux aux prestations, offrant une voie herméneutique garantissant une plus grande justice sociale dans l'application de dispositifs liés aux droits fondamentaux. A titre d’exemple, dans l'arrêt RE 626.489, la Cour Suprême a reconnu que le droit à la sécurité sociale est un droit fondamental et que le Régime Général de Sécurité Sociale (RGSS) constitue un système de protection sociale fondé sur la dignité de la personne humaine, la solidarité, la citoyenneté et les valeurs sociales du travail (CF / 88, art.1, II, III et IV), ainsi que sur les objectifs de la République de construire une société libre, juste et solidaire, de faire progresser l'éradication de la pauvreté et de réduire les inégalités sociales.18 On peut affirmer que ces deux arrêts établissent, dans le domaine de sécurité sociale, les principes juridiques qui inspirent le fonctionnement des systèmes publics de sécurité sociale.

5 La solidarité appliquée à la sécurité sociale et les droits fondamentaux La Constitution brésilienne de 1988 a incorporé les valeurs de liberté, d'égalité et de solidarité dans le pacte social. La conception des droits fondamentaux adoptée par le Brésil découle de la réception des principes du libéralisme (autonomie privée et séparation des pouvoirs) tempérés par la valorisation de l'égalité des chances et de la solidarité, fondée sur la dignité de la personne humaine, la citoyenneté, la souveraineté populaire et dans la valeur sociale du travail. Cela renforce le concept de droits sociaux fondamentaux, mis en œuvre par un ensemble systématique de règles juridiques d'application immédiate qui donnent à l'individu un droit subjectif d'exiger des prestations de l'État. Dans cette configuration, les droits sociaux méritent d'être protégés aux côtés des libertés publiques, essentiels pour la défense de la démocratie et la protection des moins fvorisés, l'ensemble des personnes sans conditions réelles d'exercice de la citoyenneté. En intégrant le concept de droits fondamentaux, la solidarité, la protection de la liberté et l'égalité des chances, accroît le droit aux avantages existentiels, qui sont protégés par les limites matérielles du pouvoir de réforme de la Constitution (article 60). En ce qui concerne la sécurité sociale, le Régime Général est un outil puissant pour atteindre l'objectif d'éradication de la pauvreté et de réduction des inégalités sociales, permettant l'accès aux opportunités. La valeur de la solidarité, gérée par 18

BRASIL. Supremo Tribunal Federal. RE 626.4, p. 1.

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l’État, est un véritable atout dans ce système, fondé sur le partage des revenus. La sécurité sociale de base du Brésil est un droit social de garantie de la citoyenneté.19 C’est précisément sur ces principes que se construit la structure du système de sécurité sociale, l'un des moyens les plus importants d'atteindre l'objectif constitutionnel d'éradication de la pauvreté et de réduction des inégalités sociales. Comme il est destiné à une protection universelle, fondamentale et de préférence pour les plus pauvres, il faut s’opposer à ceux qui défendent la privatisation du système ou sa transformation en un régime de capitalisation. L’État ne devrait pas non plus être exempté de sa participation à la garantie de la vie digne des plus démunis en matière de sécurité sociale, et le régime de capitalisation ne serait pas suffisant, dans le Régime Général de Sécurité Sociale au Brésil, pour redistribuer la richesse dans la limite minimale permettant la survie des faibles dans la société.

6 Conclusion Dans la présente étude, il a été vérifié que la valeur de la solidarité sert de fondement aux droits fondamentaux aux prestations, en particulier aux droits à la sécurité sociale, aux côtés d'une liberté réelle et de l'égalité des chances. L'accent a été mis sur deux aspects de la solidarité qui soutiennent les modèles de protection sociale appliqués au Brésil: celui de la solidarité commutative et celui de la solidarité distributive. Il est suggéré que le concept de solidarité lié à la justice commutative est fondé sur l'idée d'égalité et l'évaluation de l'appartenance à un groupe, ce qui prend une protection réciproque. Les individus y proposent de partager des valeurs dans une communauté donnée, guidées par des objectifs communs, en relation avec la symétrie. La solidarité distributive, en revanche, n'implique pas l'appartenance à un groupe et vise à réduire les inégalités entre les individus. Si la solidarité commutative présuppose au moins une égalité relative, la solidarité distributive part d'une réalité factuelle différente, celle de l'existence d'une inégalité au niveau qui justifie l'action en faveur des moins privilégiés. Ainsi, les prévisions constitutionnelles pour la construction d'une société solidaire et la réduction des inégalités sociales en tant que fondements de la République (article 3, I et III) se réfèrent à la solidarité distributive, étroitement liée au principe de la dignité de la personne humaine et aux droits fondamentaux, en particulier les droits sociaux. D'autre part, la mention constitutionnelle de la solidarité présente à l'art. 40, ainsi que le principe de l'équilibre financier et actuariel, fondent l'incidence de la solidarité commutative sur les régimes de retraite publics.

19

de Mello (1981), p. 57. Nobre Junior (2000), p. 192. Sarlet (1998), p. 290.

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Le Brésil adopte le modèle Bismarckien (Allemand) de sécurité sociale influencé par le modèle anglais de Beveridge, fondé sur la solidarité distributive et commutative entre générations de travailleurs dans un système financier pay-as-you-go. Au premier plan, l'impact de la solidarité commutative entre les participants au régime d'assurance est observé, étant donné l'obligation de protection réciproque inhérente au modèle. Le régime d'assurance est influencé par des principes du rapport Beveridge (Anglais), qui propose une protection de la sécurité sociale plus universal et des prestations limitées à une certaine valeur. Subsidiairement, la solidarité distributive s'applique et n’empêche pas l’utilisation de la solidarité commutative, au contraire, favorise le dialogue institutionnel entre eux. L’influence du modèle anglais (système de Beveridge) de sécurité sociale au Brésil a eu pour effet d’accroître l’application du principe de solidarité distributive et donne à la société la responsabilité de soutenir de personnes assurées qui ne peuvent être maintenues uniquement par la commutativité du système. La solidarité distributive doit avant tout jouer dans les systèmes de protection sociale à caractère plus universel et dans la protection des prestations minimales. valeurs élevées de revenu. Sinon, il y aurait une solidarité inversée, dans laquelle la partie la plus pauvre de la population est appelée à contribuer au maintien des avantages d'un groupe avec de meilleures conditions financières. Par conséquent, plus la protection de la sécurité sociale est complète et plus la valeur des prestations est limitée, plus le système d’assurance pour l’application de la solidarité distributive. La compréhension des deux aspects de la solidarité et de son impact sur les droits aux prestations de la sécurité sociale, dans un pays en développement tel que le Brésil, permet une conformation plus complète des droits fondamentaux, du critère de la justice sociale, de la liberté réelle et de la l'égalité des chances, afin de garantir la dignité de la personne.

Références BIRD. Averting the old age crisis: policies to protect the old and promote growth. http://documents. worldbank.org/curated/pt/973571468174557899/pdf/multi-page.pdf. Accessed 08 Juin 2019 BRASIL. Instituto Brasileiro de Geografia e Estatística (IBGE). Indicadores de População Ativa. https://ww2.ibge.gov.br/home/estatistica/indicadores/trabalhoerendimento/pnad_continua/ primeiros_resultados/analise04.shtm. Accessed 05 Avril 2019 BRASIL. Instituto Brasileiro de Geografia e Estatística (IBGE). População. https://www.ibge.gov. br/apps/populacao/projecao/. Accessed 10 Mai 2019 BRASIL. Instituto Brasileiro de Geografia e Estatística (IBGE). Taxa de Fecundidade. https:// brasilemsintese.ibge.gov.br/populacao/taxas-de-fecundidade-total.html. Accessed 19 Juin 2019 BRASIL. Ministério da Economia. Secretaria de Previdência Social. Anuário Estatístico de 2017. http://www.previdencia.gov.br/dados-abertos/dados-abertos-previdencia-social/. Accessed 19 Juin 2019

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BRASIL. Presidência da República. Constituição da República. 1988. http://www.planalto.gov.br/ ccivil_03/constituicao/constituicaocompilado.htm. Accessed 19 Juin 2019 BRASIL. Supremo Tribunal Federal. Pleno. ADI 3.105. http://redir.stf.jus.br/paginadorpub/ paginador.jsp?docTP¼AC&docID¼363310. Accessed 11 Juin 2019 BRASIL. Supremo Tribunal Federal. RE 626.489. http://redir.stf.jus.br/paginadorpub/paginador. jsp?docTP¼TP&docID¼6760827. Accessed 10 Juin 2019 Das Neves I (1996) Direito da Segurança Social: Princípios Fundamentais numa Análise Prospectiva. Coimbra Editora, Coimbra de Mello CAB (1981) Eficácia das Normas Constitucionais sobre Justiça Social. In: Revista de Direito Público. São Paulo, vol 57–58, pp 50–88 Dupeyroux J-J (ed) (2005) Droit de la Sécurité Sociale. Dalloz, Paris Moreau P (2005) O Financiamento da Seguridade Social na União Europeia e no Brasil. Quartier Latin, São Paulo Nobre Junior EP (2000) O Direito Brasileiro e o Princípio da Dignidade da Pessoa Humana. In: Revista de Informação Legislativa. Senado Federal, Brasília, ano 37, janeiro-março, pp 188–220 Sarlet IW (1998) A Eficácia dos Direitos Fundamentais. Livraria do Advogado, Porto Alegre Tavares ML (2003) Previdência e Assistência Social: Legitimação e Fundamentação Constitucional Brasileira. Lumen Juris, Rio de Janeiro Tavares ML, Souza RJL (2016) O Princípio da Solidariedade Aplicado à Previdência Social. Revista Jurídica 1(42):277–293. http://revista.unicuritiba.edu.br/index.php/RevJur/article/ view/1495. Accessed 20 Mai 2019

Solidarity Across Generations in the Japanese Public Pension System Masahiko Ohta

Abstract This article discusses solidarity across generations in the Japanese public pension system from three aspects. First, how does the Japanese public pension system embody solidarity across generations? Second, how has the government succeeded in lowering the standard of the benefits of public pensions in an aging society with a low birth rate, which has caused population decline? Third, which legal considerations are required to control the standard of these benefits? Japan’s experience can serve as an example of the role and limitations of a public pension system with the pay-as-you-go principle based on solidarity across generations in a depopulating society.

1 Introduction The Japanese public pension system faces many challenges in an aging society with a low birth rate. One of the challenges is how to maintain solidarity across generations in the system—which practically operates on the pay-as-you-go principle by balancing the benefits and expectations of the elderly pensioners, on the one hand, and the burdens and expectations of the insured persons who pay contributions, on the other hand. In this article, I would like to demonstrate how the Japanese public pension system has dealt with this challenge. Before analyzing the pension system, I will describe the Japanese demographic situation and provide an overview of the system. Furthermore, I will explain the policy for lowering the standard of benefits and the current legal discussions on this policy in Japan.

I would like to thank Dr. Kazuko Kawamoto for helping me translate this article into English. This work was supported by JSPS KAKENHI, Grant Numbers 16H03554 and 17H02449. M. Ohta (*) Faculty of Law, The University of Tokyo, Tokyo, Japan e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_8

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Demographic Situation and Forecast Present State

The population of Japan was 126.435 million as of December 1, 2018, according to the Statistics Bureau of the Ministry of Internal Affairs and Communications. The elderly population (65 years old and above) was 35.611 million and accounted for 28.2% of the total population. The number of people in the working age (15–64 years old) was 75.437 million, representing 59.7% of the total population.1 The country’s population has been continuously decreasing since 2011, while the population of the elderly has been consistently increasing since 1950.2 The aging population had already become an important social problem by the 1970s. According to the Ministry of Health, Labour and Welfare, the total fertility rate was 1.44 children per woman in 2016 and 1.43 in 2017.3

1.1.2

Forecast

The National Institute of Population and Social Security Research estimated, in 2017, the population of Japan will be 88.08 million by 2065—a decrease of approximately 30%, compared to 2015 based on the medium-fertility projection.4 The rate of aging was 26.6% in 2015 and is expected to reach 38.4% by 2065.5

1.2

Participation of Elderly People in the Labor Market

The number of elderly people who participate in the labor market has been increasing for 14 years and reached 8.07 million in 2017—a proportion of 12.4%, which was an all-time high.6 In 2016 the participation rate for elderly people was 22.3%, which is the highest level among major countries.7 As for the form of employment, 74.4% of working elderly people were nonregular employees (excluding self-employed workers and company officers). The number of elderly nonregular employees rose from 1.41 million in 2007 to 3.16 million in 2017, doubling within 10 years. Both men and women reported that the

1

Statistics Bureau of the Ministry of Internal Affairs and Communications (2019), p. 1. Ministry of Internal Affairs and Communications (2018), p. 2. Japan witnessed its first decline in population between 2004 and 2005. 3 Ministry of Health, Labour and Welfare (2018a), p. 4. 4 National Institute of Population and Social Security Research (2017), pp. 1–2. 5 National Institute of Population and Social Security Research (2017), p. 3. 6 Ministry of Internal Affairs and Communications (2018), pp. 7–8. 7 Ministry of Internal Affairs and Communications (2017), p. 9. 2

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main reason they work as nonregular employees was they wanted to work at convenient times.8

1.3

Social Spending

Social spending, as defined by the Organization for Economic Co-operation and Development, was 119,638.4 billion yen (22.19% of the gross domestic product [GDP]) in the fiscal year 2016.9 The amount spent on the public pension system from the total social spending10 was 52,577.367 billion yen (9.7% of the GDP).11 Family benefits spending12 was 6974.663 billion yen13 (1.31% of the GDP),14 while unemployment expenditure15 was 864.941 billion yen16 (0.16% of the GDP).17 The proportion of social security expenditure has exceeded 50% and is still growing. Although the social expenditure percentage of GDP doubled in Japan from 1980 (10.33%) to 2016 (22.19%),18 the proportion in 2015 was almost the same as in the UK, greater than in the USA, but lower than in Sweden, France, and Germany.19 In addition, Japan is characterized by a huge budget deficit. It is remarkable the expenditure for elderly people, as defined by the Organization for Economic Co-operation and Development, accounted for 46% of the total social spending, 10.34% of the GDP, in 2016. This contrasts sharply with the smaller expenditure for families and children.20 Although the report of the National Council on Social Security System Reform published in August 2013 admitted such a sharp contrast reflected a structural problem in Japan,21 there has been little change to reflect this acknowledgment in the budget. 8

Ministry of Internal Affairs and Communications (2018), pp. 9–10. National Institute of Population and Social Security Research (2018), pp. 6–7, Tables 4 and 5. 10 Defined as all cash expenditures (including lump-sum payments) for old-age and survivors’ pensions (as defined by the Organization for Economic Co-operation and Development [OECD]). 11 Calculated by the author based on data from the National Institute of Population and Social Security (2018), p. 19, Summary Table 1. 12 Defined as public spending on family benefits, including financial support that is exclusively for families and children (as defined by the OECD). 13 National Institute of Population and Social Security (2018), p. 19, Summary Table 1. 14 National Institute of Population and Social Security (2018), p. 7, Table 5. 15 Public unemployment spending is defined as expenditure on cash benefits for people to compensate for unemployment (as defined by the OECD). 16 National Institute of Population and Social Security (2018), p. 19, Summary Table 1. 17 National Institute of Population and Social Security (2018), p. 7, Table 5. 18 National Institute of Population and Social Security Research (2018), p. 32, Table 2: Social expenditure by policy area as a percentage of gross domestic product, fiscal years 1980–2016. 19 National Institute of Population and Social Security Research (2018), p. 8, Figure 2 and Table 6. 20 National Institute of Population and Social Security Research (2018), pp. 6–7, Tables 4 and 5. 21 National Council on Social Security Reform (2013), pp. 6, 7–9, 19–20. 9

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2 The Pension System 2.1 2.1.1

The Pension System and Its Management Overview of the Pension System

Types of Pensions Japan has two types of compulsory public pension insurance: the National Pension system and the Employees’ Pension Insurance system. All residents of Japan participate in the former—which pays basic pension benefits to the elderly, the disabled, and, when the primary earner dies, the family. Workers employed by all businesses, including public sector organizations, participate in the latter, which provides additional benefits to the aforementioned groups. The fundamentals of this two-tiered system have been established by national law. The government introduced the present system in 1985. Before then, there were two separate pension systems. On the one hand, there was the Employees’ Pension Insurance system, in which employers were obligated to participate, and, on the other hand, there was the National Pension system—in which self-employed persons, including farmers, were obligated to participate. The 1985 reform transformed the two separate systems into the two-tiered system, but the former systems still have some influence, for instance, on the ways premiums are collected and funds are dealt with, as discussed below.22 There are also noncompulsory private pension insurance schemes—including the defined benefit corporate pensions, defined contribution corporate pensions, and defined contribution individual pensions. The government has cut taxes to encourage corporations and individuals to participate in private pension schemes to reduce the amount of public pension benefits.23

The Insured and Insurers Those Insured by the National Pension System Under Article 7 of the National Pension Act,24 there are three categories of insured persons in Japan. Category-I includes all residents of Japan aged 20–59 years who are not Category-II or Category-III insured persons. Category-II includes those who are enrolled in an employee pension insurance system. Category-III includes Category-II insured persons’ dependents who are aged 20–59 years. Consequently,

22

Act No. 34 of 1985. In addition, see Ohta (2015), pp. 150–154. Kikuchi (2018), p. 189; National Tax Agency (2018); Ministry of Health, Labour and Welfare (2018c). 24 Kokumin nenkin hou [National Pension Act], Act No. 111 of 1956. 23

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all residents of Japan can qualify to be recipients of a public pension. The system as a whole is called universal pension coverage. Those Insured by the Employees’ Pension Insurance System Almost all businesses in Japan fall under the category of businesses to which the Employees’ Pension Insurance Act applies (Article 6 of the Employees’ Pension Insurance Act).25 Workers aged up to 69 years who are employed by such a place of business are categorized as insured by the Employees’ Pension Insurance (Article 9 of the Employees’ Pension Insurance Act). Therefore, regular employees are typically insured under the Employees’ Pension Insurance. Insurers The government—specifically the Ministry of Health, Labour and Welfare—controls both the National Pension system and the Employees’ Pension Insurance system (Article 3 of the National Pension Act; Article 2 of the Employees’ Pension Insurance Act). The Japan Pension Service, established by the government, does most of the actual management (Clause 1 of Article 109-4, Clause 1 of Article 109-10, Clauses 1 and 2 of Article 74, and Clause 1 of Article 109-11 of the National Pension Act; Clause 1 of Article 104, Clause 1 of Article 100-10, Clauses 1 and 2 of Article 79, and Clause 1 of Article 100-11 of the Employees’ Pension Insurance Act; Article 27 of the Japan Pension Service Act).26

Overview of the Benefits of the Pension Programs The National Pension system provides Old-Age Basic Pension benefits to the elderly, Disability Basic Pension benefits to the disabled, and Survivors’ Basic Pension benefits to surviving dependents. The Employees’ Pension Insurance system provides Old-Age Employees’ Pension benefits to the elderly, Disability Employees’ Pension benefits to the disabled, and Survivors’ Employees’ Pension benefits to surviving dependents. However, the conditions for paying out benefits to the disabled and surviving dependents differ between the National Pension system and the Employees’ Pension Insurance. Regarding pension benefits for the elderly, which are the main focus of this article, the Old-Age Employees’ Pension benefits are paid in addition to the Old-Age Basic Pension benefits.

25 26

Kousei nenkin hoken hou [Employees’ Pension Insurance Act], Act No. 115 of 1954. Nihon nenkin kikou hou [The Japan Pension Service Act], Act No. 109 of 2007.

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Financing of the Pension System

Manner of Financing Expenditures for benefits of the National Pension system are financed by contributions and taxes, while expenditures for benefits of the Employees’ Pension Insurance system are financed by contributions only. I will first discuss the financing of the pension system as a whole before moving on to how to determine the amount of contributions to be paid by the insured individual and the government. Although the government established the Employees’ Pension Insurance system based on a fully funded scheme in 1942, the system could not work because of World War II and the postwar conditions. The government had to modify the scheme to a partly funded scheme after the war, with the intention of raising the premium rate in the future to reintroduce the fully funded scheme.27 However, the government could not raise the premium rate, though it did improve pension benefits by increasing the amount in the 1960s and 1970s and adopting cost-of-living adjustments and indexation by wage growth. Consequently, the fully funded scheme was never reintroduced. Furthermore, due to the declining birth rate and the aging population, the Employees’ Pension Insurance system now increasingly seems to operate on the pay-as-you-go principle. Even under these circumstances, the Employees’ Pension Insurance system has an abundant reserve fund, although not enough to reintroduce the fully funded scheme.28 The situation for the National Pension system has been much the same. The government intended to establish a fully funded scheme when it introduced the National Pension system in 1961. However, the premium rate was not raised to cover the improvement of pension benefits. Furthermore, it can be said that the National Pension system now operates on the pay-as-you-go principle. A key difference, however, is the National Pension system does not have a large reserve fund—having already suffered a financial problem before the 1985 reform, when the number of insured persons declined due to a change in the industrial structure caused by a falling number of self-employed persons and farmers.29 As indicated above, the Japanese pension system practically operates on the pay-as-you-go principle,30 and we must be aware of this when we later debate the legal problems associated with the reduction of pension benefits. If people of working age are obligatorily organized as the insured class that pays contributions to provide the pension benefits for the elderly and the pension system continues to

The 1954 wholesale reform significantly changed the financial scheme from the fully funded scheme to the intermediately funded scheme, with a provision to maintain the contribution rate at 3% and review the financial situation once every five years to raise the contribution rate. See Kikuchi (2018), pp. 136–137. 28 Kikuchi (2018), p. 142; Hori (2017), p. 637. 29 Ohta (2015), p. 150; Kikuchi (2018), p. 138. 30 See Kikuchi (2018), p. 142. 27

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operate in this way, then people currently of working age should expect to receive pension benefits subsequently provided by people of working age in the next generation. This is how intergenerational solidarity is expressed in terms of finance and law.

The Premium Rate and the Government’s Contributions The National Pension System Contributions by the insured and the government fund the pension benefits paid by the National Pension system. Only Category-I insured persons pay direct contributions to the National Pension system. As will be shown later, Category-II insured persons bear only the premium of the Employees’ Pension Insurance system, which provides expenditures for the National Pension system of both Category-II insured persons and Category-III insured persons who are dependent on Category-II insured persons. The amount of contributions to be paid by Category-I insured persons is theoretically fixed. Category-I insured persons started to pay 17,000 yen per month from April 2019 (Clause 3 of Article 87 of the National Pension Act). Before that, the amount from April 2017 was set as 16,900 yen. However, Act No. 114 of 2016 changed the amount to 17,000 yen. This change, as shown below, was due to the introduction of an exemption from the payment of contributions for mothers for four months before and after childbirth. To be precise, the nominal amount of contributions prescribed in the law was calculated based on the price level in 2004. The actual premium amount is roughly determined by multiplying the amount of the premium prescribed in the law by the nominal residual wage-change rate of the year; the rate in 2005 was set as 1.0 (Clauses 4 and 5 of Article 85).31 Certain categories of insured persons can be exempted from paying National Pension contributions. For example, recipients of pensions related to disability (the Disability Basic Pension), recipients of public assistance, and those who reside in institutions set up by the Ministry of Health, Labour and Welfare are automatically exempted from paying contributions, except for contributions that have been paid already (Clause 1 of Article 89 of the National Pension Act and Article 74-2 of the Ministerial Order by the Minister of Health and Welfare, No. 12 of 1960). Insured persons can request an exemption from paying all, three-quarters, half, or a quarter of the contributions if their household income is less than the amount stipulated according to the number of dependents in the household (Articles 90 and 90-2 of the National Pension Act). Dependent students can postpone payment if their income is low enough. The insured can retroactively pay exempted or postponed contributions with the approval of the Minister of Health, Labour and Welfare for up to 10 years before the approval (Article 94). As mentioned above, Category-I insured

31

See Hori (2017), p. 557.

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mothers are exempted from the payment of contributions for four months before and after childbirth (Article 88-2).

The Employees’ Pension Insurance System The premium of the Employees’ Pension Insurance for monthly wages is calculated by multiplying the standard monthly remuneration, which is a rounded amount of monthly wages, by the contribution rate (Article 20 and Clause 3 of Article 81 of the Employees’ Pension Insurance Act). The premium for bonuses is calculated by multiplying the standard bonus, which is a rounded amount of bonuses (Article 24-4 and Clause 3 of Article 81), by the contribution rate. The contribution rate has been fixed at 18.3% since September 2017 (Clause 4 of Article 81). The employer pays half of the premiums, and the employee pays the rest (Clause 1 of Article 82). The employer delivers the total premium (Clause 2 of Article 82). Insured persons and their employers are exempted from contributions during the periods of maternity leave and childcare leave (Articles 81-2 and 81-2-2).

Appropriating Contributions for Benefits and Government Contributions Fiscal Resources of the Basic Pension: Contributions for the Basic Pension and Government Contributions The National Pension pays various benefits not only out of contributions collected from Category-I insured persons but also from contributions transferred from the Employees’ Pension Insurance (contributions for basic pension, Article 94-2 of the National Pension Act) and government tax revenue (government contributions). The relationship between these three kinds of contributions is determined as follows. The average amount of basic pension benefits per person per year (p) is calculated by dividing the total amount of benefits for a year by the sum of the number of Category-I insured persons (a), the number of Category-II insured persons (b), and the number of Category-III insured persons (c). The result of multiplying (p) by (a) is the amount of contributions the National Pension has to bear. The result of multiplying (p) by the sum of (b) and (c) is the amount of contributions that should be transferred from the Employees’ Pension Insurance to the National Pension (Article 94-3 of the National Pension Act). The government is responsible for half of each contribution (Clause 1 of Article 85 of the National Pension Act; Article 80 of the Employees’ Pension Insurance Act). Thus, half of the basic pension benefits are paid by tax revenue. Benefits of the Employees’ Pension Insurance In contrast to the above, various benefits paid by the Employees’ Pension Insurance are provided by contributions to the Employees’ Pension Insurance only. There is no government expenditure here.

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Administration and Management of Pension Funds As mentioned above, because of the circumstances surrounding the shift from the fully funded scheme to the pay-as-you-go principle, the Japanese public pension, and the Employees’ Pension Insurance in particular, has a considerable reserve fund. Specifically, the Employees’ Pension Insurance had about 155 trillion yen and the National Pension had 9 trillion yen at the end of the 2017 fiscal year.32 These funds are managed by the Government Pension Investment Fund (GPIF), an independent administrative agency established by the Act on GPIF. The GPIF manages funds on the market based on entrustment by the Minister of Health, Labour and Welfare (Article 76 of the National Pension Act; Article 79-3 of the Employees’ Pension Insurance Act). The GPIF is an incorporated administrative agency established by the government and acts under the supervision of the government. The GPIF manages pension funds in accordance with the provisions of the Act on GPIF,33 the National Pension Act, and the Employees’ Pension Insurance Act. The GPIF’s duty is to manage and invest the funds safely and effectively with a long-term perspective and exclusively for the interests of insured persons (Article 75 of the National Pension Act; Article 79-2 of the Employees’ Pension Insurance Act; Clause 2 of Article 20 and Clause 1 of Article 21 of the Act on GPIF). While the president of the GPIF, as the chief executive officer, was entitled to conduct management in the beginning, the 2016 reform brought a significant change to the institution’s structure, introducing a management committee with the power to decide on basic matters and supervise the president (Clause 1 of Article 5-3 of the Act on GPIF) and establishing an audit committee in place of the former auditor (Article 5-8). The reform aimed to increase credibility in the eyes of the public through the introduction of collegiate bodies, the separation of decision-making and supervision from execution, and the strengthening of the monitoring system.

Fixed Amount of Contributions, Standard of Benefits, and Review of the Financial Situation As discussed earlier, the amount of monthly contributions is currently fixed by law. This means policymakers decided to maintain the public pension system based on the fixed amount of monthly contributions, adjusting the amount of benefits using the so-called macroeconomic indexation. However, macroeconomic indexation has its limits, as discussed below, because the standard of benefits is also regulated. The current system is based on the assumption that a certain standard of benefits can be provided, even after the completion of macroeconomic indexation, by maintaining the amount of contributions and eliminating reserve funds; thus, the balance of

32 33

Ministry of Health, Labour and Welfare (2018b), p. 8. Act No. 109 of 2017.

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pension finance would be stable in about 100 years. If the balance is expected to be lost, necessary measures must be taken. To check the stability of pension finance, the government must review its financial situation at least once every five years and publish the results and prospects (Articles 4-2 and 4-3 of the National Pension Act; Articles 2-3 and 2-4 of the Employees’ Pension Insurance Act).

2.1.3

Competence in Constructing and Managing the Pension System

As explained above, the government developed the public pension system and manages it by itself or by using corporate bodies under government supervision. For example, although the Japan Pension Service collects contributions and pays benefits, laws determine the amounts of both, and the Japan Pension Service cannot change them. Furthermore, administrative organs other than the Parliament play a central role in deciding pension policies, including the amounts of contributions and benefits, while laws passed by the Parliament construct the public pension system. For making pension policies requires long-term perspectives and financial knowledge, for which administrative organs are better trained. It is unlikely the Parliament will make concrete pension policies by itself, although it does have to vote on pension bills submitted by the Cabinet. In addition, it is not easy to tell which administrative organ is more powerful in making pension policies. The Ministry of Health, Labour and Welfare is responsible for the pension system, but it may not always achieve its goals against the will of the Ministry of Finance, which is responsible for financial policies in general.

2.2

Old-Age Pension Benefits and Other Related Issues

The primary public pension benefits for the elderly are the Old-Age Basic Pension benefits provided by the National Pension system and the Old-Age Employees’ Pension benefits provided by the Employees’ Pension Insurance system. Here, I will present an overview of these two pension benefits and related issues.

2.2.1

Old-Age Basic Pension and Old-Age Employees’ Pension

The Age to Start Receiving Pension Benefits General Principle and Raising the Age to Start Receiving Pension Benefits The pension age was fixed at 65 years for both the Old-Age Basic Pension benefits and the Old-Age Employees’ Pension benefits by the 1985 reform. Pensioners need to have paid contributions or been exempted from payment for more than 10 years

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(Article 26 of the National Pension Act; Article 42 of the Employees’ Pension Insurance Act). However, as the pension age for the Old-Age Employees’ Pension was 60 years for men before the 1985 reform, the government feared a backlash against raising the pension age and began providing the special benefits to pensioners between ages 60 and 65 to compensate for the loss caused by the radical reform. Subsequently, the government has gradually raised the pension age of the special benefits several times. However, the process of raising it has not been completed yet, as I will discuss later. The special benefits of the Old-Age Employees’ Pension are being gradually abolished as the pension age is being raised. The process of raising the pension age to 65 years for men will be completed in 2025 and for women in 2030. Earlier and Later Reception of Pension Benefits Insured persons can begin receiving pension benefits earlier or later if they wish but not earlier than age 60 years and not later than age 70 years (for earlier reception: Articles 9-2 and 9-2-2 of the Supplementary Provisions of the National Pension Act; Article 7-3 and Clause 1 of Article 13-4 of the Supplementary Provisions of the Employees’ Pension Insurance Act; for later reception: Article 28 of the National Pension Act; Article 44-3 of the Employees’ Pension Insurance Act). When insured persons choose to receive pension benefits later, the amount of their benefits increases by 0.7% per month of the belated period (Clause 3 of Article 28 of the National Pension Act; Clause 4 of Article 44-3 of the Employees’ Pension Insurance Act; Clause 1 of Article 4-5 of the Cabinet Orders of the National Pension Act; Article 3-5-2 of the Cabinet Orders of the Employees’ Pension Insurance Act). When insured persons choose to receive pension benefits earlier, the amount of their benefits decreases by 0.5% per month of the advanced period (Clause 4 of Article 9-2 of the Supplementary Provisions of the National Pension Act; Clause 4 of Article 7-3 and Clause 4 of Article 13-4 of the Supplementary Provisions of the Employees’ Pension Insurance Act; Article 12 of the Cabinet Orders of the National Pension Act; Articles 6-3 and 8-2-3 of the Cabinet Orders of the Employees’ Pension Insurance Act). The increase or decrease in benefits continues for life.

Amounts of Pension Benefits Old-Age Basic Pension The amount of Old-Age Basic Pension benefits amounts to 780,900 yen per year if the insured person has paid contributions for 40 years (480 months). This was the standard amount in 2004, and today, insured persons receive the adjusted amount, as discussed below. The amount of the Old-Age Basic Pension benefits decreases by the length of exemption or postponement if Category-I insured persons have been exempted from the payment of contributions or have postponed the payment. However, from April

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1, 2019, the exemption for four months before and after childbirth no longer causes a decrease in benefits (Article 26 and Clause 1 of Article 5 of the National Pension Act). Old-Age Employees’ Pension Insurance The amount of Old-Age Employees’ Pension Insurance benefits is determined by multiplying the average standard remuneration by the multiplying factor for benefits (0.005481) and by the number of months of the period of insurance (Clause 1 of Article 43 of the Employees’ Pension Insurance Act). The average standard remuneration is determined by dividing the sum of the amount obtained when the monthly standard remuneration and the standard bonus remuneration are multiplied by the reevaluation rates for each month, respectively, by the number of months of the period of insurance (in parentheses in Clause 1 of Article 43 of the Employees’ Pension Insurance Act). The Employees’ Pension Insurance Act establishes reevaluation rates for each month according to age groups. For example, those born after April 2, 1951, share the same reevaluation rate (Clause 1 of Article 4 and appended table in the Cabinet Order on Adjustment Rates in the National Pensions Act and so on,34 which is based on Clause 5 of Article 43-2 and Clause 4 of Article 43-3 of the Employee’s Pension Insurance Act). The purpose of the reevaluation rates is to adjust past remunerations to the present value in response to changing prices and wages.35 Therefore, the average standard remuneration translates to the average monthly value of gross remuneration of the whole period of insurance, which is adjusted for prices at the time of the reception of benefits. The reevaluation rates are automatically revised by multiplying them by indexation, as I will discuss later. The recipients of Old-Age Employees’ Pension Insurance benefits who support a spouse aged up to 64 years, children aged up to 17 years, or children aged up to 19 years with a type of disability established by law receive extra benefits if their period of insurance is more than 20 years (Article 44 of the Employees’ Pension Insurance Act; Clause 2 of Article 60 of the Supplementary Provisions of Act No. 34 of 1985). Elderly Employment and Suspension of Payment of Pension Benefits Under Japanese law, reaching a certain age is a condition for the commencement of Old-Age Pension benefits payments, while retirement (and the resulting loss of income) is not. However, if recipients of Old-Age Employees’ Pension Insurance benefits work as employees qualified as insured, they shall be treated as insured under the Employees’ Pension Insurance until they reach the age of 70 (see section ‘Those Insured by the Employees’ Pension Insurance System’). The contributions 34 35

Cabinet Order No. 92 of 2005. Hori (2017), p. 405.

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paid by the insured persons while they receive pension benefits increase the amount of the Old-Age Employees’ Pension Insurance benefits by revising the average standard monthly remuneration and extending the period of insurance after their retirement (Clauses 2 and 3 of Article 43 of the Employees’ Pension Insurance Act). Such insured persons who receive Old-Age Employees’ Pension Insurance benefits may be suspended from receiving part or all of the benefits according to the sum of wages and benefits. Specifically, if the sum of the basic monthly amount of the Old-Age Employees’ Pension Insurance benefits (amount before adding benefits due to, for example, family members) and the total monthly remuneration amount (obtained by adding the monthly average amount of the annual standard bonus remuneration and the standard monthly remuneration amount) exceeds 480,000 yen,36 the basic monthly amount shall be suspended for half of the excess amount.37 However, the Old-Age Basic Pension benefits will not be suspended no matter how much the recipient earns by working. The evaluation of the suspension of payment of the Old-Age Employees’ Pension Insurance benefits described above is controversial because a condition for starting payment is reaching a certain age but not the loss of wages due to retirement. Some experts have strongly criticized the system of suspending payments because (1) it has the same effect as imposing an income limit on recipients, although the pension system is based on the insurance principle, and (2) it provides disincentives for the employment of elderly people, which should be promoted even more in the future in an aging society with a declining population.38 In contrast, others firmly support the system, arguing that reaching a certain age is determined as a condition for the start of pension benefits payments because it is considered to be a typical reason for the loss of income. There is no doubt wages earned by pensioners as employees reduce the needs to be fulfilled by pension benefits in proportion to the amount of wages earned.39 In a society such as Japan, with a declining population and a low birth rate, decreasing the amount of pension benefits for working pensioners with higher wages is one of the few ways to ease the burden of the contributions paid by workers below the pension age and, therefore, the burden on intergenerational solidarity.40 However, the current system of suspending payment can be considered inconsistent, for it is only applied to the recipients who are employed by the businesses covered by Employees’ Pension Insurance, not recipients who earn income as self-employed 36 This amount is determined based on the price level in 2004 and is adjusted for the real price change rate. For the fiscal year 2019, it is 470,000 yen (Clause 1 of Article 5 of the Cabinet Order on Adjustment Rates in the National Pensions Act and so on (Cabinet Order No. 92 of 2005)). 37 There is another system of suspending payments for special benefits to pensioners between the ages of 60 and 65. However, this paper does not discuss this system because the special benefits will be completely abolished for men in 2025 and for women in 2030 (see section ‘General Principle and Raising the Age to Start Receiving Pension Benefits’). 38 Seki (2017), pp. 52–53. 39 Hori (2017), pp. 395–396. 40 Ohta (2019), p. 17.

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persons.41 Another possibility for reducing the burden on intergenerational solidarity is by strengthening income taxation on elderly people who receive pension benefits and earn wages as employees, rather than suspending paying benefits. This system will continue to be a subject of discussion. In fact, the current government suspects this system is impeding employment incentives and has decided to review the system, including the possibility of its future abolition.42

Adjustment of Benefits Based on Indexation To secure income, the government adjusts pension benefits based on indexation to maintain the actual value of benefits. However, one cannot argue that such an adjustment aims only to maintain the actual value of benefits. To sustain the public pension system, the government needs to balance benefits with contributions from people of working age in an aging society with a falling birth rate. The adjustment of benefits based on indexation is automatically carried out every year in accordance with the law. There is no need for the government to amend the law to carry out each adjustment. Cost-of-Living Adjustments and Indexation by Wage Growth The current laws establish how to adjust (or refrain from adjusting) the Old-Age Basic Pension benefits and the Old-Age Employees’ Pension Insurance benefits (Articles 27-2 and 27-3 of the National Pension Act; Articles 43-2 and 43-3 of the Employees’ Pension Insurance Act).43 In general, benefits are to be adjusted based on the rate of nominal residual income change for the first three years of receiving benefits and the rate of real price change beginning in the fourth year. By definition, the rate of real price change multiplied by the rate of real wage change and the rate of disposable income change is the rate of nominal residual income change. Therefore, it can be said that benefits are adjusted based on the three rates stated above for the first three years to maintain real purchasing power, as well as profit from economic growth; the adjustment beginning in the fourth year aims to maintain real purchasing power only. In particular, if both the rate of the real price change and the rate of nominal residual income change exceed 1.0 and the latter is smaller than the former, adjustments based on the rate of nominal residual income change continue after the third year. If the rate of real price change exceeds 1.0 and the rate of nominal

41

Ohta (2012), pp. 334–335. Basic Policies for Economic and Fiscal Management and Structural Reform 2019 (Cabinet decision, June 21, 2019), p. 14. 43 More precisely, Articles 27-2 and 27-3 of the National Pension Act and Articles 43-2 and 43-3 of the Employees’ Pension Insurance Act determine how the benefits should be adjusted when there is no cabinet order setting the start of the so-called macroeconomic indexation. 42

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residual income change falls behind 1.0, no adjustment takes place. In this way, the government attempts to balance pension benefits for recipients with contributions paid by people of working age (Clause 2 of Article 27-3 of the National Pension Act; Clause 3 of Article 43-3 of the Employees’ Pension Insurance Act). The 2016 amendments44 will introduce some modifications to the present indexation. Adjustments after three years will be based on the lesser of the rate of real price change and the rate of nominal residual income change (Article 27-3 of the National Pension Act and Clause 1 of Article 43-3 of the Employees’ Pension Insurance Act, which will go into effect on April 1, 2021). Therefore, if the rate of real price change is lower than the rate of nominal residual income change, benefits are to be adjusted based on the former to maintain real purchasing power. If the rate of real price change is greater than the rate of nominal residual income change, benefits are to be adjusted based on the latter to cut real purchasing power, on the one hand, and avoid an increase of contributions, on the other hand. These amendments mean the government wants to maintain, more thoroughly than before, real purchasing power within the limits of economic growth. Macroeconomic Indexation The government introduced the so-called macroeconomic indexation in 2004 to adjust pension benefits based on changes in life expectancy and population structure (Articles 27-4 and 27-5 of the National Pension Act; Articles 43-4 and 43-5 of the Employees’ Pension Insurance Act).45 The indexation adjustment rate is determined by multiplying (i) the fixed-rate, 0.997, established by law and based on the prediction of the extension of life expectancy, by (ii) the cube root of the ratio of the total number of insured persons three years prior to the year of receiving benefits to the total number of insured persons five years prior to the year of receiving benefits, which gives an average rate of change in the total number of insured persons for three years. Therefore, the indexation adjustment rate could be called the population-structure adjustment rate based on its character.46 In an aging society with a falling birth rate, the average rate of change in the total number of insured persons, as shown by (ii), is expected to fall below 1.0, meaning the indexation adjustment rate should also fall below 1.0. Benefits are adjusted by multiplying the indexation adjustment rate by the rate of the real price change or the rate of nominal residual income change, as discussed above. However, at the introduction of macroeconomic indexation in 2004, if the rate of the real price change or the rate of nominal residual income change fell below 1.0, macroeconomic indexation did not

44

Act No. 114 of 2016. Act No. 104 of 2004. More precisely, Articles 27-4 and 27-5 of the National Pension Act and Articles 43-4 and 43-5 of the Employees’ Pension Insurance Act determine how the benefits should be adjusted as a whole during the period when the government must conduct macroeconomic indexation. 46 Hori (2017), p. 265. 45

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take place to maintain the nominal amount of pension benefits. In addition, macroeconomic indexation did not occur if the result of multiplying the indexation adjustment rate and the rate of the real price change or the rate of nominal residual income change fell below 1.0. Consequently, the indexation adjustment rate is important for reducing the growth of benefits when the cost of living and nominal residual income rise. The government must conduct macroeconomic indexation to maintain sound pension financing for about 100 years if the sustainability of the pension system faces the threat of a deficit. The concrete dates for starting and ending the indexation are to be established by a cabinet order according to the law (Article 16-2 of the National Pension Act; Article 34 of the Employees’ Pension Insurance Act). In reality, although the government already began adjusting the fiscal balance in 2005,47 it has not yet decided the date for ending the adjustment. Moreover, for two interconnected reasons, the government could not carry out macroeconomic indexation as it had planned. First, in spite of deflation, the government did not reduce the amount of benefits by an adjustment based on the rate of real price change between 2000 and 2002, which resulted in an excessive amount of benefits.48 Second, under those circumstances, the Parliament passed a law according to which the government should begin macroeconomic indexation when the increase in the cost of living covered the excessive benefits,49 but neither the cost of living nor wages had risen. This situation consequently made the government fear macroeconomic indexation would last too long and eventually affect the financial balance between generations negatively. Therefore, the government reformed the law in 2012 to reduce the amount of benefits regardless of the rate of real price change between 2013 and 201550 and finally conducted macroeconomic indexation in 2015. However, as the economic situation has not improved since then, the government could not carry out macroeconomic indexation in 2016 and 2017. Furthermore, intending to prevent the financial balance between generations from worsening due to conducting macroeconomic indexation for too long, the government introduced a carry-over system in the 2016 reform, which took effect on April 1, 2018.51 Under the carry-over system, when the rate of real price change or the rate of nominal residual income change does not exceed 1.0 or when the result of multiplying the indexation adjustment rate and the rate of real price change or the rate of nominal residual income change does not exceed 1.0, macroeconomic indexation is not to be performed, although the unrealized indexation will only be delayed until such a time when the adjustment to raise the amount of benefits can be carried out based on the rate of real price change or the rate of nominal residual income change (Articles 27-4 and 27-5 of the National Pension Act; Articles 43-4

47

Article 4-2-2 of the Cabinet Order No. 184 of 1959. Act No. 34 of 2000; Act No. 13 of 2001; Act No. 21 of 2002; Act No. 19 of 2003. 49 Act No. 104 of 2004. 50 Act No. 99 of 2012. 51 Act No. 114 of 2016. 48

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and 43-5 of the Employees’ Pension Insurance Act). In April 2019 macroeconomic indexation was carried out with double adjustments for 2018 and 2019 at once under the carry-over system. However, after the introduction of the carry-over system, the nominal amount of benefits itself will not be reduced by macroeconomic indexation. The Parliament has refrained from more directly reflecting the demographic changes in the amount of benefits. Only the adjustment based on the rate of the real price change or the rate of nominal residual income change can reduce the nominal amount.

2.2.2

Other Possible Benefits for the Elderly

The elderly can receive two benefits in addition to the public pension. One is a supplementary allowance for recipients with low Old-Age Pension benefits, and the other is public assistance.

Benefits for Recipients with Low Old-Age Pension Benefits The government plans to provide pensioners with a supplementary allowance, funded by taxes if the sum of their public pension benefits and other income does not exceed an amount established by a cabinet order. The supplementary allowance was established by the Act on the Payment of Supplementary Allowance for Pensioners (Act No. 102 of 2012). The act was to be put into effect on October 1, 2015, but was postponed due to a postponement of the sales tax rate raise. The Cabinet raised the sales tax rate on October 1, 2019, and the act went into effect. This supplementary allowance is formally called the Supplementary Allowance for Old-Age Pensioners. The monthly amount of the allowance is calculated by adding the following two numbers: (1) the number obtained by multiplying 5000 yen by the number obtained by dividing the number of months of contributions to the National Pension by 480 and (2) the number obtained by multiplying one-sixth of the full monthly benefit of the Old-Age Basic Pension (about 10,000 yen) by the number obtained by dividing the number of months of exemption from contributions by 480 (Articles 3 and 4 of the Act of Supplementary Allowance for Pensioners). Therefore, those lower-paid pensioners who have contributed more and, consequently, been paid more benefits from the Old-Age Basic Pension would receive a larger allowance. Furthermore, if the amount of their public pension benefits and other income does exceed a certain amount but the excess is small enough, pensioners will receive the Exceptional Supplementary Allowance for Supporting the Needs of Elderly Pensioners. The monthly amount is calculated by multiplying 5000 yen by the number obtained when the number of months of contributions is divided by 480, although the amount is adjusted according to the level of income of the pensioner (Articles 10 and 11 of the Act of Supplementary Allowance for Pensioners; Articles 6 and 7 of the Cabinet Order No. 364 of 2018). This adjustment prevents the sum of the allowance and benefits from exceeding the benefits of

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pensioners who are not entitled to receive the allowance. Those who seek to receive either of the allowances need to have been exempted from contributions. If pensioners simply have not contributed, they are not able to receive the full amount of the allowances. The government, fearing that providing allowances without such restrictions would reduce the incentive for contribution, wants to maintain the fairness of the public pension system. Thus, these allowances are under the influence of the public pension system as the social insurance system—which links benefits and contributions in principle, although the allowances are funded by the tax.

Public Assistance Clause 1 of Article 25 of the Japanese constitution states, “All people shall have the right to maintain the minimum standards of wholesome and cultured living.” Thus, the public assistance system was established to provide all people with assistance to maintain the minimum standards of living when they cannot lead such a life by making the most of their abilities and property (the Public Assistance Act (Act No. 144 of 1950)). Because of the existence of a universal public assistance system, there is no exclusive public assistance system for elderly people. The supplementary allowance for pensioners with low Old-Age Pension benefits, as discussed in section ‘Benefits for Recipients with Low Old-Age Pension Benefits’, does not, by itself, aim to secure the minimum standard of living. If pensioners cannot maintain the minimum standard of living by receiving the Old-Age Pension benefits and the supplementary allowance, they may receive assistance based on the Public Assistance Act.52 The nonpayment of contributions to the public pension systems does not result in a reduction of benefits from public assistance.

52

Elderly people were provided with supplementary support in addition to regular public assistance within the framework of assistance based on the Public Assistance Act. However, the government gradually abolished the supplementary support between 2004 and 2006 on the grounds that such an addition could not be justified. The Supreme Court of Japan concluded the gradual abolishment was not unconstitutional. See Judgment of the Third Court by the Supreme Court, February 28, 2012, Minshu [Supreme Court reports (civil cases)], 66(3):1240; Judgment of the Second Court by the Supreme Court, April 2, 2012, Minshu [Supreme Court reports (civil cases)], 66(6):2367.

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3 Changes in the Standard of Benefits and Its Legal Restrictions 3.1

Lowering the Standard of Benefits Through Legal Reforms

Because the standard of pension benefits has been established by law in Japan, as described above, the Parliament must pass laws to lower it. Here, I will provide some examples of cases where the standard of benefits was lowered. First, the 1985 reform, which established the basic structure of the present system, accompanied a lowering of the standard of benefits. The 1985 reform extended the period of contributions to receive the full amount of benefits from the Old-Age Basic Pension to 40 years. The reform also lowered the standard of the Old-Age Employees’ Pension benefits by structuring the standard of benefits on the assumption of 40 years of contributions. Second, the pension age has been raised. The 1994 reform resolved that the pension age for receiving the fixed part of the special benefits of the Old-Age Employees’ Pension should be gradually raised from 60 to 65 years by one year every three years, beginning from 2001 for men and 2006 for women.53 The 2000 reform resolved that the pension age for receiving the part of the Old-Age Employees’ Pension special benefits proportional to the level of income should be gradually raised from 60 to 65 years by one year every three years, beginning from 2013 for men and 2018 for women.54 Third, the 2000 reform lowered the multiplying factor for benefits and introduced the present policy on the adjustment of benefits—that is, carrying out adjustments based on the rate of the real price change and not based on the rate of nominal residual income change after three years of receiving benefits. The 2004 reform introduced macroeconomic indexation to adjust the standard of benefits, keeping the standard of contributions for the future. This adjustment was significant because it partly adopted the defined contribution pension method for the adjustment of benefits.55 However, macroeconomic indexation has hardly been carried out. The government, in this awkward situation, decided in the 2012 reform to reduce the amount of benefits by 2.5% between 2013 and 2015. Furthermore, in 2016 the government introduced the carry-over system mentioned above to enhance the function of macroeconomic indexation. The 2016 reform also endorsed, as a basic rule, an adjustment, based on the rate of real price change, only within the limits of the rate of nominal residual income change. The government has to apply this rule 53

Act No. 95 of 1994. Act No. 18 of 2000. In this way, the process of raising the pension age to 65 for men will be completed in 2025 and for women in 2030, as discussed in section ‘General Principle and Raising the Age to Start Receiving Pension Benefits’. For the pension age raise according to the 1994 reform and the 2000 reform, see Ohta (2015), pp. 155–156 as well. 55 See Kikuchi (2018), p. 139. 54

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only when the rate of real price change is higher than the rate of nominal residual income change—that is, when the economic situation becomes worse. Even if this rule is limited in its application in this way, the 2016 reform clearly restricted the importance of maintaining real purchasing power and thereby made a reduction of benefits possible. We can divide past reforms into two periods with distinct characteristics. Before the 2004 reform, which introduced macroeconomic indexation, Japanese law tended to avoid lowering benefits already being received by pensioners. This characteristic appears to promote the postponement of the pension age and extension of the period of contributions by the insured to receive the full amount of benefits. The reduction of the multiplying factor for benefits established by the 1985 and 2000 reforms could have been applied to the benefits already received. However, to protect the expectation of receiving pension benefits in exchange for the contributions paid, the reduction was gradually done according to the date of birth, and the 2000 reform especially took the measure of guaranteeing the prior amount of benefits to prevent radical change.56 The 2004 reform was an important turning point because it intended to reduce the standard of benefits already provided via macroeconomic indexation. In addition, the 2012 reform resolved to lower the amount of benefits already received, and so did the revision of macroeconomic indexation in the 2016 reform.

3.2

Restrictions on Price Reduction: Pension Replacement Rates

There is broad agreement that the reduction of benefits is limited by particular laws (discussed below) and the constitution (discussed in the next section). The 2004 reform introduced the minimum standard of benefits. According to this reform, the sum of the amount of the Old-Age Employees’ Pension benefits a male pensioner of 65 years begins to receive when he has been employed for 40 years while earning average wages and the full amount of the Old-Age Basic Pension benefits for him and his wife (hereafter, the model pension amount) may not fall below 50% of the net income after taxes and other public charges of Category-II insured males of active age with the average wages (Clause 1 of Article 2 of the Supplementary Provisions of Act No. 104 of 2004). If the model pension amount is expected to be less than the minimum amount, the government has to undertake certain measures, including the suspension of macroeconomic indexation, to address this and then examine possible revisions of benefits and cost burdens to take further steps (Clauses 2 and 3 of Article 2 of the Supplementary Provisions of Act No. 104 of 2004).

56

See Hori (2017), pp. 245, 405–406.

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As shown above, the Japanese pension policy has used pension replacement rates of the model pension amount as the standard for policy-making. According to the 2014 financial inspection, the replacement rate of the model pension amount was 62.7%.57 Such a high rate was due to the absence of macroeconomic indexation to reduce the amount of benefits, which eventually led to the 2016 reform. However, we should not strongly expect pension replacement rates would play an important role in decision-making in pension policy for the following reasons. First, because the amount of Old-Age Basic Pension benefits is fixed regardless of previous wages because of the consideration the benefits should cover basic everyday needs, the pension replacement rate of a household of a pensioner who has earned lower wages in his working years than the average wages is higher than the pension replacement rate of the model pension amount,58 but the amount of benefits of such pensioner’s household is lower than the model pension amount. Second, self-employed workers and nonregular workers will only receive Old-Age Basic Pension benefits, so we cannot use the same standard of the pension replacement rates of the model pension amount for judging whether their pension replacement rates are appropriate. For the self-employed, because they do not have a fixed retirement age, the amount of their benefits can be evaluated by considering the greater possibility that they might continue to work. On the other hand, nonregular workers cannot expect such continuity of their work and can have longer periods of exemption from contributions and of not contributing, thus being noneligible to receive the full amount of the Old-Age Basic Pension benefits.59

3.3

Constitutionality of Lowering the Standard of Benefits

Legal restrictions have their limits. For example, the legislature can change the target of the pension replacement rates from 50% to 40%. Whether such legislative changes are unconstitutional is to be decided by the court. Therefore, we have to discuss the following two questions: 1. Does any constitutional clause set limits on lowering the standard of benefits? 2. Does any constitutional clause justify lowering the standard of benefits?

57

Ministry of Health, Labour and Welfare (2014), p. 13. Here, we can find the Old-Age Basic Pension has an effect of vertical redistribution from the insured earning more to the insured earning less. 59 Based on the OECD data, the net replacement rate of the mandatory old-age pension of male pensioners with average earnings was 36.8% in 2018. See OECD (2019), p. 155. 58

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Possible Restrictions on Lowering the Standard of Benefits

Article 25 of the Japanese constitution holds special significance for the social security system. As mentioned earlier, Clause 1 of the article states, “All people shall have the right to maintain the minimum standards of wholesome and cultured living.” Clause 2 states, “In all spheres of life, the State shall use its endeavors for the promotion and extension of social welfare and security and of public health.” Because Japan has a comprehensive public assistance system, as discussed above, and thereby secures minimum standards of living, the Old-Age Pension system as a social insurance system is unlikely to be unconstitutional and invalid in the scope of Clause 1 of Article 25 when it does not meet a certain fixed standard.60 Furthermore, the reduction of the standard of benefits is unlikely to be judged as contravening Clause 1 of Article 25. If the legislature lowers the standard of benefits without rational consideration, the court might judge it as unconstitutional in light of Clause 2. Nonetheless, this possibility would be limited because Clause 2 obligates the legislature to merely make efforts in establishing a social security system, and the Supreme Court of Japan grants much discretion to the legislature on social security policies.61 Some researchers say Article 29, which determines the protection of property rights, may restrict the lowering of the standard of benefits as well. The general understanding in Japan is the protection of property rights protects all rights to property interests, including claims to government benefits.62 The Old-Age Basic Pension benefits and Old-Age Employees’ Pension benefits fall under the scope of protection, so lowering the standard of benefits could be restricted because it could constitute ex post facto changes to pension benefits as property rights. However, the Supreme Court of Japan has never clearly stated the right of receiving public pension benefits should be guaranteed under the principle of the protection of property rights. Indeed, the Supreme Court has never admitted ex post facto changes to the substance of property rights should not be allowed. However, it has stated that because Clause 2 of Article 29 “prescribes that the substance of property rights should be established by law so as to be compatible with public welfare,” the constitutionality of ex post facto changes to the substance of property rights “should be decided based on whether a specific change should be allowed as a rational constraint in overall consideration of the characters of property rights based on already established laws, the extent of the change, the characters of public interests to be secured by the change, and so forth.” The government does not deny it should lower the standard of benefits within the framework of the Supreme Court’s interpretation.63

60

Nakano (2012), pp. 199–200. Judgment of the Grand Bench of the Supreme Court, July 7, 1977, Minshu [Supreme Court reports (civil cases)], 36(7):1235. In addition, see Nakano (2012), p. 200. 62 See Hori (2017), p. 244; Shishido (2016), pp. 353–354; Takami (2012), p. 482. 63 See Hori (2017), pp. 245–246. 61

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Possible Justifications for Lowering the Standard of Benefits

As shown above, a reduction of benefits requires consideration of public interests (which serve as both the objects and causes of it), the substance of which must be examined closely. The government is trying to justify the current reduction of benefits by citing the need for not increasing the contributions of people of working age from the point of view of intergenerational justice. The question is whether this justification has constitutional underpinnings. In general, the answer is yes. Insured people of working age reserve the right to have their interests considered equally with the interests of pensioners, according to the principle of equal treatment (Clause 1 of Article 14 of the Japanese constitution) and the fundamental principle of the constitutional state.64 Furthermore, Article 11 declares the constitution guarantees fundamental human rights not only to the people of the present generations but also to the people of future generations. It is generally believed Article 11 binds the government to consider the interests of future generations,65 as does the preamble to the constitution. Therefore, scholars and researchers agree the standard of benefits may be lowered in consideration of the interests of insured persons of working age.

3.3.3

Stages of Pension Rights

Insured persons pass through four stages in the pension schemes: (1) paying contributions to the Old-Age Pension program, (2) having completed the payment but not having reached pension age, (3) having reached pension age but not yet receiving benefits, and (4) receiving benefits. However, stage (2) is only relevant for CategoryI insured persons. Scholars in Japan generally believe the extent of protection of pension rights changes according to these stages—that is, the later the stage, the more firmly protected the pension rights are as property rights.66 Some argue that during the period when insured persons pay contributions, they can only expect to receive benefits in the future but cannot have pension rights as property rights.67 Ultimately, both positions do not differ from each other. On the one hand, no one claims ex post facto changes to the standard of benefits cannot be allowed if pensioners have already started receiving benefits. This is supported by the fact that most scholars believe in the constitutionality of the macroeconomic indexation

64

Ohta (2016), pp. 67–68. Aoyagi (2012), pp. 47–48. There is a dispute over whether future generations can be understood as the subject of basic human rights. However, no one has argued the government cannot constitutionally consider the interests of future generations. Rather, many believe they should indeed be considered. 66 Kikuchi (2010), pp. 89–90; Dake (2013), pp. 743–744. 67 Hori (2017), p. 245; Kikuchi (2010), p. 90; Dake (2013), p. 744. 65

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of the pension benefits of those who have already started receiving benefits.68 On the other hand, even if some scholars argue insured persons paying contributions cannot have pension rights as property rights, they do not intend to free the government from considering the interests and expectations of insured persons in the first stage.69 In other words, scholars argue the protection of pension rights essentially means the protection of expectation, which grows gradually as insured persons move along the stages.

3.3.4

Meanings of the Manner of Financing the Pension System

Based on the discussion above, the constitutionality of lowering the standard of benefits should be judged according to the following framework: under which conditions is it possible for the government to subordinate the expectation of pensioners and lower the standard of benefits, taking into consideration the interest of insured persons who are forced to pay contributions to realize the expectation of pensioners who had paid contributions as insured persons? In other words, the constitutionality of lowering the standard of benefits is judged based on whether the legislature has properly considered the interests of pensioners who receive benefits, on the one hand, and the interests of insured persons who pay contributions, on the other hand.70 The intergenerational balance of interests is especially important when pensioners receive benefits financed under the pay-as-you-go principle by contributions made by insured persons. If the government only focuses on the pension rights of preceding generations and burdens insured persons with heavy contributions, the government is not considering the interests of both generations equally, and its policies based on such a consideration would be inappropriate. However, the main reason for the difficulty in maintaining the amount of benefits under the pay-as-yougo principle is the population decrease in successive generations (i.e., insured persons of working age). Because successive generations are only born from the preceding generations and the decrease in successive generations should have been predicted (and, to some extent, avoided by responding appropriately), the preceding generations have to share the burden with the successive generations.71 However, preserving the pension rights of preceding generations could lead to securing the pension rights of successive generations. Therefore, lowering the standard of benefits either before or after people begin receiving benefits should be constitutional if it aims to maintain the pension system and the amount of benefits is only reduced to the necessary extent. This is how we can understand what most scholars in Japan think of measures already taken to reduce the standard of benefits as macroeconomic

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Dake (2013), pp. 745–747; Kikuchi (2010), pp. 99–101. Hori (2017), p. 245. 70 For more details discussed in this section, see Ohta (2016), pp. 57–70; Ohta (2013), pp. 74–78. 71 Ohta (2013), pp. 76–77; Butzer (2008), pp. 378–387; Schnapp (2012), pp. 543–545, 547–549. 69

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indexation to be constitutional.72 Furthermore, it should be constitutional if the laws are amended so the adjustment based on macroeconomic indexation is always carried out regardless of the rate of real price change or the rate of nominal residual income change because the real value of benefits—that is, purchasing power—is important for evaluating the reduction in benefits.73

3.3.5

Court Judgments

There has been no judgment by the Supreme Court of Japan on the constitutionality of lowering the standard of benefits to date. However, some lawsuits are pending on the constitutionality of lowering the amount of benefits between 2013 and 2015 and the macroeconomic indexation in 2016 for pensioners who had already started receiving benefits. On April 26, 2019, Sapporo District Court decided on the constitutionality of lowering the amount of benefits in 2013, finding no violations of Article 25 or 29 of the Japanese Constitution.74 The court determined there was no abuse of the discretion of the legislature widely granted by the court with regard to Article 25. As for Article 29, the court found no violation, for the lowering of the amount of benefits was based on a legitimate purpose of protecting the interests of the generations of working age and the gradual reduction between 2013 and 2015 did not harm pensioners beyond the limit justified by the purpose concerned. The court practically followed the arguments of the abovementioned scholars. Furthermore, the court recognized the macroeconomic indexation as reasonable for adjusting the standard of benefits.

3.4

Automatic Adjustment of Pension Benefits and Parliamentary Democracy

The standard of the pension benefits in Japan is automatically adjusted by setting indexes that reflect changes in the socioeconomic situation and demographic structure under the provisions of the pension laws but without changing them. Thus, the adjustment system aims to gradually change the forms of solidarity across

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See Kikuchi (2010), pp. 90–101; Hori (2017), pp. 244–246; Dake (2013), pp. 742–747. For the rationality of such amendments, see Ohta (2013), p. 78. For constitutionality, see Kikuchi (2018), p. 77. 74 Judgment of the Sapporo District Court, April 26, 2019 (Heisei 27 (Gyo U) No. 15). http://www. courts.go.jp/app/files/hanrei_jp/690/088690_hanrei.pdf. Accessed 13 August 2019. In addition, the court found no violation of Article 9 of the International Covenant on Economic, Social and Cultural Rights. 73

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generations embodied in the public pension system stably and continuously, avoiding repeated political conflicts over the standard of benefits in the Parliament.75 Such a mechanism that continuously and automatically adjusts the standard of pension benefits is preferable in terms of stabilizing the solidarity across generations, taking into account the interests of each generation.76 However, even with the automatic adjustment using the various indexes, the Parliament determines the conditions and interrelationships under which the automatic adjustment is carried out, as it did in 2004 and 2016. The Parliament can revise the conditions anytime in the future to secure intergenerational solidarity and equity.77,78 Thus, we do not have to argue the current automatic adjustment system in Japan is regarded as an attempt to oppose parliamentary democracy.

4 Conclusion The Japanese public pension system embodies solidarity across generations under the pay-as-you-go insurance system and seeks to balance the interests of the generations in an aging society with a declining population. For this purpose, the government has tried to lower the standard of pension benefits with automatic adjustments, including macroeconomic indexation. Most scholars in Japan generally consider the lowering of the standard of benefits constitutional, though the Supreme Court of Japan has not decided on this matter yet. Further discussions on the constitutionality of the lowering of the standard of benefits and the constitutional orientation for developing the Japanese public pension system will be expected based on future judgments of the Supreme Court and other courts.

References Aoyagi K (2012) Kokka no kadai to jikan jiku: Kenpou to mirai (Tasks of the nation and axis of time: constitutional law and the future). Koho kenkyu (Public Law Rev) 74:43–63 Butzer H (2008) Der Generationenvertrag: Zu Herkunft und Inhalt eines sozialstaatlichen Schlüsselbegriffs (The intergenerational contract: the origin and content of a key concept of the social state). In: Butzer H et al (eds) Organisation und Verfahren im sozialen Rechtsstaat: Festschrift für Friedrich E. Schnapp zum 70. Geburtstag (Organization and procedure in the

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Hori (2017), pp. 539–540; Ohta (2019), p. 20. Ohta (2013), p. 78. 77 Ohta (2019), p. 20. 78 The report of the review and prospect of the financial situation of the public pension system at least every five years (see section ‘Fixed Amount of Contributions, Standard of Benefits, and Review of the Financial Situation’) provides the Parliament with regular opportunities for discussion. 76

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social state governed by the rule of law: Festschrift on the 70th birthday of Friedrich E. Schnapp). Duncker & Humblot, Berlin, pp 367–387 Dake S (2013) Kouteki nenkin to zaisanken hoshou: Koushotokusha he no rourei kiso nenkin no sikyuu teisi an wo keiki ni kangaeru (Public pension and protection of property rights: a study based on the bill for suspending the payment of the Old-Age Basic Pension benefits to pensioners with high income). In: Araki T et al (eds) Roudou hougaku no tenbou: Sugeno Kazuo sensei koki kinen ronshuu (The outlook of labor law: Festschrift on the 70th birthday of Professor Kazuo Sugeno). Yuhikaku, Tokyo, pp 737–758 Hori K (2017) Nenkin hoken hou (dai 4 han) (Pension Insurance Law, 4th edn). Houritsubunkasha, Kyoto Kikuchi Y (2010) Shakai hoshou housei no shourai kousou (Structural reform of Social Security Law). Yuhikaku, Tokyo Kikuchi Y (2018) Shakai hoshou hou (dai 2 han) (Social Security Law, 2nd edn). Yuhikaku, Tokyo Ministry of Health, Labour and Welfare (2014) Summaries of the 2014 Actuarial Valuation and Reform Options. https://www.mhlw.go.jp/file/06-Seisakujouhou-12500000-Nenkinkyoku/ 2014_Actuarial_Valuatin_3.pdf. Accessed 5 Aug 2019 Ministry of Health, Labour and Welfare (2018a) Heisei 29 (2017) jinko doutai toukei (kakutei suu) no gaikyou (An overview of the demographic statistics 2017). https://www.mhlw.go.jp/toukei/ saikin/hw/jinkou/kakutei17/dl/00_all.pdf. Accessed 5 Aug 2019 Ministry of Health, Labour and Welfare (2018b) Heisei 29 nendo: Nenkin tsumitatekin no unyoujoukyou ni tsuite (Fiscal year 2017: on the financial situation of the pension funds). https://www.mhlw.go.jp/wp/seisaku/dokuritu/dl/seisaku-hyouka-10-09.pdf. Accessed 5 Aug 2019 Ministry of Health, Labour and Welfare (2018c) Kakutei kyoshutsu nenkin seido no gaiyou (Overview of the defined contribution pension system). https://www.mhlw.go.jp/stf/ seisakunitsuite/bunya/nenkin/nenkin/kyoshutsu/gaiyou.html. Accessed 13 Aug 2019 Ministry of Internal Affairs and Communications (2017) Toukei kara mita wagakuni no koureisha (65 sai ijou) (Elderly people [65 years old and above] in Japan viewed from statistics). https:// www.stat.go.jp/data/topics/pdf/topics103.pdf. Accessed 5 Aug 2019 Ministry of Internal Affairs and Communications (2018) Toukei kara mita wagakuni no koureisha (65 sai ijou) (Elderly people [65 years old and above] in Japan viewed from statistics). https:// www.stat.go.jp/data/topics/pdf/topics113-1.pdf. Accessed 5 Aug 2019 Nakano T (2012) Kiso nenkin no kadai (Problems of the Basic Pension). In: Nihon Shakai Hoshou Hou Gakkai (Japan Association of Social Security Law) (ed) Korekara no iryou to nenkin (Medical care and pension in the future). Houritsubunkasha, Kyoto, pp 195–214 National Council on Social Security Reform (2013) Shakaihoshouseidokaikaku kokumin kaigi houkokusho: Tasikana shakaihoshou wo shouraisedai ni tutaeru tameno michisuji (Report of the National Council on Social Security Reform: a path to deliver reliable social security to future generations). https://www.kantei.go.jp/jp/singi/kokuminkaigi/pdf/houkokusyo.pdf. Accessed 5 Aug 2019 National Institute of Population and Social Security Research (2017) Population projections for Japan: 2016 to 2065 (Appendix: Auxiliary projections 2066 to 2115). http://www.ipss.go.jp/ppzenkoku/e/zenkoku_e2017/pp29_summary.pdf. Accessed 5 Aug 2019 National Institute of Population and Social Security Research (2018) Shakai hoshou hiyou toukei (Financial statistics of social security in Japan 2016). http://www.ipss.go.jp/ss-cost/j/fsss-h28/ H28.pdf. Accessed 5 Aug 2019 National Tax Agency (2018) No. 5231: Kakutei kyufu kigyo nenkin tou ni kakaru kazeikankei (Q&A No. 5231: on taxation on defined benefit corporation pensions, etc.). https://www.nta.go. jp/taxes/shiraberu/taxanswer/hojin/5231.htm. Accessed 13 Aug 2019 Ohta M (2012) Shakai hoshou kyuhu ni okeru youhoshoujiyu, hitsuyou, zai, kinsenhyouka no kankei ni kansuru ichikousatsu: Toriwake “juzenshotoku no hoshou” ni tyuumokusite (An analysis of the relationships among conditions, needs, goods and monetary valuations in social security benefits: with particular attention on “benefits according to prior wages”). In:

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Takagi H et al (eds) Gyousei hougaku no mirai ni mukete: Abe Yasutaka sensei koki kinen ronshuu (Toward the future of administrative law: Festschrift on the 70th birthday of Professor Yasutaka Abe). Yuhikaku, Tokyo, pp 301–339 Ohta M (2013) Shakai hoshou no zaigen choutatsu: Shakai hoshou no kouzou wo fumaeta houteki giron no tame ni (Social security financing: legal and policy perspectives). Financ Rev 113:60–78. http://warp.da.ndl.go.jp/info:ndljp/pid/10982716/www.mof.go.jp/pri/publication/ financial_review/fr_list6/r113/r113_05.pdf. Accessed 5 Aug 2019 Ohta M (2015) Rentenversicherung in der alternden Gesellschaft Japans (Public pension insurance in Japan’s aging society). In: Gebauer M et al (eds) Alternde Gesellschaften im Recht: Japanisch-deutsches Symposium in Tübingen vom 3 bis 4. September 2012 (Ageing societies in the law: Japanese-German symposium in Tübingen from 3 to 4 September 2012). Mohr Siebeck, Tübingen, pp 149–164 Ohta M (2016) Kouteki rourei nenkin ni okeru shourai kousoku (Why the legislature’s discretion to change the public Old-Age Pension Insurance is restricted). Shakai hoshou hou (J Soc Secur Law) 31:57–70 Ohta M (2019) Nihon no shotoku hoshou seido to sedaikan no rentai, kouhei: Kouteki rourei nenkin wo tyuusin ni (Income security system in Japan from points of view of solidarity and equity across generations: focusing on the public old-age pensions). Horitsujihou (J Law) 90(1):14–21 Organization for Economic Co-operation and Development (2019) Pensions at a glance 2019: OECD and G20 indicators. https://doi.org/10.1787/b6d3dcfc-en. Accessed 7 Dec 2019 Schnapp FE (2012) Demographische Entwicklung und soziale Sicherungssysteme: Gefahren oder Chancen? (Demographic development and social security systems: risks or opportunities?). In: Hilgendorf E, Eckert F (eds) Subsidiarität – Sicherheit – Solidarität: Festgabe für Franz-Ludwig Knemeyer zum 75. Geburtstag (Subsidiarity - Security - Solidarity: Festschrift on the 75th birthday of Franz-Ludwig Knemeyer). Ergon, Würzburg, pp 535–557 Seki F (2017) Koureisha no shotoku hoshou: Kouteki nenkin seido no genjou to kadai (Income security for the elderly: current situation and challenges of the public pension system). Horitsujihou (J Law) 89(3):46–53 Shishido J (2016) Zaisanken (Property rights). In: Watanabe Y et al (eds) Kenpou I: Kihonken (Constitutional law I: basic human rights). Nihonhyouronsha, Tokyo, pp 339–367 Statistics Bureau of the Ministry of Internal Affairs and Communications (2019) Jinkou suikei 2019 nen 5 gatsu hou (Monthly report on population estimates in May 2019). https://www.stat.go.jp/ data/jinsui/pdf/201905.pdf. Accessed 5 Aug 2019 Takami K (2012) Keizaiteki jiyu (Economic liberties). In: Nonaka T et al (eds) Kenpou I (dai 5 han) (Constitutional law, 5th edn). Yuhikaku, Tokyo, pp 455–499

Part III

Different Types of Solidarity Facing the Needs of Elderly People

Long-Term Elderly Care, Family and Money in Ageing Finland Katja Karjalainen and Anna Mäki-Petäjä-Leinonen

Abstract In common with other European countries, Finland faces multiple challenges in providing its ageing population with adequate, sustainable and rightsfriendly services. This contribution focuses on long-term elderly care from the perspective of family law and solidarity among family members. The contribution explains the legal basis for the right to care at national level, the most important care models used, how care is paid for, as well as noting the main problems and challenges faced within the current system. We also assess the ways in which the funding basis of long-term care could be broadened in future in the event of older people’s own property being used to a greater extent in funding care expenses, and discuss the pros and cons of this approach. Finally, the contribution notes the ongoing but subtle development of Finnish legislation towards greater emphasis on home care and individual networks of people in need of care—the ‘family presumption’ that inevitably leads to family members playing an increasing role in elderly care.

1 Introduction The demographic situation in Finland follows international trends. The official total population of Finland at the end of 2018 was 5,517,919.1 Fewer than 50,000 children are born yearly. Since 1969, the birth rate has been below the population regeneration rate.2 The number of people of working age (aged 15 to 64) is decreasing. It was at its highest in 2009, when it numbered 3.55 million persons. During 2010 to

We would like to thank research assistant and law student Anni Kainulainen for her kind assistance with technical corrections and for her fresh and inspirational ideas. 1 2

Official Statistics of Finland (OSF): Population Projection. [e-publication]. For further details, see Official Statistics of Finland (OSF): Births [e-publication].

K. Karjalainen (*) · A. Mäki-Petäjä-Leinonen Law School, University of Eastern Finland, Joensuu, Finland e-mail: katja.karjalainen@uef.fi; anna.maki-petaja-leinonen@uef.fi © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_9

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2014, the number of people of working age fell by 69,000. The self-sufficiency forecast indicates that this figure is set to fall by 217,000 by 2030 and by 630,000 by 2050.3 Furthermore, it is estimated that the proportion of the population aged 65 or over will rise from the current level of 19.9% to 26% by 2030 and 29% by 2060.4 This development will result in a weakening of the demographic dependency ratio, which refers to the number of persons aged 15 or under and 65 or over per 100 persons of working age. At the end of 2017 the ratio was 60. It is projected to be 62 by 2020; 66 by 2030; 71 by 2050; and 81 by 2070.5 The demographic development and related dependency ratio show that the Finnish welfare society faces multiple challenges in providing adequate and economically sustainable care services to its ageing population in such a way as to respect individuals’ fundamental rights. There is an obvious tension between public spending and funding. The care and social services provided to the elderly must be adequate and fulfil the social rights provided for in the Finnish Constitution and binding international instruments.6 The affordability of the welfare state is, however, open to question. Thus, the issue of how to provide and pay for necessary, equal and rights-friendly care services for the elderly in such a way as to avoid overburdening the ever-shrinking cohort of people of working age must be addressed. Recently, severe problems relating to care services have come to the fore and raised public awareness of this issue. These problems indicate that the care models and practices currently being followed need critical scrutiny. Addressing the issues of the availability, funding and quality of care services is especially crucial due to the fact that the members of the ‘baby boomer’ generation have now reached retirement age.7 This contribution focuses on long-term care models, the payment mechanisms applicable to them and the role of family members in that situation. Section 2 covers the legal basis of the right to receive care, the different care models in use and the applicable care legislation and practices. Section 3 explains care payments and investigates alternative methods of payment, especially the role of older people’s own property in paying for care expenses. Section 4 concentrates on the role of the 3 The self-sufficiency forecast describes a theoretical situation in which there is no immigration and emigration at all and only the birth and mortality rates influence the age structure. 4 Official Statistics of Finland (OSF): Population Projection. [e-publication]. 5 The projection indicates that the dependency ratio will rise in future decades, but at a slower rate than envisaged in earlier projections. The reason for this is the decrease in the birth rate and the resulting fall in the number of young dependants. Thus, in the short term, the demographic dependency ratio will weaken more slowly than earlier projections indicated. In the long term, the demographic dependency ratio will weaken to a greater extent than in earlier projections. See Official Statistics of Finland (OSF): Population projection [e-publication]. 6 Especially the European Convention on Human Rights, the European Social Charter, and the UN Convention on the Rights of the Persons with Disabilities (UNCRPD). 7 In this context, see the research project Generational Transmissions in Finland (Gentrans), which is a longitudinal survey studying family transfers and interaction between two family generations. The survey was conducted on a representative sample of baby boomers, i.e. people born in Finland between 1945 and 1950 (initial sample 1998 individuals), and their adult children (initial sample 3391 individuals).

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family in caring for older people. In theory, this role should be limited. However, in practice, there is a growing tendency for family members to be expected to carry out care duties. Section 5 sets out our conclusions. The contribution offers, in particular, a family law perspective on long-term care. We take the view that that the dependency mechanisms and rights and duties among family members are one of the most essential aspects of intergenerational solidarity.

2 Fulfilling the Right to Care in the Jungle of Care Models 2.1

Right to Care

The right to care is regulated at both European and national level. For instance, the European Social Charter (1961 and 1996) defines the material scope of European social human rights and the majority of the required standards and benchmarks.8 Several rights stipulated in the Charter are also enjoyed by the elderly. These cover income security (Articles 12 and 13), health (Article 11), welfare services (Article 14) and housing (Article 31). Article 23 of the Charter specifically concerns elderly persons’ right to social protection, comprising (1) living conditions and income security; (2) public or equivalent guaranteed services for those with limited capacity; and (3) the organisation and provision of institutional care. Although the areas of social protection are defined, states may safeguard the rights provided for in the manner that best suits their needs and interests.9 The EU Charter of Fundamental Rights lays down the principle that the elderly as a group have certain rights, particularly health care rights.10 It states that the EU recognises and respects the rights of the elderly to lead a life of dignity and independence and to participate in social and cultural life.11 The Finnish Constitution (731/1999) contains an obligation to provide adequate social security, including adequate old age care. It states that those who cannot obtain the means necessary for a life of dignity have the right to receive indispensable subsistence and care (section 19.1). The essence of a life of dignity includes the organisation of nutrition and housing necessary for the maintenance of health and vitality, emergency medical care as well as support measures for special care groups.12 This provision is guaranteed to individuals as a subjective right: the public

8

E.g. Mikkola (2010), p. 3. Meenan (2012), pp. 69–70. See, e.g., Mikkola (2010), pp. 541–542. 10 E.g, O’Cinneide (2014), pp. 701–702. 11 Many other international instruments contain provisions on the right to care. For instance, the Convention on the Rights of the Persons with Disabilities contains provisions on health (Article 25) and adequacy of standards of living and social protection (Article 28). 12 Government proposal for the Finnish Constitution (HE 309/1993 vp), pp. 69–72 and (HE 1/1998 vp), p. 80. 9

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authority must grant or offer the service to those entitled to it and has no discretion to decline to do so on budgetary grounds. The Constitution also stipulates that the public authorities shall guarantee for everyone, as provided for in more detail in an Act, adequate social, health and medical services and promote the health of the population (section 19.3). This provision is intended to lay down an active duty for public authorities to fulfil and entails the realisation of the fundamental rights of citizens through public means. The state must meet its operational obligations by adopting legislation on social and health services but the Constitution leaves open the question of how such services should be organised. Municipalities must ensure that services meet the level required by the Constitution and that, in practice, they are equally accessible to all citizens living in the municipality. The provision also implies that municipalities have an obligation to allocate financial resources so that adequate social and health services can be provided.13 The municipality has, however, a right to decide how it fulfils its obligations, as the following case heard by the Administrative Court of Turku in 2014 (Turun HAO 25.03.2014) indicates. The case involved the rights of a 97-year-old man, X, who was seeking intensive sheltered housing with 24-hour assistance. The security board had offered him family home care or an increased number of home care visits, but rejected his application for intensive sheltered housing. The Administrative Court took the view that the Act on Supporting the Functional Capacity of the Ageing Population and on Social and Health Care Services for Older People (980/2012) (hereinafter the ‘Elderly Care Act’) contains no provisions that would oblige the municipality to provide the elderly person with care in accordance with his or her own wishes. X did not have a subjective right to receive social services in a manner that would give him a right to decide the care facility and the way the care was arranged. The municipality had the right to decide how it will arrange the service. Furthermore, being of a certain age does not in itself provide entitlement to a housing service. Based on the findings of the case, the board was entitled to assess that given his state of health and activity X did not need intensive sheltered housing. His main problem was the insecurity he felt at home. In offering X a family care facility or offering additional home service visits up to several visits per day, the basic security board had fulfilled its social welfare obligation to provide social services and the obligation to provide a timely and adequate social service under the Elderly Care Act. In Finland the municipality provides social and healthcare services for older people based on different laws. The principle is to provide services based on general legislation, such as the Social Welfare Act (1301/2014) and based on a person’s needs, not on their age. Hence, the provision of services for older people as well as for people with disabilities is primarily based on the Social Welfare Act, which applies to all clients, from children to the elderly. The Social Welfare Act provides for the promotion of social security and wellbeing and lays down other municipal

13 Government proposal for the Finnish Constitution (HE 309/1993 vp), pp. 69–72 and (HE 1/1998 vp), p. 80. See also The Constitutional Law Committees report PeVM 25/1994 vp, pp. 10–11.

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tasks and services concerning social welfare and its implementation. This general legislation is complemented by a number of specific laws. For older people, the Elderly Care Act is intended to be of principal importance. The Elderly Care Act came into force on 1 July 2013. Its central objective is to support the wellbeing, health, functional capacity and independent living capacity of older members of the population and to improve their access to high-quality social and health care services. The Act describes the care chain for older persons and contains provisions concerning advice services, the mapping of service needs, and the right to have a service plan and decisions on the provision of social services. It also contains provisions on the quality of services. However, other legislation that applies to the population at large contains provisions that are very similar to those in the Elderly Care Act. The Elderly Care Act sets out the general principles governing the response to the service needs of older people. It provides that the municipality is responsible for the provision of long-term care that supports the valuable life of older people, primarily through the provision of home care and other social and health care services. These services must be adapted in terms of content and quantity to match the service needs of the older person concerned. Long-term care can be provided in the form of institutional care only if there are either medical grounds for doing so or if it is required in order to provide safe care for the older person (section 14a). Furthermore, social and health care services in the form of long-term care must be provided so that the older person can feel that they are living a safe, meaningful and dignified life and can maintain social contacts and participate in meaningful activities promoting and maintaining their wellbeing, health and functional capacity (section 14.2). It may be argued that while the Elderly Care Act is symbolically significant, it remains unsatisfactory in practice. Since many of its provisions are formulated as principles, there is a risk that they will be ineffective in practice or serve function simply as symbolic recommendations.14 Nevertheless, there is another law, namely the Act on Disability Services and Assistance (380/1987)15 (hereinafter the ‘Disability Services Act’), which offers a better legal guarantee for a person in need of services than the Social Welfare Act. The Disability Services Act guarantees certain services and forms of support, such as personal assistance or transport services for a person who meets the definition of a severely disabled person set out in the Act. These guaranteed forms of support are considered to be subjective rights, and, as such, cannot be conditional on the financial status of the municipality. The problem is that older people are often not regarded as being entitled to the support provided for under the Disability Services Act due to the fact that cognitive disabilities, such as Alzheimer’s disease, are not always viewed as being ‘disabilities’ under the law. Thus, Disability Services Act is unfortunately not an act of key significance, even for

14 15

Hoppania et al. (2017), pp. 229–231. Act on Disability Services and Assistance (380/1987).

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those older people who should meet the definition of a severely disabled person.16 Noteworthy, it seems that the Finnish approach to the interpretation of disability in the Disability Services Act does not fulfil the requirements set in the United Nation’s Convention on Rights of the Persons with Disabilities, because it involves assessment of the right to services on the basis of age and diagnosis more than in terms of capabilities.

2.2

Models of Long-Term Care

In Finland, a municipality can arrange the long-term care of an older person mainly in three different ways: home care, intensive sheltered housing or long-term institutional care. These forms of care are discussed in this section. Furthermore, one must note that there are unofficial ways to arrange long term care of an older person, that is, by family members who may or may not get public support for care duties. The role of the family is discussed in Sect. 4. Home Care Ageing Finns have a strong desire to live in their own homes for as long as possible.17 These wishes are supported by the Finnish legislation as the current law promotes care in the context of private homes (Elderly Care Act, section 14(1)). Home care is also the cheapest form of care for municipalities meaning that in practice it is also strongly favored. The municipality must provide home care for older people through home care services and, if necessary, home nursing. The goal is to ensure that an older person can live safely at home. Home care services involve the carrying out of, or assistance with, tasks and activities that are part of housing, care, maintenance of capabilities and other tasks of everyday life, and are provided on the basis on an assessment of the client’s capabilities.18 They include support services for catering, garment and cleaning as well as social interaction services (Social Welfare Act, section 19). Home nursing is a multi-professional health and medical service provided at the patient’s place of residence, at home or in a comparable place (Health Care Act (1326/2019), section 25). Home nursing includes drug distribution, administration of injections, taking samples, mapping the need for aid devices and performing memory tests. The number of ageing customers in home care has increased over 40% in the last few years in the capital area of Finland (Uusimaa); yet, at the same time, the number of personnel as well as care visits has decreased.19 In practice, a growing number of

16

The fact that sometimes very similar needs result in access to very different services because of the age or illness of a client can be seen as an ethical and human rights issue. See Hoppania et al. (2017), pp. 233–236. 17 Alastalo et al. (2017), p. 5. 18 Government proposal for the Social Welfare Act, HE 164/2014 vp, pp. 112–116 and 128–134. 19 Alastalo et al. (2017), pp. 2–3.

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ageing people live in their private homes regardless of their weakening physical or mental capacity. This has put pressure on the ability to provide adequate and timely home care services, leading to problems in some respects. There have been reports that some older people have not received all the services that they would have needed in order to be able to stay safely at home. Furthermore, the care provided does not always meet the need for help and support.20 There have even been situations that are suspected to amount to abandonment as it seems that in some cases older people have died in their homes as a result of lack of care.21 Because the availability of adequate home care has been in continuous decline, it has been argued that responsibility for care has shifted to the older person’s family and relatives. There has been a transition towards more lightly staffed care facilities and from the provision of municipal services towards supporting family care.22 It is, however, vital that, when the condition of an older person deteriorates to such an extent that he or she is no longer capable of managing in their own home, even when support is given, that person is provided with long-term care outside the home, either in intensive seltered housing or in long-term institutional care. The decision-making process involved depends on the nature of the need for care. Where social care is required, the decision is made by a social worker; while where health care is required, the decision is made by a medical practitioner. Intensive Sheltered Housing The law provides that sheltered housing is arranged for persons who need both suitable housing and care. Intensive sheltered housing, on the other hand, is organised for people who need 24-hour care. Sheltered housing includes care tailored to the customer’s needs, activities maintaining and promoting customer’s capabilities, catering, garment, washing and cleaning services, as well as services promoting inclusion and social interaction (Social Welfare Act, sections 21.3 and 21.4). Care includes, among other things, assisting with personal activities such as eating and hygiene, and ensuring that medication is taken in accordance with instructions. Intensive sheltered housing is especially designed for older people who need 24-hour care. The private sector is responsible for providing almost half of the intensive sheltered housing.23 Customers pay separately for housing and services and, with adequate support, may live to the end of their lives there.24 Intensive sheltered housing has recently been in the national headlines, as has home care. Some private care facilities have been shut down due to a lack of care personnel and poor quality of care.25

20

The Annual Report 2017 of the Parliamentary Ombudsman of Finland 2017, pp. 250–254. Mölsä 22.4.2018, https://yle.fi/uutiset/3-10172017. 22 Hoppania et al. (2017), p. 228. 23 National Institute for Health and Welfare (THL) (2017). 24 Government proposal for the Social Welfare Act, HE 164/2014 vp, pp. 114–115. 25 National Supervisory Authority for Welfare and Health (Valvira) 13 March 2019. 21

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Institutional Care Finnish institutional care is organised either as social care or as health care. Institutional care services for social care are the organisation of care and rehabilitation in a social care unit providing continuous care. Institutional care services may be provided on a short-term or continuous basis, during the day, at night or around the clock (Social Welfare Act, section 22.1). Institutional care can also be provided in the health care unit. The Health Care Act specifies that institutional care means treatment and rehabilitation in a hospital ward, health care centre or other health care unit (section 67). In practice, patients in health care units are bedridden. Treatment and care can only be provided in the form of long-term institutional care on medical grounds or pursuant to criteria related to customer or patient safety (Elderly Care Act, section 14). Before a person is taken into long-term institutional care, the municipality must investigate whether it would be possible to meet an older person’s service needs by providing home and other social and health care services. This investigation must also be made when 24-hour institutional care has continued for 3 months without an investigation having been done. The decision for long-term institutional care should be justified (Elderly Care Act, section 15). The number of available places in institutional care homes has fallen due to austerity measures. Nowadays, institutional care for older people is very rarely provided in the form of social care (in nursing homes) under the Social Welfare Act. In practice, care is provided in the form of intensive sheltered housing, the charges for which are higher for the client than institutional care fees,26 and despite the fact that treatment in these two different units is practically the same as the condition of their customers is at the same level: both care for people in very poor health.

3 The Incoherent Care Payment System and Its Future 3.1

Different Care Models, Different Payments

As discussed above, there are different care models and the fees charged for them are determined in a different manner. The fees for home service and home care as well as institutional care are provided for in the Act on Client Charges in Healthcare and Social Welfare (734/1992) (hereinafter the ‘Client Payments Act’) and in the decree (912/1992) (hereinafter the ‘Client Payments Decree’). The monthly payments for home service and home care are determined by the quality and quantity of the service, the ability of the user to pay for the service and also depends on the family members living in the same household (Client Payments Decree, section 3.1).

26

See Sect. 3.1 on the subject of housing payments.

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Institutional care fees are charged at care units that usually provide 24-hour care, i.e. in hospitals, health-care centres, nursing homes, and intellectual disability care institutions. Long-term institutional care fees are determined under the Client Payments Act (section 7c). The fee is determined by reference to the customer’s ability to pay and may not exceed 85% of the net income of the person under treatment. Disability benefits (disability allowance, pensioner’s care allowance and dietary allowance) are included in net income. The Client Payments Act takes into account the situation of a spouse staying at home. In other words, if a person under long-term institutional care lived in a co-household with a spouse (in a marriage or in marriage-like circumstances) prior to the commencement of the care and his or her monthly income is greater than the monthly income of the spouse who continues to live in the common home, the fee is determined by reference to the total monthly income of the spouses. In this case, the fee charged for long-term institutional care may not exceed 42.5% of the spouses’ monthly income. This will secure the financial position of the spouse staying in a shared apartment in a situation where the family’s breadwinner ends up in longterm care. It is worth noting that housing services provided under the Social Welfare Act, such as sheltered housing and intensive sheltered housing, are not specifically provided for in the Client Payments Act; a fee is decided by the municipality. The payment usually consists of rent and payments for various support services such as care and meal services. The fees payable by residents for housing services are often higher than those payable for long-term institutional care. For instance, residents are responsible for paying for their medicine. When fees are not specifically stipulated in the legislation, municipal practices vary. However, the municipality must take into account the general provisions and principles on payments laid down in the Client Payments Act. The fees charged to customers may not exceed the cost of providing the service. When the municipality arranges services by purchasing them from a private service provider, the customer is charged the same fees as the corresponding services provided by the municipality itself (sections 1, 2 and 12 of the Client Payments Act). Since the Client Payments Act is outdated and, in many respects, ambiguous, the Government submitted a proposal for a new act on 13 December 2018.27 The new act would have clarified and harmonised the fees payable by social and health care customers. The regulation of long-term intensive sheltered housing and long-term institutional care would largely have been carried out on a uniform basis. Thus, users of the same type of services in different municipalities and under different ‘titles’ would no longer have been in an unequal payment positions and national equality would have been improved. Unfortunately, the proposal did not proceed before the end of the parliamentary term in April 2019. It remains to be seen when this matter

27 Government proposal for the new Client Payments Act in Social and Health Care, HE 310/2018 vp.

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will be considered again and what kind of proposal the current government will put forward.

3.2

Use of Older People’s Own Assets in Respect of Care Payments

In an ageing society growing care expenses force the authorities to seek different alternatives to finance care. There are naturally various options, including raising taxes or cutting from other public expenses. All these options are unpopular from certain stakeholders’ perspective. This section discusses this issue solely from a family law angle, in the light of the perspective adopted in this contribution. Finnish legislation does not impose binding care and maintenance duties on an older person’s family. The assumption is that any person of full age and competency maintains himself or herself and takes care of his or her own matters. Thus, adult children are not legally obliged to provide care or maintenance to their parents or grandparents as in many other countries.28 Such an obligation would appear so unfamiliar in the context of the modern Nordic welfare system that introducing it cannot be seen as a realistic alternative to the funding of elderly care.29 One option would be to encourage or even oblige older people to utilise their own property to cover care expenses. As noted above, the Finnish legal system does not currently lay down any obligation to utilise personal assets to cover care expenses. This is especially true in relation to institutional care expenses. The situation is, however, more complicated in relation to intensive sheltered housing as the expenses vary from municipality to municipality and it depends to some extent on the needs and wishes of the older person and his or her next of kin as to what services that person requires and is also willing to pay for voluntarily. Many different issues need to be taken into account in the politically very sensitive scenario of broadening the funding basis of care for older persons to include their property. Most importantly, the constitutional protection of property (Finnish Constitution, section 15) must be noted. Both the potential imposition of an obligation and the increasing emphasis on the promotion of the use of personal property to meet care expenses call for critical scrutiny from the perspective of

28

Under Finnish Law maintenance obligations only exist in principle as between a minor child and his or her parents and between married spouses. A child is entitled to receive maintenance from his or her parents until the age of 18 (Child Maintenance Act, section 2). Each spouse is obliged to participate in the common household of the family and the maintenance of the spouses to the best of his or her ability. The maintenance of the spouses means meeting their common needs as well as the personal needs of each spouse (section 46.1 of the Marriage Act). 29 Until the 1950s, family members were legally responsible to care for their next of kin in Finland. It was, for example, possible to charge them for institutional care expenses. This option gradually became a dead letter and was eventually removed from the law in 1970. See Kalliomaa-Puha (2017), p. 321.

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fundamental rights and freedoms. However, other issues also need to be factored in. The following paragraphs discuss the pros and cons of requiring older people to use their property to meet care expenses. The issues addressed include the division of property in relation to different generations, the role of inheritance in society and administrative costs. The idea of using older people’s property to fund their care expenses in the future is supported by the statistics showing the current distribution of wealth among different generations. The most affluent generation at the moment in Finland comprises those aged from 65 to 74.30 It has also been predicted that the generation now in their twenties and thirties will be the first to be less wealthy than their parents’ generation due to the prevalence of temporary working contracts and the difficulties members of this generation have experienced in entering the labour market and buying their own homes.31 In this context it should also be noted that the role of so-called family property has changed, because inherited property no longer has the same role in society as used to be the case when most societies were primarily agrarian and life expectancy was shorter. Nowadays in Finland adult children inherit from their parents at the approximate age of 60 or more.32 The consequence is that inherited property no longer provides assets to young widows and minor children or even to adult children that are still paying mortgages or still have young children to support. On the contrary, at present inherited property is falling into the hands of the most affluent generation in society.33 Family law professor Urpo Kangas has investigated the pros and cons of extending the current funding basis of care provided to older people to include the utilisation of their own property in the context of long-term care. He emphasises that the main reason why the property of a given person is excluded when institutional care fees are calculated is the ‘service promise’ given by society, i.e. that a person cannot be required to use his or her own assets to finance the service provided. Kangas writes that the problem with this stricture, which allows for the use of running income but not acquired property to cover institutional care expenses, is that it can easily lead to unequal and unjust results. An older person may have a very small yearly income but a lot of property in the form of real estate. However, the value of the property does not, theoretically, affect the level of care expenses. This leads to a situation in which a person who receives an average pension but has no significant assets has to pay much higher care fees than a person who is affluent in terms of real estate ownership but who has a low running income. The easiest way to resolve equality problems among groups of elderly people who are affluent in

30

Official Statistics of Finland (OSF): Households’ assets. There are indications that this western phenomenon is making itself felt in Finland although the problem is not considered to be as drastic as in many other countries. See Kinnunen and MäkiFränti (2016). 32 See Government proposal on modifications to the gift and inheritance tax law, pp. 5–6. 33 On the different roles of inheritance and especially forced heirship, see e.g. Kangas (2004). 31

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different ways would be to lessen the payment burden of those who have high net incomes. However, that is not possible from a public spending perspective, and does not sound very reasonable in terms of general fairness.34 Despite the equality problem in the present system discussed above, there are a large number of practical problems and open questions that make it very difficult to broaden the funding basis of institutional care for older people by forcing people to use their own property to meet care expenses. As Kangas notes, the imposition of an obligation to use property to meet care expenses would entail the need for onerous administration in order to calculate and collect payments. The cost involved in such bureaucracy would inevitably eat into some of the income the system seeks to generate, and the higher the administration costs involved, the less popular the system would be.35 Futhermore, taking account of property in the calculation of care fees may lead to a ‘care debt’, because the net income of an affluent older person may be so small that he or she cannot pay the additional care fees caused by his or her property ownership.36 Kangas asks relevant questions in this regard. Should the property be sold or foreclosed? Should that be done straightaway or after the death of the person who has received care? Instant foreclosure would be likely to be a publicly very unpopular and politically sensitive option. However, the prospect of a care debt being payable from an older person’s estate might lead to a situation in which that person, or, in the worst-case scenario, his or her heirs, avoids seeking necessary care in order to try to safeguard assets.37 The element of time should also be taken into account. The need for care may escalate unexpectedly and quickly. Property values fluctuate. Thus, an obligation to sell the property could result in it having to be sold at a low price during a period when the economic situation is precarious. Obliging a person to liquidate his or her assets during a recession might lead to heavy losses. Would an obligation to liquidate property despite the risk of significant losses be acceptable under the Finnish Constitution? Furthermore, the question of how quickly a sale can be arranged depends on the type of property in question. It takes time to sell real estate and other investments or businesses. Would a situation in which a property has to be sold quickly hand an unfair negotiating advantage to banks and other stakeholders, for example? Kangas states that in the current system the society in fact subsidises heirs. It is in the interests of those who expect to receive an inheritance to support the status quo.38 Therefore, interestingly, it could be argued that the issue of whether the younger

34

See Kangas (2014), p. 227. Kangas (2014), pp. 227–228, 230. 36 The current system may in fact lead to a situation in which older people are forced to sell their property due to inability to meet the running costs relating to the property following payment of care fees. 37 Kangas (2014), pp. 227–228. 38 Kangas (2014), p. 230. 35

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generation still have a moral right to inherit from their parents or whether their parents should be required to use their savings to safeguard their own wellbeing and meet their care expenses should form part of the public debate over how care expenses are to be paid for. Obliging older people to use their own property to meet care expenses could reduce the payment burden on tax-paying younger generations, but, on the other hand, the use of property to meet these expenses would reduce the level of inheritance available to younger generations. It might be argued that this consideration is only relevant in respect of a certain proportion of older people. However, the available statistics indicate that most Finnish households do have some inheritable savings.39 Since imposing the obligation for older people to use their own assets to finance care services appears to be both a highly controversial and a practically problematic issue, another option would be to promote the use of acquired assets. This is already happening indirectly due to insufficient provision of public services and a shift away from institutional care towards intensive sheltered housing. Also, the increased usage of continuing powers of attorney encourages people to contemplate beforehand how they want their property to be used in the event that they have diminished capacity to act in the future and to give express instructions as to their wishes.40 The trend of voluntarily using personal assets to obtain better care services naturally eases the burden on the public service provider to some extent. However, it makes one wonder whether this will lead to a situation in which the rich pay their way to the necessary services and those secured by the poor are the result either of pure luck or dependent on whether the person in question happens to have family members or other next of kin able to tackle the service jungle.41 The problem of equal treatment of older persons in need of long-term care services is brought especially into focus by the fact that the social service legislation has gradually started to lean more and more towards involving the family members of a person in need of care.

39

Official Statistics of Finland (OSF): Households’ assets. Continuing powers of attorney were introduced into the Finnish legal system in 2007. Their usage in order to benefit an older person’s own assets to meet his or her own needs is slowly but steadily increasing. Continuing powers of attorney or advance directive are also used to appoint a representative (often a family member) to take care of his or her financial and personal matters in the event that the person in question has diminished capacity to act in the future. See Act on Continuing Powers of Attorney (648/2007). 41 E.g. the surveys indicate that female poverty among the retired is especially significant due to the fact that their accrued work pension is often relatively low because they have cared for children at home for long periods of time. The so-called guarantee pension was created in order to better the situation of those living on the minimum national pension. Government proposal for an act on guaranteed pension HE 50/2010 vp, pp. 5–9. 40

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4 Increasing the Role of Family Members Finland is a state characterised by weak family connections in which it is not common for two or three generations to live together.42 Finnish law does not recognise any kind of maintenance duties on the part of adult children towards their parents, as noted above. Any financial support or care provided by the family members of a dependent older person is provided on a voluntary basis. Furthermore, Finland, in common with other Nordic countries, is considered to be a highly ‘defamilised’ state. This expression signifies that national welfare policy lessens an individual’s dependency on his or her family due to the individual and universal rights supported by the welfare state.43 Nevertheless, in Finland, as in other countries, family members do tend to take care of each other and contribute in terms of carrying out demanding care tasks. Informal care of a family member can be full-time work, but often it is not. Many people are carers unknowingly as they help family members in lighter home care situations. It has been estimated that there are altogether somewhere between 300,000 and 1,000,000 carers in Finland. Kauppinen and Silver-Kuhalammi estimate, for example, that 700,000 persons—approximately one-third of the working age population—are carers.44 There is a strong desire and sense of moral duty in many families to care for their dependent love ones.45 Furthermore, an inadequate level of social security and public care leads to family members taking on care responsibilities.46 The legislation is not black and white. It contains no obligation to provide care but supports and guides the provision of care within the family. Social and health care legislation is said to enshrine a ‘family presumption’, which amounts to a presumption that functional and financial loyalty exists among family members.47 For instance, the Social Welfare Act, which was amended in 2014, now maps out how a customer’s family members and next of kin may participate in the provision of

42

Eurostat Estimated average age of young people leaving the parental household by sex 2017. See Hämäläinen (2017), p. 22. 44 Kauppinen and Silfver-Kuhalampi (2015), pp. 11–12. 45 The Gentrans survey illustrates how family members belonging to different generations tend to support each other. In the survey baby boomers were asked whether they had assisted family or friends. The term ‘assistance’ referred to, for instance, household work, gardening or help in using technology. Most respondents answered that they had provided assistance to their own parents (68% of those who had at least one parent still alive) during the last 12 months. The baby boomers were also asked whether they had provided care to their parents. A little under half of the respondents (48% overall, comprising 53% of women and 40% of men) had done so. Usually care had been provided to the respondents’ own parents less frequently than once a month or monthly and seldom weekly or more often. Danielsbacka et al. (2013), pp. 41–44. 46 See Reports and Memorandums of the Ministry of Social Affairs and Health 2018:60, pp. 12–13, 18. See also Kröger and Leinonen (2012). 47 Kalliomaa-Puha (2017), p. 232. 43

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support to that person.48 Correspondingly, the Elderly Care Act states that the necessary services can be assessed with assistance from family members and other persons close to the older person who requires care.49 There are also certain financial incentives to support contributions in the family, which are indicative of the legislator’s implicit desire that family members contribute to the care provided to an older person. The allowance provided for unofficial care is one form of supporting the contributions made within the family. An allowance for informal care may be paid if the care is provided at the older person’s home and is especially demanding and burdensome.50 The allowance for informal care is taxable income and in principle accrues pension entitlement. Furthermore, the informal caregiver’s allowance is modest, and is granted at the discretion of municipalities, because it is a budgetspecific allowance and the question of how much money is allocated to the provision of this allowance depends on the municipal budget.51 In practice, carers of older people have sometimes faced problems in obtaining the allowance.52 It has been estimated that 60,000 of all the? informal carers are involved in burdensome and time-consuming care work. Approximately two-thirds of these are ‘official informal carers’ who receive an informal care allowance. The surveys show that it would be economically justifiable to increase the number of recipients of informal care allowance as the savings achieved are considerably higher than the costs. The provision of informal care for dependent adults saves an estimated 2.8 billion euros annually. This is a significant amount, especially if one takes into account that total expenditure for services for old people and disabled people stands at EUR 5.2 billion.53

In this context, a few points related to taxation should also be made. Payment made for supporting or maintaining another person, whether they are a family member or not, is not considered to be taxable under the gift tax provisions. Household services (including, among other things, repairs, nursing of children or older people and cleaning) are not only tax-deductible when they are provided at a taxpayer’s own home, but also when they are provided at the home of a taxpayer’s parents or grandparents.54 The household tax deduction is justified by the fact that it may be necessary for adult children to pay for certain services for their elderly parents who may not be able to afford to pay for such services by themselves. Perhaps the main Achilles heel of the system set up for long-term care of the elderly is that it does not currently include the provision of functional public coordination and representation services, even though the duty to communicate

48

Social Welfare Act, p. 43. Elderly Care Act, p. 15. 50 Act on Support for Informal Care (937/2005). 51 See, e.g., Reports and Memorandums of the Ministry of Social Affairs and Health, pp. 12–13. 52 Hoppania et al. (2017), p. 230. 53 Kehusmaa (2014). The Ministry of Social Affairs and Health, Service Expenditure and Financing (2016). 54 See Tax Administration (2017). 49

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information lies at the heart of both the Social Welfare Act and the Elderly Care Act. Social and health care professionals have a responsibility to inform their clients of their social and legal options. They need to facilitate choices and planning for the future.55 In practice, however, this is where the family members are most needed. It also means that is likely that there are lonely older people who do not receive adequate care services. Kalliomaa-Puha has strongly and fairly criticised the ‘family presumption’ implicit in the legislation on the grounds that it increases the risk that some older people do not enjoy the right to care because they have no close relatives or because their relatives cannot or do not want to help them. Given the relative complexity of the service network, most older people do need help in seeking suitable services, coordinating services and eventually correcting possible errors. It may be argued that the applicable legislation at least assumes that family members will assist an older person in need of care services to find a way through the service jungle.56

5 Conclusions It is obvious that elderly care and its financing are complex matters and that the current system faces many challenges. It is complicated and its horizontal equality (as between different older persons) and its vertical equality (between generations) can be compromised. The quality and cost of care depends on the stance taken by each municipality and the level of assistance provided by relatives in seeking care. The right to adequate elderly care has not been wholly fulfilled. In early 2019 many care homes lost their licences due to malpractice. This has raised wide-ranging public debate on the quality of care provided in privately owned care homes from which municipalities buy services. The main problem appears to be personnel shortages. There have also been cases in which an older person in receipt of home care services has died in his or her home and the death was not detected for several days by the home care provider. The parliamentary ombudsman has reported many violations of fundamental rights and human rights in respect of living conditions and the treatment of older persons. Tens of thousands of older people living in institutional care units or intensive sheltered housing face situations in which their nutrition, hygiene, rehabilitation and outdoor activities are neglected. Similar problems have also been noted among dependent older people living in their own homes.57 Several attempts have been made to change and unify the complicated legislation, for example to harmonise the different payments made in relation to different care models. A wide-ranging reform of social and health care services was recently proposed. This included measures intended to consolidate the

55

Nikumaa and Mäki-Petäjä-Leinonen (2019), pp. 3–4. Kalliomaa-Puha (2017), pp. 237–238. 57 The Annual Report 2014 of the Parliamentary Ombudsman of Finland, p. 76. 56

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295 municipality-based health care providers currently operating in Finland into fewer than 20 separate regions, which would have been in charge of arranging health care services to the entire Finnish population, since small and financially weak municipalities have experienced difficulties in arranging and providing necessary services for residents. None of these politically sensitive and difficult attempts at reforming the system have so far been successful. Furthermore, due to problems observed in long-term care units and intensive sheltered housing there are ongoing discussions on laying down a mandatory client/staff ratio. Professor of Social and Public Policy Teppo Kröger has estimated that Finland needs to spend EUR 1 billion more every year to meet Nordic elder care standards. By way of comparison, neighbouring Norway spends more than 2.5 times more on elder care than Finland does.58 However, a recent contribution by Ministry of Finance officials states clearly that public spending should be cut rather than increased and that there is a strong need to prepare for the constantly weakening dependency ratio.59 This controversy seems to lead to the conclusion that family members and future generations will be required to participate to a greater extent both in actual care work and in the funding of care. In essence, two problematic and unpopular options exist: either raise taxes or reduce expectations as to the degree of care the welfare society will provide and increase participation by individuals and family members—which is of course highly problematic in terms of equal treatment of older people. At present it appears that the latter model is prevailing over the former. This is well illustrated by the legislation development that led to the family presumption concept and has also been eloquently articulated by the Future Committee of the Finnish Parliament: ‘the Finnish welfare society is built on trust and participation. The welfare society takes care of the agreed services but people need to be more active also. The new welfare promise must be based on the participation of the citizens.’60 However, there is still high level of support among citizens for the state having primary responsibility in this area, particularly where financial support is concerned. Support for state responsibility is also common in relation to the provision of practical help and care.61

References Alastalo H, Vainio S, Kehusmaa S (2017) Kotihoidon asiakasmäärät kasvussa, henkilöstön määrän kasvu ei kaikissa maakunnissa seuraa perässä. THL. http://urn.fi/URN:ISBN:978-952-302-899-9

58

See Seppälä A., 30.1.2019. Nordic Social Statistical Committee (2017), p. 174. See Ministry of Finance: Work to strengthen general government finances should continue (2019). 60 The Future Committee of the Finnish Parliament 1/2014, p. 7. 61 Tanskanen et al. (2018), pp. 151–153. 59

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Constitutional Law Committees report PeVM 25/1994 vp. Perustuslakivaliokunnan mietintö n:o 25 hallituksen esityksestä perustuslakien perusoikeussäännösten muuttamisesta Danielsbacka M et al (2013) Sukupolvien vuorovaikutus. Auttaminen ja yhteydenpito suurten ikäluokkien ja heidän lastensa elämässä. Väestöntutkimuslaitoksen julkaisusarja D 58/2013. Väestöliitto, Helsinki Eurostat (2017) Estimated average age of young people leaving the parental household by sex. http://appsso.eurostat.ec.europa.eu/nui/submitViewTableAction.do. Accessed 5 Sept 2017 Gentrans – Generational Transmissions in Finland (2019) Research project’s homepage. www. blogs.helsinki.fi/gentrans/. Accessed 11 Apr 2019 Government proposal for modifications to the Gift and Inheritance Tax Law HE 58/2007 vp. Hallituksen esitys Eduskunnalle laiksi perintö- ja lahjaverolain muuttamisesta Government proposal for the Client Payments Act HE 310/2018 vp. Hallituksen esitys eduskunnalle laiksi sosiaali- ja terveyspalvelujen asiakasmaksuista Government proposal for the new Constitution of Finland HE 1/1998 vp. Hallituksen esitys Eduskunnalle uudeksi Suomen Hallitusmuodoksi Government proposal for the Social Welfare Act HE 164/2014 vp. Hallituksen esitys eduskunnalle sosiaalihuoltolaiksi ja eräiksi siihen liittyviksi laeiksi Government proposal for the transformation of fundamental rights HE 309/1993 vp. Hallituksen esitys Eduskunnalle perustuslakien perusoikeussäännösten muuttamisesta Hämäläinen H (2017) Perhesukupolvien välinen apu. Tutkimus suurten ikäluokkien vanhemmilleen ja aikuisille lapsilleen antamasta avusta. Valtiotieteellisen tiedekunnan julkaisuja 45/2017. Unigrafia, Helsinki Hoppania H-K, Mäki-Petäjä-Leinonen A, Nikumaa H (2017) (Un)equal treatment? People with dementia between elder care and disability services in Finland. Eur J Soc Secur 19(3):225–241 Kalliomaa-Puha L (2017) Vanhuksen oikeus hoivaan ja omaisolettama. Gerontologia 2017 (3):227–242 Kangas U (2004) Lakiosa eilen, tänään ja huomenna. Defensor Legis 2004(4):575–601 Kangas U (2014) Laitoshoitomaksun määräytymisen ongelmia. In: Mäki-Petäjä-Leinonen A, Nieminen L (eds) Vanhuus ja Oikeus, Lakimiesliiton kustannus, pp 221–255 Kauppinen K, Silfver-Kuhalampi M (2015) Työssäkäynnin ja läheishoivan yhteensovittaminen ky- selytutkimuksen tuloksia. In: Kauppinen K, Silfver-Kuhalampi M (eds) Työssäkäynti ja läheis- ja omaishoiva – työssä jaksamisen ja jatkamisen tukeminen. Sosiaalitieteiden laitoksen julkaisuja 12. Helsingin yliopisto, Helsinki, pp 21–76 Kehusmaa S (2014) Hoidon menoja hillitsemässä. Heikkokuntoisten kotona asuvien ikäihmisten palvelujen käyttö, omaishoito ja kuntoutus. Sosiaali- ja terveysturvan tutkimuksia 131. Kela, Helsinki Kinnunen H, Mäki-Fränti P (2016) Pitkittynyt taantuma heikentää nuorten sukupolvien asemaa Suomessa. In Euro ja Talous. Suomen Pankki, https://www.eurojatalous.fi/fi/2016/artikkelit/ pitkittynyt-taantuma-heikentaa-nuorten-sukupolvien-asemaa-suomessa/. Accessed 25 Sept 2017 Kröger T, Leinonen A (2012) Transformation by stealth: the retargeting of home care services in Finland. Health Soc Care Commun 20(3):319–327 Meenan H (2012) Age discrimination and the future development of elder rights in the European Union: walking side by side or hand in hand? In: Doron I, Soden Ann M (eds) Beyond elder law: new directions in law and aging. Springer, pp 57–97 Mikkola M (2010) Social Human Rights of Europe, 1st edn. Legisaction Ltd, Porvoo Ministry of Finance (2019) Work to strengthen general government finances should continue. https://vm.fi/ artikkeli/-/asset_publisher/virkamiespuheenvuoro?_101_INSTANCE_AOvUVthvfE4u_ languageId¼en_US. Accessed 11 Apr 2019 Ministry of Social Affairs and Health (2016) Palvelujen menot ja rahoitus [Service Expenditure and Financing] www.stm.fi/talous-ja-toiminta/palvelujen-menot-ja-rahoitus. Accessed 21 Sept 2017 Ministry of Social Affairs and Health (2018) Omaishoidon ja ansiotyön yhteensovittaminen. Selvityshenkilön raportti. Sosiaali- ja terveysministeriön raportteja ja muistioita 2018:60

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Mölsä A (22.4.2018) Oikeusoppineet: Vanhusten lisääntynyt kotihoito on johtanut heitteillejättöihin. https://yle.fi/uutiset/3-10172017. Accessed 27 Apr 2019 National Institute for Health and Welfare (THL) (2017) Kotihoito ja sosiaalihuollon laitos- ja asumispalvelut 2017. https://thl.fi/en/tilastot-ja-data/tilastot-aiheittain/ikaantyneet/ sosiaalihuollon-laitos-ja-asumispalvelut. Accessed 2 May 2019 National Supervisory Authority for Welfare and Health (Valvira) (13 March 2019) Valviran ja aluehallintovirastojen tarkastuskäynnit vanhusten hoivakodeissa – samanlaiset ongelmat toistuivat monin paikoin. https://www.valvira.fi/-/valviran-ja-aluehallintovirastojentarkastuskaynnit-vanhusten-hoivakodeissa-samanlaiset-ongelmat-toistuivat-monin-paikoin. Accessed 2 May 2019 Nikumaa H, Mäki-Petäjä-Leinonen A (2019) Counselling of people with dementia in legal matters social and health care professionals’ role. Eur J Soc Work 1:1–15 Nordic Social Statistical Committee (2017) Social Protection in the Nordic Countries 2015/2016 Scope, Expenditure and Financing. www.nowbase.org. Accessed 2 May 2019 O’Cinneide C (2014) The rights of the elderly. In: Peers S, Hervey T, Kenner J, Ward A (eds) The EU Charter of fundamental rights: a commentary. Hart, Oxford, pp 694–708 Official Statistics of Finland (2016) Households’ assets. https://www.stat.fi/til/vtutk/index.html. Accessed 27 Apr 2019 Official Statistics of Finland (2018) Population structure. http://www.stat.fi/til/vaerak/2018/vaerak_ 2018_2019-03-29_tie_001_en.html. Accessed 1 Apr 2019 Official Statistics of Finland (2019) Births. http://www.stat.fi/til/synt/2018/synt_2018_2019-0426_tie_001_en.html. Accessed 29 Apr 2019 Official Statistics of Finland (2019) Population projection. http://www.stat.fi/til/vaenn/2018/vaenn_2018_2018-11-16_tie_001_en.html. Accessed 26 Mar 2019 Seppälä A (30.1.2019) Huippututkija: miljardi euroa lisää vuodessa nostaisi Suomen vanhushuollon pohjoismaiselle keskitasolle. https://yle.fi/uutiset/3-10618988. Accessed 2 May 2019 Tanskanen A, Kallio J, Danielsbacka M (2018) Should the family or the state provide support for the elderly people? Findings from a two-generational Finnish study. Int J Sociol Soc Policy 39 (1/2):138–155 Tax Administration (2017) The tax credit for household expenses relating to cleaning and household work. https://www.vero.fi/en/individuals/tax-cards-and-tax-returns/income-and-deduc tions/Tax-credit-for-household-expenses/siivous%2D%2Dja-kotitaloustyö/. Accessed 27 Apr 2019 The Annual Report 2014 of the Parliamentary Ombudsman of Finland Eduskunnan oikeusasiamiehen kertomus vuodelta 2014, K3/2015 vp. Helsinki 2015 The Annual Report 2017 of the Parliamentary Ombudsman of Finland Eduskunnan oikeusasiamiehen kertomus vuodelta 2017, K16/2018 vp. Tampere 2018 The Future Committee of the Finnish Parliament 1/2014. Eduskunnan tulevaisuusvaliokunta (2014) Mahdollistava valtio – kokeileva Suomi. Tulevaisuusvaliokunnan mietintö 1/2014

Solidarity Across Generations in England and Wales Brian Sloan

Abstract This chapter considers intergenerational solidarity in the context of pensions, poverty and care in England and Wales. Aspects of the legal system concerning solidarity across generations in England and Wales might appear disjointed, incoherent, or even non-existent. That said, this chapter demonstrates that much solidarity across generations is encouraged by the legal system and occurs in practice, even if the absence of a coherent legal and policy framework might cause future strain in light of anticipated demographic changes.

1 Introduction The population of England and Wales was around 58.7 million people in mid-2017 (Office for National Statistics 2018a). According to the 2011 census, the proportion of the population aged 65 or over was 16.4% (Office for National Statistics 2012). The proportion of the population aged 15–64 in the United Kingdom, according to the OECD (2019f), was 64.92% in 2014. The ageing population is a highly significant matter in England and Wales: one estimate suggests that in the United Kingdom, 23% of the population is projected to be aged 65 or older by 2035, while only 18% will be under 16 by then (Office for National Statistics 2011, p. 1). This raises important issues about, for example, the provision and funding of social care (see, e.g., Sloan 2016 and Sect. 4 below). The birth rate shows an overall picture of decline. According to the Office for National Statistics (2018b): In 2017 there were 679,106 live births in England and Wales, a decrease of 2.5% compared with 696,271 in 2016. This is the largest annual percentage decrease since the number of live births declined by 4.3% between 2012 and 2013. . .

The aim in this chapter has been to state law and policy as they stood, and statistics as available, on 11 June 2019. B. Sloan (*) Robinson College, Cambridge, UK e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_10

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The total fertility rate (TFR) for England and Wales decreased in 2017 to an average of 1.76 children per woman from 1.81 in 2016, declining for the fifth consecutive year, from 1.94 in 2012. . .

Whatever the precise figures, it will become clear that there are many issues on which there is arguably both a need for, and a practice of, intergenerational solidarity but also a potential for tension between generations. This chapter considers solidarity across generations in the pension systems in England and Wales, before analysing the approach of the state and the family towards elderly people in poverty and those in need of care respectively.

2 Solidarity Across Generations in Pension Systems 2.1

Outline of Labour Market Participation and Pension Provision

The pension system is obviously heavily affected by labour market participation. In the last quarter of 2014, ‘86.3% of people aged between 25 and 49 in the UK were participating in the labour market’ (Office for National Statistics 2015). The equivalent rate for those aged between 50 and the state pension age was 75.3%, and for those aged 16–24 it was 62.8% (Office for National Statistics 2015). For those above the state pension age, the labour market participation rate was 12.1% (Office for National Statistics 2015). The state pension age is 65 for men and in 2010 began to increase from 60 to 65 for women, though both will increase.1 The employment rate for August-October 2013 for people aged 16–24 was 50.6% (Office for National Statistics 2013b). It was 80% for those aged 25–34, 82.1% for those aged 35–49, 68.1% for those 50–64 and 10% for those 65 and over (Office for National Statistics 2013b). Lain (2016, p. 2) has described how it is the UK Government ‘to a considerable degree’ that ‘has sought to “reconstruct” retirement by using regulation and legislation to promote/necessitate employment beyond [65] and dissolve the notion of a fixed retirement age’. While this is often couched as a benefit for the older population, a parliamentary committee (House of Lords Select Committee on Public Service and Demographic Change 2013, p. 9) has described it as ‘naïve’ to think that a ‘sufficient income for a good quality of life at a time of increased longevity can come from the taxpayer’, such that the ability to work longer might be more of a necessity than a beneficial choice for some. The ONS (2016) reports that 10.4% (1.19 million) of those aged 65 and over were in employment in the period for May to July 2016, as compared to 6.6% (609,000) in the equivalent period in 2006 and 5.5% (478,000) when records began in 1992.

1

Pensions Act 1995, s 126.

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On the other hand, the Government has introduced a number of policies aimed at reducing the number of young people who are ‘not in education, employment or training’ (‘NEET’) (Powell 2018, pp. 13–19), which arguably creates a confused picture and risks intergenerational tension. These include increasing the age until which people must continue in education to 18, apprenticeships, traineeships and the Work Programme, a ‘welfare-to-work’ scheme. It seems that (Powell 2018, p. 4): 783,000 people aged 16-24 were Not in Education, Employment or Training (NEET) in the second quarter of 2018, 11.2% of all people in this age group. This was a decrease of 25,000 from the previous quarter and also a slight decrease from the second quarter of 2017.

According to the same House of Commons briefing paper (Powell 2018, p. 4): The proportion of 16-24 year olds who were NEET remained relatively steady between 2002 and 2008, and at the beginning of 2008 13.4% were NEET. The proportion increased following the 2008 recession and peaked in July-September 2011 when 16.9% of 16-24 year olds were NEET (1.25 million people). Since then the number of people who are NEET has generally been falling.

Hanton (2012, p. 445) has said that the prevalence of older people in the labour market, and particularly discrimination in their favour as regards related tax and benefits, ‘creates intergenerational tension’, and that Government policy is ‘seriously disadvantaging young people’. For example, he notes that some apprenticeship places originally intended for younger people have been taken by older ones. He highlights two schools of thought on the question whether older people are ‘taking younger people’s jobs’: the ‘lump of labour’ school who think that there is a fixed number of jobs available (and that employment of older people will therefore reduce opportunities for younger people), and those who think that increased numbers of people working will increase the size of the economy and the total number of jobs available. While he considers that the ‘lump of labour’ view is flawed in circumstances of full employment, he describes the argument that older people are taking younger people’s jobs as stronger in times of recession (as relatively recently experienced by the UK), and it is significant that ‘[i]nsecure employment is concentrated in the younger part of the age spectrum’ (House of Lords Select Committee on Intergenerational Fairness and Provision 2019, p. 51). Self-evidently, the state is responsible for the state pension system in England and Wales. For other forms of pensions, the responsibility will lie with pension trustees acting within the confines of relevant legislation, the general law of trusts and the particular terms of the scheme (see, generally, Nabarro Pensions Team 2017). The UK pension system has been described as ‘unfunded’ (Directorate-General for Employment, Social Affairs and Inclusion of the European Commission and the Social Protection Committee 2012). Entitlement to the UK state pension is amassed by working and making ‘National Insurance contributions’, which can be a payroll tax, or by undertaking other ‘qualifying’ activities such as caring for children, looking for work or receiving disability-related benefits (Cribb and Emerson 2016, p. 8). Those reaching the state pension age with more than 10 years’ qualifying activities are entitled to some level of state pension, with the full amount payable only to those who have amassed

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35 years of contributions (Cribb and Emerson 2016, p. 8). Once a certain number of years’ contribution has been made, the rate of state pension does not relate to earnings during working life (Cribb and Emerson 2016, p. 8). The low level of state pension provision (essentially funded by taxation) in the UK means that ‘income from private pensions (which include both employerorganised and personal pensions) makes up a large proportion of income in retirement for individuals in the UK’ (Cribb and Emerson 2016, p. 9). Employers are now generally obliged unless the employee opts out to enrol their employees in a pension scheme,2 a ‘defined contribution’ or ‘defined benefit’ scheme. This involves the employer and/or employee making tax-free contributions over the course of a working life. Income is then paid on retirement, with the level of income depending on length of service and salary (Cribb and Emerson 2016, p. 9). As a matter of employment law, there is no general mandatory retirement age3 and any such age imposed by a given employer must be objectively justified.4 The state pension can currently be claimed from the age of 65 for men and for women.5 It seems that ‘defined contribution’ schemes will generally allow individuals to draw on their pension ‘pots’ from the age of 55, while for ‘defined benefit’ schemes this ages varies (Cribb and Emerson 2016, p. 9). It is possible to claim the state pension and carry on working, although pension income will be taxed and workers may wish to defer it (Moore 2015). For private pensions, the position will depend upon the terms of the particular scheme. According to the Institute for Fiscal Studies (Cribb and Emerson 2016, p. 8): . . .the UK government does not provide a pension at a level that provides high ‘replacement rates’ for individuals who are retiring after a full working life. A full public pension (known as a ‘state pension’) in the UK is £155.65 per week (in 2016–17), equivalent to around only 30% of median full-time weekly earnings.

The 2019–2020 rate is the slightly increased £168.60 per week (HM Government 2019c). It was seen that once a certain number of years’ contribution has been made, the rate of state pension does not now relate to earnings during working life (Cribb and Emerson 2016, p. 8). That said, it is currently the subject of a ‘triple lock’, whereby it will increase by the highest of the increase in earnings, the increase in prices (as measured by the Consumer Price Index) and 2.5% (Emerson 2017). This is discussed, alongside more general risks of intergenerational tension as regards pension spending, in Sect. 2.2. As regards private pension schemes, there has been a decline in the availability of schemes based on the member’s final salary (see, e.g., Bourke 2006).

2 Pensions Act 2014, Part 6; see, e.g., Nabarro Pensions Team (2017, [14.9]ff), Cribb and Emerson (2016, p. 9). 3 Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011 SI No 1069. 4 See, generally, Seldon v Clarkson Wright & Jakes [2012] UKSC 16, [2012] 3 All ER 1301. 5 Pensions Act 1995, s 126.

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The ‘Triple Lock’ and the Politics of Pensions

There are considerable contemporary debates about the relative wealth of older and younger generations and the appropriate distribution of state spending (considered further in Sect. 3.1). It has been claimed that ‘[p]ensioners now have higher incomes on average than the rest of the population, once housing costs and family composition are taken into account’ (Institute for Fiscal Studies 2015). As summarised by the House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 69), ‘[h]ouseholds over the State Pension age have higher incomes than those below State Pension age with children but lower levels of income than those without children’ once taxes, benefits and housing costs are applied. The ‘triple lock’ (described in Sect. 2.1) for state pensions became an election issue in 2017 (Cumbo 2017). Changes to pension benefits could be made in accordance with legislation, the general law of trusts or the terms of a particular private pension schemes. According to the Pensions Law Handbook (Nabarro Pensions Team 2017, [7.10]), ‘[i]n many cases the reduction of an employee’s past service benefits will be prevented by the scheme’s documentation and it is arguably precluded by general trust law principles’, and there is statutory protection for ‘accrued rights and benefits’.6 Powers of amendment vested in pension trustees or employers are subject to court supervision.7 The level of the state pension is determined by the Government. On Disney (2016, p. R9)’s analysis, ‘[e]ach round of reforms has been imbued with a promise of permanence which has proved illusory in practice’. Since the UK lacks a written constitution (see, generally, Elliott and Thomas 2017), a major mechanism through which fundamental rights (specifically those contained in the European Convention on Human Rights) can currently be enforced by individuals in England and Wales is the Human Rights Act 1998. Pension entitlement is likely to be within the scope of Article 1 of the European Convention on Human Rights’ First Protocol (see, generally, Allen 2005, ch 2), and the European Court of Human Rights has said that ‘a wholly insufficient amount of pension and social benefits may raise an issue under Article 3 of the Convention’, which protects the right not to be ‘subjected to torture or to inhuman or degrading treatment or punishment’.8 That said, it has also said that it is acceptable to reduce prospective pension entitlements due to budget constraints.9 The Government has considered reforming the ‘triple lock’ on state pensions (essentially a political rather than a long-term legal commitment) and, while it looks set to remain until 2020, the pensions secretary has said that it will have to be reformed within his lifetime (Syal 2017). Disney (2016, p. R9) has said that the lock 6

Pensions Act 1995, ss 67-67I. See, e.g., Lloyds Bank Pension Trust Corporation v Lloyds Bank plc [1996] Pensions Law Reports 263. 8 Budina v Russia (App No 45603/05), 18 June 2009, p 5 of transcript. 9 Blanco Callejas v Spain (App No 64100/00), 18 June 2002. 7

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‘is now carrying [the] principle of poverty alleviation among the elderly too far’, and the House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 73) has recommended its removal. The issue of ‘pensioner poverty’ is addressed further in the next section.

3 Roles and Obligations of the State and the Family Towards Elderly People in Poverty 3.1

Debates About the Appropriate Balance of State Spending Between Older and Younger Generations

According to the OECD (2019c), the UK poverty rate for the population as a whole in 2016 was 0.111. For 0–17 year-olds it was 0.118, and it was 0.142 for those 66 and over. Whatever interpretation is made of these figures, there are a number of areas of potential conflict and differentiation between generations as regards state spending priorities. The Institute for Fiscal Studies (Cribb et al. 2016, p. 2) reports that those born in the early 1980s are ‘the first post-war cohort not to at least start working-age life with higher incomes than their predecessors had at the same age’, they ‘have accumulated significantly less wealth than their predecessors had by the same age’ and ‘have much lower homeownership rates in early adulthood than any other post-war cohort’. The Institute assert (Crawford et al. 2016, p. 1) that ‘[y]ounger generations. . .face an economic and policy environment in which it is harder to accumulate wealth for retirement than it was for their predecessors: it is harder to become a homeowner, private pension schemes are less generous on average, and the state pension will replace a smaller share of earnings on average’. Bristow (2015, p. 3) describes how ‘[o]n an everyday level’, the so-called ‘Baby Boomers’ born in the aftermath of the Second World War ‘appear to be embodied in a “silver tsunami”. . .of “young olds” who have just started retiring and threaten to live forever, allegedly sending the country into never-ending debt as it struggles to pay for spiralling costs of pensions, health and social care, and using their considerable voting and purchasing power to skew markets and public policy around their own interests’. While she describes this account as ‘a one-sided one, at best’ and locates the problematisation of the Baby Boomers within a wider ambivalence about the legacy of the 1960s, the very fact that it exists demonstrates the potential for conflict. That said, the House of Lords Select Committee on Intergenerational Fairness and Provision (2019, pp. 5–6) found ‘little public support for the idea that older people are to blame for the woes of younger generations or that one generation has wilfully robbed another’. During the 2017 general election campaign, there was much public discussion about the extent to which (often) elderly people should be expected to use the equity in their homes to pay for their social care, rather than the system receiving more funding via direct taxation that might affect younger people (Hussain 2017). The

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ultimately victorious Conservatives proposed that more such housing equity should be used (specifically by people receiving care while still living in their own homes), although their reduced majority apparently hampered their ability to implement this policy (HM Government 2017, p. 58; see further Sect. 4 below). The picture of intergenerational conflict is complicated, however, by the fact that the motivations of those seeking to protect the home often relate to the ability of social care recipients to pass their homes to their children etc via inheritance, even if there is evidence that ‘an expectation that housing will be kept intact for the next generation has been replaced with the reality of using housing assets across the life-cycle. . .“either on high days and holidays, or to meet a more sobering array of welfare needs”’ (Hopkins and Laurie 2015, p. 132), and even if inheritance apparently has the potential to increase future inequality across and between generations (Hood and Joyce 2017). In addition, while there are allegations that constituency boundaries favour the Conservatives (Smith 2017), and a perception that they are the party tending to be preferred by older people and associated with furthering their interest, the position is complex since it has been seen that the Conservative Government considered reforming the ‘triple lock’ on pensions and it was they who proposed that more elderly people should be expected to use housing equity to fund care. Aside from issues concerned directly with material provision, there was something of a division between generations on the issue of whether the United Kingdom should leave the European Union, which could have very significant implications for a range of issues including material wellbeing and the viability of the social care system. According to a YouGov (2016) poll, ‘[u]nder-25s were more than twice as likely to vote Remain (71%) than Leave (29%)’ in the 2016 referendum on the topic and ‘[a]mong over-65s the picture is almost the exact opposite’. More generally, YouGov (2017b) have said in light of the 2017 general election that ‘age seems to be the new dividing line in British politics’. That said, the House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 5) found that ‘a strong and positive relationship does exist between generations even though there are serious concerns about fairness in public policy’, albeit that (10) ‘[i]f society continues on its current trajectory, and the Government takes no action, there could be a breakdown in the intergenerational compact’. Despite the contested issue of the reality of ‘pensioner poverty’, it does appear to have a significant gendered dimension. As summarised by Bisom-Rapp and Sargent (2014, pp. 3–4), data suggest that ‘women in the United Kingdom were at a greater risk of poverty throughout their working lives’ producing ‘a significant statistical difference in poverty risk between men and women under the age of 50, which decreased for the 50–64 age group, and then increased dramatically for those aged 65 and over, resulting in a poverty gap that was more than twice the average for the whole population in the United Kingdom’ and ‘the male/female poverty gap for older people in the United Kingdom is almost five times the average of the whole U.K. population’. The OECD (2019e) suggests that social spending in the United Kingdom in 2018 was 20.6% of GDP. Public pension spending was 6.238% of GDP in 2015 (OECD 2019b). In 2015, family benefit spending was 3.474% (OECD 2019a) and public

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unemployment spending was 0.173% (OECD 2019d). The Institute for Fiscal Studies (Crawford et al. 2016, [4.1]) have said that ‘it is extremely hard to assess the distributional impact of public spending’ but noted that (Crawford et al. 2016, [4.2]): . . .the tax and benefit reforms implemented by the coalition government [in office from 2010 to 2015] had very different impacts on working-age and pensioner households. In particular, relative to an ‘unchanged policy’ baseline, low-income pensioner households fared much better than low-income working-age households on average, reflecting the fact that they were largely protected from the benefit cuts implemented by the coalition, with the state pension instead being ‘triple locked’.

On their analysis (Crawford et al. 2016, [4.3]): The differential impact of tax and benefit reforms implemented by the coalition is part of a longer-run pattern in the impact of changes in government policy. . .[P]ensioner households gained significantly more than working-age households on average from changes implemented by the Labour government between 1997 and 2010. . .And pensioners have again been largely protected from the large package of benefit cuts announced by the Conservative government in the July 2015 Budget.

That said, the picture is complex, with Ginn (2013, p. 36) claiming that ‘far from being protected from the cuts, older people face a number of reductions to services, pensions and benefits’. The House of Commons Work and Pensions Committee (2016, [25]–[28]) discussed generational accounting in its report on ‘Intergenerational Fairness’, published in November 2016, but this should not necessarily be taken to mean that it plays any sustained long-term role in policymaking. In fact, the House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 19) reported that ‘[o]ne particular government weakness is a lack of work on generational accounts’. As regards the European Convention on Human Rights, it has been seen that much deference is shown to Contracting Parties on matters of state spending priorities (see, by analogy, Sloan 2016, as well as Sect. 2.2), reducing the likelihood of a successful challenge to such priorities on the basis of age discrimination.

3.2

State Financial Provision for Elderly People

Whatever the controversy over the relative wealth of older versus younger generations, a number of benefits are specifically intended for older people (see, generally, Hood and Norris Keiller 2016, section 4.5). Pension credit ‘tops up the income of older people to a specified minimum level and improves their incentives to save for retirement’ (Hood and Norris Keiller 2016, p. 40). A Financial Assistance Scheme compensates those who lose their pension provision because their provider unexpectedly shuts down, and winter fuel payments and free television licences are exclusively for older people. Free bus travel is also provided via an older person’s bus pass (HM Government 2019a). Some of these may be genuine attempts to reduce ‘pensioner poverty’ (Herring 2009, ch 6), and of course some more generally

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available forms of social assistance are likely to be (albeit by no means exclusively) claimed by older people (King’s Fund 2014, p. 4). That said, in light of the fact that many pensioners appear to be better off in substance than those of working age (and it is claimed that ‘poverty now “wears a younger face”’ following the introduction of pension credit (House of Lords Select Committee on Intergenerational Fairness and Provision 2019, p. 69)), there may be suspicions that politicians and others are courting those who are more likely to vote or use particular services and thus to represent a greater proportion of potential voters/service users (Yougov 2017a). This could lead to a form of age discrimination, even if it is not necessarily actionable due to deference, and, unchecked, to a ‘silver democracy’ or ‘silvercracy’ (Seo 2017). It is therefore significant that, for example, it has recently been announced that in 2020 free television licences for the over-75s (funded by the British Broadcasting Corporation and not the Government since 2015) will be restricted to households where one person is in receipt of the means-tested pension credit discussed above (Hall and Clementi 2019). The House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 75) has recommended that the age threshold for winter fuel payments and free bus passes should be raised and that means testing should be investigated.

3.3

The Absence of a Duty to Maintain One’s Elderly Parents and Its Implications

There is no general legal duty on adult children to care for or maintain their elderly parents in England and Wales. On Oldham’s (2001, pp. 135–139) account: Before the repeal of the Poor Laws in 1948, children were under a legal duty to support their parents and grandparents. Sons bore this duty indefinitely but, because of the historical legal disabilities of married women under the doctrine of conjugal unity, the duty imposed on daughters ended when they married. The creation of the welfare state in 1948 relieved children of legal responsibility for their ascendants. . .Such support is considered to fall within the realm of public rather than private intergenerational transfer.

Oldham draws a comparison between, on the one hand, the absence of such legal support obligations combined with a default principle of testamentary freedom in English Law and, on the other, the existence of such obligations and compulsory portions in civil law jurisdictions. But despite West et al. (2017, p. 2467)’s finding that ‘in the majority of cases, there was no expectation by parents or offspring that the latter should contribute toward board and lodging’ in the case of young graduates, suggesting that if anything the flow of maintenance is often in the other direction, it will be seen (in Sect. 3.4) that a major reason to live in a multigenerational household is to provide care for a relative so that in-kind provision is often made in England. For those who require formal care (considered in Sect. 4), it was previously the case that

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only third parties could make ‘top-up’ payments to secure a higher standard of social care, but this is no longer necessarily the case (Spencer-Lane 2015, [1–349]).

3.4

Intergenerational Support and Property Transfers, Particularly from Older to Younger Generations

The reality that many older people are materially better off than younger generations means that much support in practice flows from the former to the latter. According to the Office for National Statistics (2017), around 6.6 million 15- to 34-year-olds lived with their parents in 2017, and the percentage of such people doing so has risen from 36% in 1996 to 40% in 2017, although the number does decrease once they reach the age of 20. The ONS (2017) speculates that ‘[l]arger numbers of young adults tending to stay at home for longer may be explained by them staying in education and training for longer, delaying leaving the parental home as they formalise relationships and have children at older ages and also as it has become more expensive to rent or buy a home’. It reported that households containing two or more families ‘were the fastest growing household type over the decade to 2017, increasing by 42.1% from 215,000 households in 2007 to 306,000 households in 2017’. It should be noted that these families are not necessarily related, and that ‘[c]hanges in the number of multi-family households may be because of older couples moving in with their adult child and their family, young adults who are partnered or lone parents, remaining or returning to their parent’s household and unrelated families sharing a household’. The insurance company Aviva (2016) published a report on ‘Changing Households’, comprising an empirical study with a respondent cohort of 2000 adults. It found that 70% of multigenerational households included adult children who had not yet moved out of their parents’ home, and 9% contained those who had moved back in in order to save for a deposit (the so-called ‘boomerang’ generation; see, e.g., West et al. 2017). Nine per cent contained parents or elderly relatives who had moved in (Aviva 2016, p. 6). The main reason given for opting to live in a multigenerational household was to look after a relative (see further Sect. 4.2), although significantly this figure included not only those who had actually done so but also those asked about the circumstances in which they would make such a choice. In any case, the picture of the flow of support in multigenerational households is clearly complex. There is nevertheless considerable evidence of support being given by parents to their adult children. This is in spite the absence of a legal duty to do so while the parents remain alive,10 even (notwithstanding the default principle of testamentary freedom) if a(n adult) child can bring a claim for discretionary provision from a

10 Child support has a very limited role once a child reaches 18: see, e.g. Masson et al. (2008, [15-032]).

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parent’s estate on the basis that the will and/or the intestacy rules has failed to make ‘reasonable financial provision’ for that child’s maintenance.11 A step-child can make an equivalent claim.12 The fact that the motivation for living with parents is often to save money (Aviva 2016, p. 6) itself suggests that in-kind benefits are being provided by parents to people who do so. West et al. (2017, p. 2467)’s study of young adult graduates returning to parental homes in England found that ‘[p]arents felt that they should support their adult children— they saw it as an obligation, a responsibility, or part of their caring role as parents’. Moreover, 29% of first time buyers responding to an English Housing Survey (Department for Communities and Local Government 2017, p. 4) had help from friends and family to purchase their home in 2015–2016, and much of that support is likely to come from the purchaser’s parents. It is arguable that the inheritance tax rules effectively incentivise inter vivos gifts rather than testamentary dispositions in some circumstances, inter alia by allowing such gifts to remain free of inheritance tax (whose standard rate is 40%) if made more than seven years before the death of the donor.13 The House of Lords Select Committee on Intergenerational Fairness and Provision (2019, p. 83) made the bold claim that ‘Inheritance Tax is capricious and not currently fit for purpose [and c]onsideration needs to be given to whether and how assets should be taxed on death or transfer in a way that ensures fairness between generations’. According to Tan et al. (2010, p. 993), ‘there is growing evidence that grandparents today are playing an increasing role in rearing the next generation’ in the UK. They suggest that ‘with the changing family scenario—more working parents, more divorces, and increased longevity—grandparents are filling the gap between the time- poor parents and the parenting needs of the young people’ (Tan et al. 2010, p. 1009). This is in spite of the fact that grandparents are often said to lack sufficient recognition as regards contact with their grandchildren in the event of a dispute (Kaganas 2007). According to a report by Lloyds Bank (2015, p. 1), UK grandparents provided £5.6m of direct financial assistance to their grandchildren in 2014: ‘most money was provided for the purpose of grandchildren buying a home, totalling just under £1.9 billion, with cash gifts coming second at £1.3 billion and £846 million being put towards help with rental payments’. Again, the inheritance tax system arguably encourages such inter vivos transfers. Ultimately, while significant numbers of older people are materially supported by the state, the picture is complicated by the fact that the relative material comfort of many older people means that they are often providing much support to younger generations. The next section concerns the treatment by the state and society of elderly people who require long-term care.

11 Inheritance (Provision for Family and Dependants) Act 1975, s 1(1)(c). See, in particular, Ilott v The Blue Cross [2017] UKSC 17, [2018] AC 545. 12 Inheritance (Provision for Family and Dependants) Act 1975. 13 Inheritance Tax Act 1984; see, e.g., Sloan (2017, pp. 6–7).

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4 Roles and Obligations of the State and the Family Towards Elderly People Who Need Long-Term Care 4.1

The Social Care System, Its Funding and Its Limitations

Healthcare is provided broadly free of charge at the point of delivery by the National Health Service, which is funded via general taxation.14 That said, social care, which (despite lacking a statutory definition) supports people with physical, cognitive or age-related conditions in carrying out personal care or domestic routines, either in their own homes or in care homes, is subject to a means test that mandates that many elderly people make significant contributions (Commission on Funding of Care and Support 2011; Sloan 2016). The charging regimes for health care and social care have been separate since the beginnings of the NHS (Bilton 2014, p. 14), although the distinction between them is frequently criticised (Herring 2018, p. 57). Adult social care is the responsibility of local authorities in England, though ‘few. . .are now involved in the direct delivery of care and support services’, with most services operated by private, for-profit providers (Kelly 2013, p. 24). It should be emphasised that local authorities are struggling to meet demands in the context of the ageing population (Age UK 2016). Moreover, the dignity of those who require care is far from guaranteed, whatever the rhetoric surrounding the introduction of the Care Act 2014 on the focus towards ensuring the well-being of those requiring care and ensuring a national eligibility framework for care services (Sloan 2016). There are concerns that recent commitments to increase state spending on social care are insufficient to improve the level of care appropriately and cope with increased demand (Matthews-King 2018). Under the system pre-dating the Care Act, those with assets above £23,250 (including a home, but subject to some exceptions) could be expected to pay for all of their social care unless and until their relevant assets are reduced to that threshold.15 It is the taxpayer who funds the system otherwise, which inevitably means that those of working age are doing so to some extent. Baxter (2016) estimated that in the recent past between 20 and 25% of those receiving care in their own homes, and between 43 and 45% of those doing so in a care home, paid for their own care, as well as predicting future increases in those figures. It remains possible (see, e.g., Asthana 2017) that the Care Act’s aim of broadly reducing the scope for a person’s assets to be swallowed up in paying for care will ultimately be implemented (Hopkins and Laurie 2015), by imposing something of a cap on each person’s eligible lifetime care costs16 (albeit that it was originally delayed from 2016 and 2020: Department of Health 2015a) and increasing the capital limit below which means-tested help is available (Department of Health

14

National Health Service Act 2006, s 1(4). National Assistance (Assessment of Resources) Regulations 1992 SI No 2977. 16 Care Act 2014, s 15. 15

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2015b, [9.7]). It has been seen (in Sect. 3.1), however, that the extent to which the general taxpayer should be footing the bill rather than care recipients who have been fortunate enough to build up housing equity in more favourable economic conditions became a significant election issue in 2017. At the time of writing, a green paper on the future of social care (including any cap on individual liability to pay for it) is expected, but the paper has been subject to repeated delays apparently due to a focus on the ‘Brexit’ process (Jarrett 2018). It is also unlikely that a cap would have a significant substantive effect for many individual self-funders. For example, the Institute and Faculty of Actuaries (2014) has estimated that those who reached a £72,000 cap would have spent an average of £140,000 before doing so, and that only around 10% of those who pay for care would ever reach it (Independent Age and Institute and Faculty of Actuaries 2017). Even before its implementation was delayed, the King’s Fund (2014, p. 3) emphasised that only the cost of meeting eligible needs would count towards the cap, which are likely to be critical or substantial and not low or moderate. There was also concern that progress towards the cap could be set below what it costs an individual to pay for care (Department of Health 2015b, ch 4) because the local authority could secure cheaper provision itself (Spencer-Lane 2015, [1-317]). It should also be emphasised that the cap would exclude so-called ‘general’ or ‘daily’ ‘living costs’ within a care home, and these were expected to be set at around £12,000 per year (Department of Health 2015b, [7.3]). On the other hand, a reason given for the originally delayed implementation of the cap was that ‘a time of consolidation is not the right moment to be implementing expensive new commitments’ to the tune of £6 billion (Department of Health 2015b). The social care system will be a site of debate and possibly conflict between and within the generations for many years to come.

4.2

The Realities of Informal Care for Elderly People

Despite the existence of a social care system, there are around 5.8 million informal carers in England and Wales (Office for National Statistics 2013a), and around 85% of disabled and elderly people who live in their own homes and receive informal care do so from either a spouse or an adult child (an issue discussed in Sect. 3.4). A (slight) majority of those receive it from an adult child, even if there are concerns about the supply of such care in the future due to demographic and lifestyle changes (Pickard 2015, p. 97). The reasons for the number of carers are likely to include the social care system being unable to provide the required support (Age UK 2016), the costs associated with social care (considered in Sect. 4.1) and resistance to leaving one’s home and/or ‘official’ involvement in one’s care (see, e.g., Sloan 2013, ch 1). Significantly, many such carers suffer financial and health disadvantages as a result of the responsibilities that they assume (Sloan 2013, ch 1), although Sect. 4.3 discusses the limited state support available to them.

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State Support for Informal Carers

Local authorities can provide services to informal carers themselves as well as to those who require care. The Carers (Recognition and Services) Act 1995 granted carers the right to an assessment of their ability to provide care when a local authority is ascertaining a care recipient’s need for more formal community care. The Carers and Disabled Children Act 2000 made the right to an assessment independent of the care recipient’s assessment, and gave local authorities powers to provide services for carers. The Carers (Equal Opportunities) Act 2004 then placed local authorities under a duty to inform carers of their rights under the previous two Acts, and required consideration of the carer’s employment, training and housing needs as part of the assessment. Under the 2004 Act, a local authority could also enlist the help of housing, health, education and other local authorities in providing support to carers. This has been described as a ‘major cultural shift’, since it involved seeing carers ‘not so much as unpaid providers of care services for disabled people, but as people in their own right’ (Clements 2014, [1.3]). The Care Act 2014 then created ‘the first ever entitlement to support for carers’ (Department of Health 2014a, p. 1) and the Impact Assessment expects this to be the main cost of implementing Part 1 of that Act (Department of Health 2014b, p. 2). Previously, there was no duty to provide services or apply an eligibility framework for carers,17 and the Department of Health’s guidance on the matter was non-statutory (Spencer-Lane 2015, [1-250]). Carers’ own eligibility for care and support, which is independent to the eligibility of the care recipient, is governed by criteria similar to those applied to a care recipient.18 In the employment context (see, e.g., Horton 2011), one example of recognition for carers is the Work and Families Act 2006’s introduction of a right to request flexible working for those who care for certain adults,19 subsequently extended to all employees.20 Moreover, the definition of discrimination on grounds of disability in the Equality Act 201021 is broad enough to include carers due to the concept of ‘associative’ discrimination (see, e.g., Clements 2014, [13.9]-[13.30]).22 Similar concepts are evident in the Court of Justice of the European Union’s decision in Case C-303/06 Coleman v Attridge Law,23 which required the Disability Discrimination Act 1995 to be interpreted as covering carers of disabled children even

17

Cf Carers (Recognition and Services) Act 1995; Carers and Disabled Children Act 2000; Carers (Equal Opportunities) Act 2004. 18 Care and Support (Eligibility Criteria) Regulations 2015, SI No 313, r 3. 19 Work and Families Act 2006, s 12, amending Employment Rights Act 1996, s 80F. 20 Children and Families Act 2014, Part 9. 21 Equality Act 2010, s 13. 22 See also Busby (2011) for a discussion of the failure to include being a carer as a specific protected characteristic. 23 Case C-303/06 Coleman v Attridge Law [2008] All ER (EC) 1105 (ECJ).

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though the carers are not disabled themselves.24 As a result of this decision, Herring (2010, [10.73]) argues that a refusal to accede to a carer’s request for flexible working could constitute disability discrimination in certain circumstances. An employee is ‘entitled to be permitted by his employer to take a reasonable amount of time off during the employee’s working hours in order to take action which is necessary’ inter alia ‘to provide assistance on an occasion when a dependant falls ill, gives birth or is injured or assaulted’, ‘to make arrangements for the provision of care for a dependant who is ill or injured or ‘because of the unexpected disruption or termination of arrangements for the care of a dependant’.25 As well as provisions on the general availability of services for carers, a publicly administered direct remuneration approach is in evidence in England and Wales. For example, a carer’s allowance is a limited means-tested benefit payable to a person who spends at least 35 h per week caring for someone who is herself in receipt of certain benefits related to illness or disability.26 Care-related benefits frequently go unclaimed (Carers UK 2010), and they have been roundly criticised for their inadequacy (Herring 2009, pp. 100–101). Many of those eligible for social care can also obtain money from a local authority in order to purchase care services under the Direct Payment Scheme.27 The scheme is intended to ‘increase the choice, flexibility and independence of the care recipient’ (Stewart 2007, p. 175). A significant limitation, however, is that a Direct Payment recipient is often prohibited from purchasing services from spouses, civil partners or people living with the recipient as such, or from close relatives living in the same household.28 The definition of such a relative has been described as ‘expansive’ (Stewart 2007, p. 173), and contrasts with the approach to eligibility to request flexible working under the Work and Families Act 2006. A relative can be paid through Direct Payments ‘if the local authority considers it is necessary to do so’,29 but Clements (2014, [5.35]) claims that local authorities have often erroneously assumed that ‘exceptional circumstances’ must be present before the relevant threshold is met. The Government seems to have accepted that some responsibility for care should, or at least will inevitably, rest with family members (see, e.g., Swinford 2017; Sloan 2015; Conservatives 2017, p. 60). This is controversial, and another potential site of intergenerational tension. But the reality is that if potential informal carers are unable or unwilling to provide care, this may necessitate greater state spending on the social care system. This, in turn, would also have an impact on the working-age population.

24

EBR Attridge Law LLP (formerly Attridge Law) v Coleman [2010] 1 CMLR 28 (EAT). Employment Rights Act 1996, s 57A. 26 The amount currently payable is £66.15 per week, and there are restrictions based on age, income and student status: HM Government (2019b). 27 Care Act 2014, s 31. 28 For a full list of presumptive exclusions see Care and Support (Direct Payments) Regulations 2014 SI No 2871, r 3. 29 Care and Support (Direct Payments) Regulations 2014, SI No 2871, r 3(2). 25

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Private Legal Arrangements Supporting Informal Care

In light of the widely-perceived inadequacy of state support for both for those requiring formal care and those providing informal care (considered in Sects. 4.1– 4.3), my previous work has considered the scope for a carer to have a claim on the estate (or other property) of the recipient (Sloan 2013, 2015). Such a claim is already possible in some circumstances, and I have argued for both rationalisation and expansion of these. An example of a situation where provision was made is Re Callaghan (deceased).30 The applicant stepson and his wife undertook to provide care for the deceased during the last four months of his life, during which time he suffered from a ‘painful and distressing illness’ and was a ‘bad patient’ who discharged himself from hospital several times.31 Booth J held that the deceased’s obligations and responsibilities towards the applicant were ‘very considerable indeed’, effectively being those of a ‘widowed parent to a dutiful and responsible only child’.32 An award under the Inheritance (Provision for Family and Dependants Act 1975 (consisting of a payment of £15,000 out of an estate valued at £31,000) was therefore made. It is telling, however, that the leading case on the 1975 Act, Ilott v The Blue Cross, involved an ultimately modestly successful claim by a daughter who had been estranged from her mother for some 26 years before the mother’s death.33 As I have argued elsewhere (Sloan 2013, 2015), the prospect of private transfers from care recipients to carers can never be a comprehensive solution to the conundrum of care.

5 Conclusion There are many examples of intergenerational solidarity in England and Wales. For instance, it is clear that many adult children do provide care for their elderly parents, and that significant numbers of grandparents care for their grandchildren. This is in spite of the fact that there is not necessarily a clear legislatively-implemented policy mandating or even facilitating intergenerational solidarity. Debates will inevitably continue in particular contexts about whether a particular burden associated with a life-stage should lie where it falls, or whether the appropriate flow of benefits should be from the younger to the older or vice versa. But the arguable absence of a coherent framework might have to be reconsidered as the population ages, even if the question of intergenerational solidarity often raise more questions of social policy than of law.

30

[1985] Fam 1. [1985] Fam 1, 4 (Booth J). 32 [1985] Fam 1, 7. 33 [2017] UKSC 17. 31

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Office for National Statistics (2018a) Dataset: Estimates of the population for the UK, England and Wales, Scotland and Northern Ireland. Available at https://www.ons.gov.uk/ peoplepopulationandcommunity/populationandmigration/populationestimates/datasets/ populationestimatesforukenglandandwalesscotlandandnorthernireland. Accessed 11 June 2019 Office for National Statistics (2018b) Statistical bulletin: Births in England and Wales: 2017. Available at https://www.ons.gov.uk/peoplepopulationandcommunity/ birthsdeathsandmarriages/livebirths/bulletins/birthsummarytablesenglandandwales/2017. Accessed 11 June 2019 Oldham MPC (2001) Financial obligations within the family aspects of intergenerational maintenance and succession in England and France. Camb Law J 60:128–177 Pickard L (2015) A growing care gap? The supply of unpaid care for older people by their adult children in England to 2032. Ageing Soc 35:96–123 Powell A (2018) NEET: Young People Not in Education, Employment or Training. House of Commons Library Briefing Paper Number SN 06705 Seo Y (2017) Democracy in the ageing society: quest for political equilibrium between generations. Futures 85:42–57 Sloan B (2013) Informal carers and private law. Hart, Oxford Sloan B (2015) Informal care and private law: governance or a failure thereof? Can J Comp Contemp Law 1:275–291 Sloan B (2016) Adult social care and property rights. Oxford J Legal Stud 36:428–458 Sloan B (2017) Borkowski’s law of succession, 3rd edn. Oxford University Press, Oxford Smith T (2017) The UK electoral system now decisively favours the conservatives. The Constitution Unit, London. Available at: https://constitution-unit.com/2015/06/03/the-uk-electoral-sys tem-now-decisively-favours-the-conservatives/. Accessed 11 June 2019 Spencer-Lane T (2015) Care act manual, 2nd edn. Sweet & Maxwell, London Stewart A (2007) Home or home: caring about and for elderly family members in a welfare state. In: Probert R (ed) Family life and the law. Ashgate, Aldershot Swinford S (2017) Parents responsible for care of their elderly mothers and fathers as much as their own children, minister says. Daily Telegraph, 31 January 2017. Available at http://www. telegraph.co.uk/news/2017/01/31/parents-responsible-care-elderlymothers-fathers-much-chil dren/. Accessed 11 June 2019 Syal R (2017) Triple lock on pensions will go eventually, says pensions secretary. The Guardian, 22 June 2017. Available at https://www.theguardian.com/money/2017/jun/22/triple-lock-onpensions-will-go-eventually-says-pensions-secretary. Accessed 11 June 2019 Tan J-P et al (2010) Filling the parenting gap? Grandparent involvement with U.K. adolescents. J Family Issues 31:992–1015 West A et al (2017) Young adult graduates living in the parental home: expectations, negotiations, and parental financial support. J Family Issues 38:2449–2473 YouGov (2016) How Britain Voted. Available at https://yougov.co.uk/news/2016/06/27/how-brit ain-voted/. Accessed 11 June 2019 YouGov (2017a) How Britain voted at the 2017 general election. Available at https://yougov.co.uk/ news/2017/06/13/how-britain-voted-2017-general-election/. Accessed 11 June 2019 YouGov (2017b) The demographics dividing Britain. Available at https://yougov.co.uk/news/ 2017/04/25/demographics-dividing-britain/. Accessed 11 June 2019

The Elderly and Their Families: The Hungarian Context Orsolya Szeibert

Abstract The number of elderly persons is also increasing in Hungary, which has many consequences for families and family law as well. Providing care for the elderly does not seem to be addressed with any kind of coordinated plan; however, several issues concerning the elderly are raised and discussed in detail in various fora. The main topics that I tackle in this paper, after giving an overview of the demographic situation in Hungary, with a focus on elderly persons, their households and their embeddedness in their families, are the connecting points between elderly family members and the family, such as intergenerational transfers, grandparenting and taking care of the elderlies. In addition, maintenance obligations towards elder parents and grandparents are analysed in the light of recent legislative changes and governmental measures.

1 Elderly in Hungarian Society: Statistical Facts 1.1

Demographic Situation and Forecast

A huge demographic research project (Microcensus 2016) was implemented in Hungary in 2016. This was a sample-based population enumeration that tracked social trends between two full-scale censuses and it was carried out between 1 October and 8 November 2016. It covered 440,000 addresses in 2148 settlements (10% of all households in Hungary) and, as it was ordered by law, the participation

The first version of this paper was finalised in September 2017 as a Hungarian report for the ‘Solidarity across generations’ session of the XXth General Congress of the Academy of Comparative Law, Fukuoka (Japan) on 22–28 July 2018. This revision is dated September 6th 2019. Linguistic review was supported by Eötvös Loránd University. O. Szeibert (*) Department of Civil Law, Faculty of Law, Eötvös Loránd University, Budapest, Hungary e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_11

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of occupants of the selected dwellings was mandatory.1 The first results of Microcensus 2016 were published in May 2017. The population of Hungary is decreasing: the resident population (the permanent population was 10,381,959 in 1990 and 9,546,540 in 2016, according to results of Microcensus 2016. This decline began in 1980 and has been continuous and quite steady since that time. The data makes this clear: while in the most recent 5 years (between the latest census in 2011 and Microcensus 2016) the population of Hungary decreased by 134,000, in the 10 years before that (between 2001 and 2011), it fell by 261,000 persons.2 The number of live births is below the number of deaths, so the natural decrease has been constant in the last years. Between February 2008 and July 2017, the natural decrease in the population was between 750 (July 2008) and 7120 persons (January 2017).3 The number of live births has been declining according to a study on fertility in 2015.4 This study was preceded by major studies around the world on the link between fertility intentions and behavioural outcomes, especially in Hungary, as the Hungarian culture favours having children but it is not reflected in the outcome.5 In Hungary the ideal number of children is at least two; nevertheless, this model seemed to be increasingly in disfavour already in 2015.6 One of the main statements concerning the vital findings of Microcensus 2016 is that the Hungarian population is ageing. The incidence of the elderly population has increased since the most recent census in 2011. While in 2011 16.9% of the population was 65 years old and older, in 2016 that amount had increased to 18.6%. Regarding the working age population (15–64 years old) the decrease is even more significant. While in 2011 68.6% of the population belonged to the working age population, in 2016 it was only 66.9%. (According to the data, while the proportion of those 40–64 years old remained almost the same, the proportion between 15 and 39 decreased to a greater extent.) The age structure of the Hungarian population is summarised by the ageing index (elderly persons per 100 children). While in 2011, the year of the latest census, it was 116, according to Microcensus 2016 it became 128, some 10% higher.7 The average age of the population has been constantly increasing: in 2016 the average age was 42 years, which was almost 1 year higher than 5 years before. 1 A short description of Microcensus 2016 on the webpage of the Hungarian Central Statistical Office. http://www.ksh.hu/mikrocenzus2016/?lang¼en. 2 The particular data are from “Main characteristics of the population and the dwellings” published in Hungarian as one of the summaries of Microcensus 2016 on the webpage of the Hungarian Central Statistical Office. http://www.ksh.hu/docs/hun/xftp/idoszaki/mikrocenzus2016/ mikrocenzus_2016_3.pdf, p. 7. 3 Latest data. Key figures. Monthly changes of live births and deaths. Webpage of Hungarian Central Statistical Office. https://www.ksh.hu/?lang¼en. Published in August 2017. 4 Kapitány and Spéder (2015). 5 Among others, Spéder and Kapitány (2014). 6 Kapitány and Spéder (2015), p. 48. 7 http://www.ksh.hu/docs/hun/xftp/idoszaki/mikrocenzus2016/mikrocenzus_2016_3.pdf, pp. 8–9.

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The analysis of Microcensus 2016 dealt with the maintenance burden of the working age population (15–64 years old). While between 1980 and 2011 the burden of maintenance was mitigated due to the decrease in the minority age population (0–14), this trend reversed between 2011 and 2016 due to the increase in the elderly population (65 years old and more). While in 2011 child age population per 100 persons of working age was 21, this number was 22 in 2016. The number of persons of elderly per 100 persons of working age was 25; this number was 28 in 2016. Altogether, the number of persons to be maintained per 100 persons of working age was 46 in 2011 and 49 in 2016. Currently, and for some years now, the ageing population and potential incentives to have more children are issues that are dealt with in conferences and through primary research. Increasing the fertility rate is a constant issue, resulting in several governmental measures. These measures affect some allowances for parents having children. The two matters—raising children and the pension—are discussed in connection with each other, too.8 Issues concerning the ageing society are not discussed in the legal literature too much but are discussed in volumes on social policy in a relatively intensive way. In recent years, some studies have been published on the phenomena of ageing, including demographic trends, social inequality, the answers and crisis of public policy and the health problems of elderly persons.9 The solidarity between generations is another issue that is at least discussed scientifically, in terms such as transfers between generations, the responsibilities towards the elderly and the younger generation, pension reform and wealth redistribution between generations.10

1.2

Social Situations of Different Generations

The employment rate in Hungary in the first quarter 2017 was 28.4% in the age group of 15–24 year-old persons, 82.7% among 25–54 year-olds and 90.2% for 55–64 year-old persons. The employment rate in the age group of 15–64 year-old

8 Experts in the pension-system held a conference in 2012 to discuss the relationship between having children and pensions and especially the recognition of having children through the pension system as well. The papers have been published in a volume (Kovács 2012) and different approaches are shown in the papers. One of these approaches is based upon the view that the pension system is unjust, as it does not take having children into consideration, so it proposes the building of some motivation into the pension system, e.g. those parents who had at least two children and cared for them at least until they reached 14 should get some extra points in the system, in contrast to couples without children. See this proposal in Botos and Botos (2012), pp. 19–21. According to another viewpoint, the free schooling of children is the task of the state and the future bonus in the pension system for child-raising cannot influence the number of children (Németh 2012, pp. 35–36). 9 Krémer (2015). 10 Örkény and Székely (2011a, b).

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persons was altogether 67.1%, the unemployment rate was 4.2% in that segment.11 (The employment rate in the age group of 15–64 year-old women was 60.6; in that age group of men it was 73.8%.) The unemployment rate has decreased in the past 2 years, as it was 7.8% in the first quarter of 2015, 6% in the first quarter of 2016 and 4.4% in the last quarter of 2016. Regarding the poverty rate, it was 19.9% among the 0–17 year-old age group, 15% among 18–64 year-olds and 6.8% in the age group of those 65 years olds and over. (Broken down by economic activity, the poverty rate was the highest among the unemployed, at 48.5%. It was 9.6% for employed persons and 7.1% for pensioners.) Regarding the conflict of interests between different generations, it is apparent that the elderly would prioritise the pension system whereas the younger generation would prioritise education. There is a difference of attitudes between the two groups in terms of on the possible role of self-support in the pension system or in the system of education.12

1.3

The Elderly in Households and Their Embeddedness in the Family According to the Researches

At the time of the last census (2011) there were 4.11 million households in Hungary. The proportion of one-person households increased from 24% to 32% between 1990 and 2011. In 2011 1.32 million households belonged to this category and almost two thirds of those living alone were women and the proportion of one-person households was the highest among the elderly.13 The proportion of those living in three- or multigenerational families (grandparents, parents and children together), has been decreasing over this period.14 Although the elderly live predominantly in private household, the elderly also live in residential homes. According to the 2011 population census, 6% of 80–84 year-olds, 9% of 85–89 year-olds and 14% of those aged 90 more lived in an institute, primarily in an old people’s home.15 Regarding elderly persons in private households, one in three lived alone and their number has increased (34.5% of those aged 65 or more lived in a one-person household in 2011). The older the person, the greater the likelihood of living alone—the proportion of the one-person households

11

Statisztikai tükör. Munkaerőpiaci folyamatok. 2017. I. félév. 2017. szeptember 15. [Statistical Mirror. Labour market processes I. quarter 2017. 15. September 2015. http://www.ksh.hu/docs/hun/xftp/idoszaki/mpf/mpf1706.pdf. 12 Örkény and Székely (2011a, b), pp. 103–105. 13 Monostori and Murinkó (2015), p. 151. 14 Monostori and Murinkó (2015), p. 152. 15 Monostori and Murinkó (2015), p. 163.

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was 26% among 65–70 year-olds, 32.5% for 71–74 year-olds, 39.8 for 75–80 yearolds and 46.7% among those 81 years olds or more.16 The elderly living alone are much more vulnerable than those old people who live in a family and, according to the Microcensus 2016 data, 31% of those aged 65 or more living in private households lived alone. Their proportion has been continuously growing since the 1990s, partly due to the growing proportion of divorced persons among them. While in 1990 17% of single men aged 65 years-or more had a divorced family status, in 2016 this proportion was 27%. Similarly, this rate for women in the same situation was 9% in 1990 and as high as 16%.17 It shows, according to the experts, that the break-up of marriages deeply affects the elderly as well. More women than men live in one-person households partly because women’s life expectancy is higher. The life trajectories of men and women are different and it is connection with the fact that the number of elderly persons living in a partnership (marriage or informal cohabitation) is higher while the number of those who live alone is lower among men in each cohort. As women live longer, the elderly who live in three- and multigenerational households are primarily women and not men and women typically move in with their children’s family when they get old. As men pass away earlier than women, older men are more likely to spend their final years with a partner than women will. If men outlive their partner they are more likely to live alone and so multigenerational household or institutional care do not seem to be real alternative for them.18 Even if living alone in a private household, the embeddedness of elderly persons in the family depends upon the fact whether there are any children or grandchildren living in another household and how close their relationship is. According to the 2016 Wave of the Turning Points of Life Course demographic survey, 10% of those 65 years-old and over were childless, 70% of them had child living apart from that elderly person and 14% of them had children living with them and living apart from them.19 As regards being embedded in the family, elderly women living alone seem to be better integrated into their family than men. 21.8% of women 65 years-old and more keep intensive, everyday contact with their children living apart, 34.1% of them keep contact with their children several times per week, and 22.3% maintain contact with their children every week or 2 weeks. These rates are 4.7%, 33.7% and 19.8%, respectively for men.20

16

Monostori and Murinkó (2015), p. 163. Monostori and Gresits (2018), pp. 134–135. 18 Monostori (2015), p. 121. 19 Monostori and Gresits (2018), p. 135. 20 Monostori and Gresits (2018), p. 136. 17

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2 Intergenerational Transfers and Intergenerational Family Relationships 2.1

Intergenerational Transfers in General

There is little information on transfers—and primarily financial transfers—between the elderly and their adult children. According to a 2000 finding, an average child received nearly one-and-a-half times more resources in form of intergenerational transfers than an elderly person in Hungary.21 Public spending has a key role in supporting both the elderly and children, as the elderly received 13% and the children received 7% of national income as net public transfers. However, the elderly are supported almost exclusively by public transfers flowing through the government, and households have a marginal role in supporting them.22 (This last statement has a qualification, which I mention later, as there seems to be an expectation going back at least for some years that the elderly should be cared for by their family.) The different forms of intergenerational reallocations can be seen upon the basis of statistical data which show the net reallocations by item (time transfers in household economy, public transfers, private transfers and asset-based allocations in national economy and the total economy) and age groups, namely children (0–23 years), persons in active age (24–57 years) and elderly (58 years and more). In 2000, when the data were taken, there were approximately three million children, 4.9 million persons of economically active age and 2.3 million elderly people.23 The time transfers in the household economy is 11.1% of the total economy, which advantageous for children as children get 10.2% and elderly only 0.9% of population of active age’s time budget. The proportion of the public transfers is relatively high as it is 19% of the total economy. The support for elderly derives mostly from this proportion as they get 13.1% and children get 6.7% of national income as net public transfers.24 Private transfers within the national economy are advantageous for children (9.2%) and they come partly from the generation in their active age (8.9%) and partly from elderly (0.3%). The asset-based allocations are not well developed in Hungary, they represent only 7.1% of total economy, allocated mostly for people in their active ages.25 21

Gál and Vargha (2015), p. 135. Gál and Vargha (2015), p. 135. According to the researchers children receive a high amount of private transfers mostly from their parents. 23 Gál and Vargha (2015), p. 139. The researchers provide exact definitions. Time transfer is the net value of unpaid household labour done for or received from another household member or an individual outside the household; public transfers are public expenditures and taxes/contributions. Private transfers are items transferred within or between households. Asset-based reallocations are income from ownership, capital or savings. Total economy means household and national economies together. 24 Gál and Vargha (2015), pp. 135 and 139. 25 It has to be marked that although these were the years of the active and inactive cohorts used in 2000, the active ages shifted by 1 or 2 years now. Gál and Vargha (2015), p. 141. 22

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The networking of the Hungarian population over 60 was the issue from Hungarian research in 2015.26 Some results had already existed from a SHARE study concerning the networking of the elderly in Hungary. Hungary belonged to the group of countries where there is the greatest proportion, in the networking of family members, of elderly suffering from physical impediments and the frequency of contacts in Hungary is also one of the highest. Children with elderly parents are the most likely to be found networking in some countries, including Hungary, and the proportion of caregiving and help around the household provided by the adult child to the elderly is relatively high in Hungary by international comparison.27 According to the research, in 2015 half of 60–74 year-olds felt they were impaired in their everyday activities because of bad health, chronic disease or mental illness and three quarters of those 75 years old or more felt the same. Not only the existence of a partner (spouse or cohabitant) but also the existence of intimates (confidants) were measured including friends and those with a looser connection with the elderly. The older the person is, the smaller the size of the network of confidants and there are elderly who do not have anybody to speak with about intimate issues. Regarding the person of the confidant, he or she is generally the partner or the (adult) child. As elder women live often without a partner, 40% of women in the group of 60–74 year-olds nominated their child as confidant, while this proportion in the group of the men in the same age-group is 25%. In the circle of women over 75 years, 45% of them nominated their child as their main confidant.28 The SHARE research in 2011 confirmed the close relationship between the elderly and their children. While in other countries friends are likely to be confidants, in Hungary the elderly primarily named their child as main confidant.29 We have some very recent analysis on one aspect of intergenerational transfers, namely the support provided by adult children to their parents.30 Transfers between their elderly and their adult children are rarely researched in Hungary and it is primarily transfers from the elderly towards their children and grandchildren that are discussed and familial transfers to the elderly are rarely discussed.31 The transfers from adult children to their elderly parents depend upon the age of the adult children. The adult children in the group of 30–50 year-olds support their parents over the average extent while adult children over 60 years support their children only rarely which can be in connection with the fact that their parents had already passed away.32 In other research carried out over 4 years and analysing the transfers between parents and their adult children the conclusion could be drawn that although

26 ‘Integrational and dezintegrational processes in the Hungarian society’. The article reporting on the results of the research, Albert (2016), pp. 173–200. 27 Albert (2016), p. 178. 28 Albert (2016), p. 183. 29 Albert (2016), p. 186. 30 Medgyesi (2016), pp. 59–87. 31 Medgyesi (2016), p. 66. 32 Medgyesi refers to the research of Spéder (2002); Medgyesi (2016), p. 66.

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the transfers of labour occur in both directions, from the parents towards adult children and from the children to their parents, financial transfers are primarily provided by the parents.33 According to research on intergenerational transfers in 2011, supporters do not only help their own parents but also—at least 25% of them—assist the parents of their spouses, and transfers to the older generation include not only those towards their parents but also grandparents.34 The non-financial transfers to parents aged over 65 years from their non co-resident children over 21 occur not quite often. Eight percent of such parent get regular support from their children. The geographical distance between a parent over 65 years and her or his adult child is not too great. The proportion of elderly persons whose children all live no further than 5 km is one of the highest in Europe as it is almost 40%. The proportion of elderly persons whose children all live further than 5 km from the parent is less than 30%.35 What concerns the transfers from children over 21 years towards parents there are some conclusions to be reported. Elderly parents living alone are more likely to get support from their children than those living with their partner and elderly parents in worse health are more likely to get support from children, as well. If the elderly parent works he or she is less likely to get support from children. There are some characteristics not only on the side of the elderly but also on the side of the adult child and on the whole family, e.g. if the parent has children under 21 years, they are less likely to get support from children over 21 years.36 Another point is that if all children live further from the parent than 5 km, the parent is less likely to get support. Altogether, the researcher drew the conclusion that not primarily the reciprocity but the altruist motivation of the adult children plays a role when giving support to elderly parents and the likeliness of transfer towards parents decreases when its costs are rising.37 When evaluating these results in comparison with other European countries, Hungary belongs to the group of countries with familial regime as the level of support for elderly parents is relatively high. The researcher notes that the elderly in Hungary who were analysed in this research were in worse health than those in other countries which can be a factor when evaluating the relatively high level of support and adult children often do no live far from the parent.38 Grandparental babysitting and childcare is rarely analysed. In 2014 a study was published using data from 2002 and 2004.39 The focus of the demographic research was families with four generations. The generation of the great grandparents (born between 1908 and 1940) provides taking care of their great grandchild as a non-financial transfer. Besides, there are other non-financial transfers, such as

33

Medgyesi referes to the research of Bocz and Medgyesi (2004); Medgyesi (2016), p. 66. Medgyesi refers to the research of Örkény and Székely (2011a, b); Medgyesi (2016), p. 66. 35 Medgyesi (2016), p. 75. 36 Medgyesi (2016), p. 77. 37 Medgyesi (2016), p. 79. 38 Medgyesi (2016), p. 83. 39 Gyarmati (2014), pp. 45–72. 34

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helping in household duties, and financial transfers as smaller gifts. Approximately 50% of great grandparents looked after the great grandchild.40 The generation of grandparents (born between 1941 and 1957) helped their children primarily with providing a flat of their own, and other financial and non-financial transfers have a secondary character. In terms of caring for their grandchild, two times per week seemed to be the norm, with the primary aim of reducing the mother’s burden. The generation of adult children (born between 1968 and 1982) seemed to establish their own attitude to child-raising, which regularly deviates from the child-caring methods of their grandparents’ generation. The researcher concluded that the financial support of grandparents towards their children was necessary but such non-financial transfers as child-caring were limited to occasional help. It can be explained by the economic activity of the grandparents, their geographical distance from their children’s house and also the aim of avoiding conflicts. The financial transfer from grandparents was necessary and remained unreciprocated.41 Any non-financial transfer is provided by the women and for the women (especially help in child-caring). According to the research findings, there are mutual transfers between the generation of great grandparents and grandparents. In the relationship between the grandparents and their adult children, the transfers are primarily unidirectional as grandparents give much more than they get back. Within every generation, help, most importantly when a baby is born, is typically occasional. From this research it is clear that individualism, the role of personal decisions, highly significant in intergenerational transfers.42 There is a shift in attitude in the generation of adult children, towards everybody being expected to be responsible for himself or herself, even if this change is not held as a positive one. The great grandparents are not active in taking care of the great grandchild but are not actively transferring to grandparents, either. Some of the grandparents are economically active and they are a so called ‘sandwich generation’ between their parents and their children. The connections between the generations seemed to be looser according to this research, which is not in harmony with the expected behaviours in reallocating transfers. As the family policy have had a maternalistic and familial approach the opposite was expected in the opinion of the researcher.43

40

Gyarmati (2014), p. 55. Gyarmati (2014), p. 65. 42 Gyarmati (2014), p. 67. 43 Gyarmati (2014), p. 69. 41

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Intergenerational Family Relationship: Grandparenting of Elderly Persons

The elderly and grandparenting is an issue that is not discussed too much in the legal and sociological literature; however, it has been analysed demographically. Research in 2008 (2008 Wave of the Turning Points of Life Course demographic panel survey) let the demographers draw some conclusions concerning the change of the elderlies’ contact with their grandchildren. In 2008 42% of grandparents in the group of 55 year-olds and more took part in the child care of their grandparents and this activity declined with ageing. There are very clear numbers of the grandparents’ participation rate in the child care. Nearly 56% of the group of 55–59 year-olds participated in the child care in 2008 and that was 51.6% in the group of 60–64 yearolds, 41.9% in the group of 65–69 year-olds, 32.7% in the group of 70–74 year-olds, 21.9% in the group of 75–79 year-olds and only 14% in the group of 80–84 yearolds.44 In a survey completed in 2009–2010 the daily activities of middle-aged persons and elderlies was monitored just as the time which the elderly persons spend alone. According to the analysis of the data (how many minutes of their waking time they spend typically alone per day not including if they perform paid work) the elderly persons spent quite much time alone. In the group of 65–69 yearsold it is more than 10 h per day and this amount rose when looking at the even elder persons.45 Remarkable that the chance for people of 55–79 years-old of becoming a grandparent has deceased between 2008 and 2016. The greatest difference can be recognised in the age-groups of 55–59 and 60–64 years-old but it is measurable also for older persons. While in 2008 61.4% of 55–59 years-old and 77.5% of 60–64 olds had a grandchild, in 2016 only 50.8% and 67.8% of them, respectively. 85.3% of 65–69 years-old had a grandchild in 2008 and this rate declined to 80.5% in 2016. These proportions are 86.8% and 85.7% for 70–74 years-old and 89.2% and 84.9% for 75–79 years-old. This change of the proportions is in connection with the lower fertility, the growing rate of childless young people and the postponement of childbearing.46 The contact between elderly persons and their grandchildren and the participation of elderly in the child care are in close connection with several factors, namely the availability of day care services, the availability of part-time work for parents, the parents’ position on the labour market and the elderly’s health and demand for being involved into the grandchildren’s everyday life. There are several demographic changes which also influence the grandparents’ role in their family’s life. According to a demographic researcher the decline of multigenerational families is a reason of 44

Monostori (2015), p. 128. It has to be added that only care for children who live in separate household was taken into attention. 45 Monostori (2015), pp. 129–130. 46 Monostori and Gresits (2018), pp. 136–137. The statistical data are the mentioned authors’ own calculation, 3. and 5. Wave of the Turning Points of Life Course demographic panel surveys.

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the continuous reduce of the close bond between grandparents and grandchildren. Another change is the postponing childbirth until later in life with the effect that elderly become grandparents in their later years and sometimes in bad health. The following change is that the age of retirement has been steadily rising.47 What concerns the participation in the caretaking of grandchildren, data from the year of 2016 show that more than two-third of the grandparents took part in the nursing and caretaking of their grandchildren. There was almost no difference between the grandmothers and grandfathers but only the help for grandchildren not living in the same household as the grandparent was taken into attention. However, there are differences concerning the activity of grandparents depending on their age and educational attainment.48

2.3

Childcare Benefit for Grandparents As a New Form of Family Benefits in Hungary

The childcare allowance, which was introduced in 1967, is a fixed-sum benefit for families regardless of their financial situation or whether the parents were employed before the birth of the child and it is provided until the child turns three.49 Grandparents have been entitled to request this childcare allowance since 2001. The aim of this then new measure was to correct the family benefits system in the interest of both the younger generation and that of the elderly, with the final aim of increasing fertility and improving the conditions for bringing up children. The justification of the Act emphasised that parental tasks, even besides kindergarten and daycare, are difficult to harmonise with workplace expectations and their labour market disadvantages could be mitigated by using family solidarity, just like the fact that, when the younger generation decide on childbearing, their parents are at the end of their working career.50 Childcare benefit was introduced as element of the family benefit system in 1985; it provides financial assistance for working parents and is provided only to parents who paid social security contributions for at least 365 days within the 2 years prior to the child’s birth. There is a bill,51 presented in May 2019, before the Hungarian 47

Monostori (2015), p. 127. Monostori and Gresits (2018), p. 137. 49 The childcare allowance (gyermekgondozást segítő ellátás) is regulated in the Act No. LXXXIV of 1998 on the support of families (1998. évi LXXXIV. törvény a családok támogatásáról). About the family support system in English see: Makay (2015). 50 Justification of Act No. LXXXIV of 1998 on the support of families. Wolters Kluwer Legal Database. 51 T/6191 Egyes törvényeknek a nagyszülői gyermekgondozási díj bevezetésével kapcsolatos módosításáról. [T/6191 on the modification of some Acts in connection with the introduction of childcare benefit for grandparents] https://www.parlament.hu. 48

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Parliament that proposes the introduction of childcare benefit for grandparents as an additional part of the family protection action plan, which was launched in Hungary in spring 2019.52 The action plan contains seven points aiming to modify the family support system as an answer to the demographical challenges. One point of this plan is that “It is to be expected that, from next year, grandparents who have not yet retired will also be eligible for childcare allowance [benefit, in fact] if, instead of the working parent(s), they agree to look after their grandchildren at home. In this case, the given grandparent(s) will be eligible for childcare allowance [benefit, in fact] instead of the parents. This seeks to encourage them to play a more active role in the supervision of their grandchildren.”53 The justification of the Bill underlines that childcare benefit acknowledges the ‘work’ of the grandparents not yet of pensionable age, which they perform by taking care of their grandchildren while supporting their working children. Grandparents can request the childcare benefit if the parents declare in writing that they agree. This childcare benefit will be provided until the child turns two or, in the case of twins three. A grandparent who paid social security for at least 365 days within the 2 years prior to the child’s birth can ask for it if the parents also paid social security at the same time and are employed. The exact amount, just as if the birth-parents are the recipients, is determined according to the grandparent’s income. The grandparent can receive the childcare benefit for subsequent grandchildren but only one grandparent can receive childcare benefit, even if not only one grandchild is taken care of in one household. Bill explicitly provides that the child shall be brought up in the parents’ household and he or she may reside with the grandparent temporarily and only in daytime. As childcare for grandparents is a new opportunity for families, the debates and analyses have began just recently and primarily discuss how it can improve families’ welfare and fertility and who can request it as a grandparent, taking its conditions into account. However, there are many questions emerging from the side of the grandparents, e.g. whether the ageing of the grandparents and the postponement of childbearing of the younger generation results in older grandparents who sometimes turn out not to healthy enough to take care of a child who is less than 2 years old.

3 The Care of Dependent Elderly In Hungary the care of the elderly seemed to have moved—at least in its direction— from a public task towards the tasks of family. It can be experienced from a survey of these tasks from 1993 until 2015.54 In 1993, the Social Welfare Act provided home

52 1110/2019. (III. 12.) Governmental Decision (A Kormány 1110/2019. (III. 12.) Korm. határozata a családvédelmi akcióterv részét képező kormányzati intézkedésekről). 53 https://www.kormany.hu/en/news/about-the-family-protection-action-plan. 54 Széman (2015), p. 249.

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care for people over the age of 60 as a basic obligation of the local government. It ordered that towns with over 2000 inhabitants should operate clubs for pensioners, and towns over 10,000 inhabitants should operate a residential home. In 2006, new services were provided, such as installing emergency alarm systems as part of home care for elderly. It should be highlighted that in 2011 the Fundamental Law declared care as a task for families, and in 2013 the financing of home care began to decrease. In 2015, stricter rules were ordered for providing home care for elderly. As it was underlined, caregiving became an obligation of the family without financial support for that.55 As regards the funding of long-term care for the elderly, OECD statistical data how public spending on long-term care as a percentage of GDP. In 2008 it was about 0.25% in Hungary56 and it did not increase significantly until 2014, as it was 0.3% in that year.57 There are not enough or reliable data on the requirements of care of elderly, so, according to the research findings, there are several political factors that determine the overall expenditure on and allocation of funds for elderly care but there are no precise demographic, sociological or economic justifications.58 The weight of pensions as a proportion of expenditure on the elderly is extremely high; namely it was four-fifths of the total allocated amount so other expenditure on the elderly, including long-term care, is very small. That does not reflect the number of the elderly in need of care, which increases each year.59

4 Maintenance in Family Between Adults 4.1

Support Duties Between Adult Children and Their Parents in General

The support duties of family members, and especially these duties from parents towards their children and from adult children to their parents, had primarily been regulated in the civil law rules even earlier but recently a new approach was enacted, which had some civil law consequences as well. The earlier family law rules were incorporated into a Family Act60 which regulated on the maintenance of parents towards their minors and also provided for maintenance between relatives, inter alia between parents, even the elderly and their adult children (including grandparents and grandchildren). In 2014, new rules on family law entered into force, as a new 55

Széman (2015), p. 250. The statistical data is referred to by Krémer (2015), p. 112. 57 www.oecd.org. 58 Krémer (2015), p. 141. 59 Krémer (2015), pp. 142–143. 60 Act No IV 1952. 56

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Civil Code61 was enacted that includes family law rules, too. Almost at the same time, an amended Fundamental Law and a so-called cardinal act on the protection of families were approved and entered into force.62 Both the Fundamental Law and the Family Protection Act confirmed the institution of marriage much more strongly than had occurred before. Regarding the issue of support and solidarity between the family members (relatives), the Fundamental Law states that everybody is responsible for himself or herself. Besides, the Fundamental Law emphasises the parent’s obligation to maintain their minor child and, as a novum, highlights the adult child’s maintenance obligation towards his or her parent. The Civil Code preserved the rules on maintenance of the minor. Child maintenance has an extreme character, as it results in many lawsuits and is a field that is governed by the principle of the child’s best interests, as also contained in the UN Convention on the Rights of the Child. Child maintenance is regulated in a unique way, which differs fundamentally from the requirements of any other form of maintenance. There is a presumption that a child below 18 lacks means and they are the first in the maintenance ranking. A child cannot be unworthy of maintenance (unlike former spouses) and the parents’ duty to maintain their child is over all other maintenance duties towards relatives or their existing or former spouse.

4.2

Maintenance of the Adult Child by the Parents

A parent has maintenance duty towards the adult child as well, but this obligation depends on several requirements. There is one situation for an adult child that is subject to special regulations and it is the child over 18 who pursues further studies. (The Family Act did not regulate it earlier as a separate form of maintenance, but the basic elements were crystallised in the judiciary as many children pursue further studies after they reach 18, with the consequence of several cases emerging before courts. This is in connection with the fact that the parents’ marriage or cohabitation often breaks down.) The parental maintenance of a child over 18 who pursues further studies is legally between the maintenance of any other adult family members and that of minors. The requirement of lack of means is not caused by their inability to work but by the fact that the child continues his or her training and education, providing skills and qualifications for the child’s planned career. Training covers a wide range of education, not only university studies. They are expected to meet several requirements as, albeit lacking means but being adults in legal sense.63

61

Act No V 2013. The Basic Law entered into force in January 2012, while the Family Protection Act (Act No CCXI on the protection of families) entered into force also in January 2012. The Family Protection Act is a cardinal one as it can be modified only by the overwhelming majority of the Parliament. 63 Szeibert (2018-1); Szeibert (2018-2); Szeibert (2013); Szeibert (2018-3), p. 1411. 62

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They have to begin their further studies without any delay after secondary school and if some time elapses between secondary school and further studies then there should be a legitimate reason and it has to last for a limited period. Providing maintenance for the studies required to qualify in their first profession is expected of parents. The adult child has to be able to pursue the studies; he or she cannot prolong the studies and he or she must study well with the aim of getting a scholarship or a reduction in the tuition fees. As a main rule, an adult child may claim parental maintenance until he or she reaches 25. An adult child not pursuing these further studies can claim for maintenance from his or her parents according to the main rules of maintenance between relatives. Although those rules are not very rigid, claiming for support before court involving two adults (who are not partners, as spouses, registered partners or informal cohabitants) is not easy, as the obligee’s ability to pay plays a key role. (That is important with regard to children over 18 pursuing further studies as well but there are other factors making it easier.) There are requirements on the claimant’s side and on the obligee’s side even if the adult child (not pursuing further studies) seeks support from his or her parents. The requirement of lacking means is not detailed in the regulation itself; however, it has been crystallised in the judiciary. Some factors can be underlined, such as the age of the claimant, the state of health and illness. Being elderly is not a fact in itself; maintenance can be successfully claimed for but being unable to work due to chronic illness may be a ground for getting maintenance, usually for an unlimited period of time. The adult child should be in lack of means, a situation which has been brought about through no fault of the claimant’s own and he or she should not be unworthy of maintenance. The claimant’s unemployment is not a ground for maintenance in itself either. The lack of means has to be assessed in an objective way, while whether the lack of means was brought about through the claimant’s own fault or not is a subjective factor. The faultiness in connection with the lack of means is analysed on the basis of the claimant’s behaviour and societal expectations play a huge role. Unworthiness is another requirement and, when adjudging it, both the debtor’s and the claimant’s behaviour is taken into attention. A further point is whether the debtor is able to pay maintenance. In the case of a minor, the parent cannot refer to the fact that he or she is unable to pay maintenance, but in the case of an adult child (whether pursuing further studies or not) the parent has to be able to support the adult child. The support of the adult child cannot be detrimental to the obligee’s own standard of living and the debtor’s ability to work and his or her earning capacity just as their assets are taken into attention. The courts regularly decide in their judgements in favour of the child pursuing further studies, but it is to be noted that the legal literature has begun to deal with the issue of how the legal requirements are evaluated in the judicial practice, how transparent is, for example, the definition and interpretation of the condition of “being unworthy of maintenance”. Unworthiness is defined as a general rule for refusing the maintenance of relatives in the Civil Code and it takes a special form, aiming to regulate the special case of adult children pursuing further studies. According to the Civil Code, the adult child is considered to be unworthy of

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maintenance if he or she fails to maintain contact with the obligee parents without due cause.64 There are many judicial cases when this rule has to be applied and the practice is far from being homogenous.

4.3

Maintenance of the Parent by the Adult Child

There have been specific modifications recently regarding the maintenance of the parents by their adult children, which deserve to be presented in detail. The Civil Code contained regulations according to which the elderly parents can claim maintenance from their adult children subject to the conditions mentioned above (lack of means, no fault, no unworthiness and the claimant’s ability to pay support). There is one more rule which has relevance only when the parent seeks support from the adult child. If the parent fulfilled his or her obligation to maintain and care for the child and provided for the child’s upbringing, the child can refer to the unworthiness of the parent only in the event of the parent’s extreme misconduct against the child.65 The Fundamental Law66 that replaced the Hungarian Constitution confirmed the adult children’s maintenance obligation towards their parents as a wholly new constitutional regulation. It states that adult children are obliged to support their parents if they lack means.67 It was discussed whether it can bring about substantive changes or just represent the legislative will that the adult children should maintain their parents. The Family Protection Act68 repeated this rule, as it states that an adult child is obliged to maintain his or her parent who lacks means and this was brought about through no fault of the parent’s own as provided by an act69 (which later is the Civil Code). The Civil Code was amended in 2016 with the aim of confirming the text of the Fundamental Law and repeating it. The text of the Fundamental Law on the maintenance duty of the adult child was incorporated into the Civil Code as well. According to this rule, the maintenance obligation shall primarily prevail in the relationship. Between the parent and his/her child and in the relationship between the adult child and his/her parent in need of support.70 However, in practice, the parents’ maintenance duty towards their minor children has a key role under almost all circumstances and there is no special requirement on the side of the minor whereas the maintenance of the adult child towards their parents is subject to several abovementioned conditions.

§4:220(4) of the Civil Code. §4:194(3) of the Civil Code. 66 The Basic Law was passed in April 2011 and entered into force on the first day of January 2012. 67 Article XVI(4) of Basic Law. 68 Act No. CCXI of 2011 on the protection of families (2011. évi CCXI. törvény a családok védelméről) was passed in December 2011. 69 § 14 of Family Protection Act. 70 §4:196(2) of the Civil Code. 64 65

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This last-mentioned legal consequence was confirmed by the Hungarian Curia (former Supreme Court) in 2017. The Hungarian Curia emphasised that Article XVI (4) of the Fundamental Law does not provide any subjective right for the parent to maintenance, as the detailed requirements contained in the Civil Code are to be fulfilled. In the concrete case71 the plaintiff referred primarily to his child’s obligation under the Fundamental Law but, according to the Curia, this rule draws up a moral obligation, the detailed legal regulation of which is mirrored in the Civil Code among the general rules of maintenance of relatives. This form of legal reasoning has been confirmed recently in a decision where the Hungarian Curia underlined that the parent as obligor should be lacking in means, but lacking means in itself is not enough for claiming maintenance from his or her child in this situation, as the obligor’s lack of is another requirement.72 One of the 2016 amendments to the Civil Code is not truly a civil law rule. The new provision states that where a person provides maintenance, without any contractual or legal obligation, to a parent in need of support instead of the parent’s child who is legally obliged to do so, that person may demand compensation for the expenses arising in connection with providing such justified care from the child owing maintenance with a preclusive period of 1 year from the date when maintenance was actually provided.73 As it only entered into force in January 2017 there is no case-law yet. The original plan was much more ambitious. The intention of the text that was submitted to the National Assembly was that if the elderly person is in institutional care (whether in a state or church maintained institution) for payment and he or she cannot pay for it, this amount of money could be claimed from his or her adult child who would be obliged to maintain his or her parent. Later it became clear that it would not work and that is why a ‘softer’ version of the adult child’s duty was enacted.74 Nevertheless, at the end of 2016 the Social Welfare Act75 was modified. According to the new rules, if an elderly person lives in permanent residential care and the fee cannot be claimed from the elderly person, the institution can enter into an agreement with this elderly person’ adult child to pay for that. If the institution and the adult child do not contract then the institution can turn to the court to oblige the adult child to pay for the costs of the permanent residential care.

71

Judicial Decision No. 18/2017 (Hungarian Curia). Judicial Decision No. 205/2019 (Hungarian Curia). 73 §4:208(1a) of the Civil Code. 74 Szeibert (2018-1), p. 901; Szeibert (2013), pp. 386–387; Szeibert (2018-3), p. 1411. 75 Act No III 1993. 72

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5 Hungarian Attitude to Ageing: System of Familism With regard to care for the elderly, Hungary is held to have a system of familism, which means that not only the organization of institutional taking care of elderlies is low but also the support of families in caretaking of elderlies.76 As the family plays an enormous role in caring for the elderly, it is impossible to get a clear picture on the situation of the elderly, taking the different needs of elderly persons and the very different reactions from families into consideration.77 The mixed picture is also supported by the above mentioned data, legal rules and governmental measures— the elderly and other family members, primarily adult children, are obliged to help each other both in caring for grandchildren and for grandparents. However, there are many elderlies without children or families at all and, even if an elderly person has a family, the personal scenarios differ from each other. Researchers could compare the answers given in two waves of the Turning Points of Life Course demographic surveys (2004–2005 and 2016) for whether adult children are obliged to provide their parents with material assistance, whether they are obliged to organise their work in a way that enables them to help their parents, whether women as adult children are obliged to take care of the elderly parents and adult children and whether they are obliged to move in with their parents (or vice versa) in the event of the parent’s illness or incapacity. The opinions of men and women in the two waves shows stability and there is also stability concerning the difference between men’s and women’s opinions. More women than men agree with the statement that caring for the elderly tends to be the woman’s task.78 It is remarkable that the opinions of the youngest respondents (34 years-old or younger) show a distinct change in attitude between the two surveys. They now seem somewhat reluctant to provide the same forms of caring for the elderly as their parents.79 The elderly persons themselves mostly would like to remain in their own homes even if being malaise.80 The recent governmental measures and legal rules confirm the traditional familism in the Hungarian society, but it can cause severe difficulties due to the increase in the ageing population. Caring for elderly family members imposes a huge task and responsibility on women. According to the recent research, the ‘invisible work’, namely the work done at home and in connection with other family members, is a greater burden on women than on men and these roles seem to be preserved.81 The latest research into women’s tasks comes to the conclusion that, traditionally and

76 Monostori and Gresits (2018), p. 140. See among others, Takács (2017) and Dupcsik and Tóth (2008). 77 Monostori and Gresits (2018), p. 140. 78 Monostori and Gresits (2018), p. 141. 79 Monostori and Gresits (2018), p. 141. 80 Monostori and Gresits (2018), p. 142. 81 Sik (2017), p. 30.

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typically, the woman is the family member who takes care of the elderly if needed; not only in practice but also in terms of expectations.82

References Albert F (2016) Az idősek kapcsolathálózati jellegzetességei [Characteristics of the elderly’s networking]. Demográfia 2016(2–3):173–200 Bocz J, Medgyesi M (2004) A háztartások közötti együttműködés jellemzői II. életmód és időmérleg [Characteristics of the cooperation between households II. life-style and time budget]. Központi Statisztikai Hivatal [Hungarian Central Statistical Office], Budapest Botos K, Botos J (2012) Nyugdíjrendszerünk jövője [The future of our pension system]. In: Kovács E (ed) Nyugdíj és gyermekvállalás. Tanulmánykötet. [Pension and having children. Volume of studies]. Gondolat, Budapest Dupcsik C, Tóth O (2008) Feminizmus helyett familizmus. [Familism instead of feminism.]. Demográfia 2008(4):307–328 Gál RI, Vargha L (2015) Intergenerational reallocation of resources. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2015. Hungarian Demographic Research Institute, Budapest. * The Demographic Portrait is a publication of the Hungarian Demographic Research Institute, which is published every three years and provides an overview of the more recent Hungarian population processes. Gregor A, Kováts E (2018) Nőügyek. In: Társadalmi problémák és megoldási stratégiák. A kutatási eredmények összefoglalója. [Women’s issues 2018. Social problems and options. Summary of the research’s results.]. Friedrich Ebert Stiftung, Budapest. http://library.fes.de/pdf-files/bueros/ budapest/14461.pdf Gyarmati A (2014) A nagyszülői gyermekgondozás intergenerációs változásának néhány jellemzője Magyarországon kvalitatív adatokon [Some characteristics of the intergenerational change in grandparental child-caring in Hungary on qualitative data]. Demográfia 2014 (1):45–72 Kapitány B, Spéder Z (2015) Fertility. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2015. Hungarian Demographic Research Institute, Budapest Kovács E (ed) (2012) Nyugdíj és gyermekvállalás. Tanulmánykötet. [Pension and having children. Volume of studies]. Gondolat, Budapest Krémer B (2015) Mi a kétségbeejtő abban, hogy tovább élünk? avagy Az idősödési válság és a halál egyenlőtlenségei [Why living longer is so desperate? that is The ageing crisis and the inequality of death]. Napvilág, Budapest Makay Z (2015) Family support system – childraising – employment. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2015. Hungarian Demographic Research Institute, Budapest Medgyesi M (2016) Az idős szülőknek nyújtott nem anyagi segítség Magyarországon európai összehasonlításban [The non-financial support provided to elder parents in Hungary in European comparison]. Demográfia 2016(1):59–87 Microcensus (2016) Hungarian Central Statistical Office. http://www.ksh.hu.mikrocenzus2016/? lang¼en Monostori M (2015) Ageing and retirement. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2015. Hungarian Demographic Research Institute, Budapest Monostori J, Gresits G (2018) Idősödés [Ageing]. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2018. Hungarian Demographic Research Institute, Budapest

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Monostori J, Murinkó L (2015) Family and household structure. In: Monostori J, Őri P, Spéder Z (eds) Demographic Portrait of Hungary 2015. Hungarian Demographic Research Institute, Budapest Németh G (2012) Gyermekvállalás – Lehet-e gazdaságilag racionális döntés? [Having children – Can it be an economically rational decision?]. In: Kovács E (ed) Nyugdíj és gyermekvállalás. tanulmánykötet. [Pension and having children. Volume of studies]. Gondolat, Budapest Örkény A, Székely M (eds) (2011a) Az igazságosság labirintusában. Társadalmi méltányosság és generációs igazságosság a 21. század Magyarországán˙[In the labyrinth of fairness. Social equity and generational fairness in Hungary in the XXI century]. Sík, Budapest Örkény A, Székely M (2011b) A nagy elosztási rendszerekről vallott nézetek generációs vonatkozásai [The views on the great distribution systems from the generational aspect]. In: Örkény A, Székely M (eds) Az igazságosság labirintusában. Társadalmi méltányosság és generációs igazságosság a 21. század Magyarországán˙[In the labyrinth of fairness. Social equity and generational fairness in Hungary in the XXI century]. Sík, Budapest Sik E (2017) Néhány gondolat a háztartásról mint a gazdaság egy szereplőjéről [Some thoughts on household as one actor of economy]. In: Janák, Szép K, Károlyné T (eds) Háztartási munka, önkéntes munka, láthatatlan munka, I. Háztartási és önkéntes munka mérése, elemzése. [Household work, voluntary work, invisible work, I. Measure and analysis of household and voluntary work.] Conference book. Hungarian Central Statistical Office, Budapest Spéder Z (2002) Generációk és élethelyzetek: háztartások közötti segítő kapcsolatok [Generations and life situations: helping connections between households]. In: Spéder Z (ed) Demográfiai folyamatok és társadalmi környezet. Gyorsjelentés [Demographic courses and social environment. Quick report]. KSH Népességtudományi Kutatóintézet [Hungarian Central Statistical Office Hungarian Demographic Research Institute], Budapest Spéder Z, Kapitány B (2014) Failure to realize fertility intentions: a key aspect of the postcommunist fertility transition. Popul Res Policy Rev 33(3):393–418 Szeibert O (2013) Maintenance of studying grown up children in Hungary. In: Fulchiron H (ed) Les solidarités entre générations, Solidarities between Generations. Bruylant, Bruxelles, pp 527–533 Szeibert O (2018-1) Családjog [Family law]. In: Vékás L, Gárdos P (eds) Kommentár a Polgári Törvénykönyvhöz [Commentary on Civil Code]. Wolters Kluwer, Budapest, pp 915–919 Szeibert O (2018-2) A továbbtanuló nagykorú gyermek tartása [Maintenance of adult child pursuing further studies]. In: Petrik F, Kőrös A (eds) Polgári Jog. Családjog III/VI [Civil Law. Family Law III/VI]. HVG-ORAC, Budapest, pp 414–423 Szeibert O (2018-3) Neuerungen bezüglich der gegenseitigen Unterhaltspflichten zwischen Kindern und Eltern in Ungarn. FamRZ 2018:1411 Széman Z (2015) Transition of long-term care in Hungary. Eur J Mental Health 10:245–255 Takács E (2017) Changing family - changing solidarity? The phenomenon of family solidarity. Rev Sociol 27(4):5–19

Support, Care and Employment for the Elderly: Examining the Law and Policy in Singapore Gary Chan Kok Yew

Abstract This article examines the role of the State and family in providing financial support, long-term care as well as employment for the elderly in Singapore. The focus of the chapter is on the legal and policy aspects. I will first discuss the government financial support schemes for the elderly especially those who are unemployed or have little income, and the Singapore Maintenance of Parents Act that imposes an obligation on children to provide financial support for their elderly parents. Secondly, I will examine the government policies to deal with the issue of long-term care for the needy elderly such as care insurance and the recent Vulnerable Adults Act to protect the vulnerable elderly from abuse. Questions concerning the policies to protect and support informal caregivers are also relevant. A holistic treatment towards the elderly entails a third area which is to examine the law and policies on employment for the elderly covering issues relating to wages, discrimination and retirement age.

1 Introduction Singapore continues to grapple with an ageing population and the attendant problems and challenges. In June 2016, from a total population of 5.6 million people (Lee 2016), there were 13.7% of citizens aged 65 and above in Singapore. It has been estimated that by 2030, 25% of Singapore’s population will be 60 years and above. Old age is typically associated with adverse health conditions such as arthritis and cataracts and chronic illnesses including diabetes, hypertension, and high blood pressure. A recent study indicated that a significant third of the elderly in Singapore suffer from multiple chronic illnesses (Choo 2019). In terms of mental health, depression and dementia are two major disorders afflicting the elderly in Singapore. In 2013, it was reported that Singapore had approximately 28,000 elderly aged 60 years and above with dementia and the figure G. C. K. Yew (*) School of Law, Singapore Management University, Singapore e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_12

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is expected to hit 80,000 by 2030 (Gan 2013). Memory clinics in the public hospitals “diagnose and manage patients with dementia” and Dementia Care Centres provide “nursing care and therapy for persons with dementia as well as respite care for their caregivers” (Gan 2013). Dementia is not only an important age-related healthcare issue but a societal concern. The total economic costs of dementia in Singapore was estimated at S$532 million as of 2013 and the annual costs per person was approximately S$10,245 per year (Abdin et al. 2016). The total costs comprised healthcare and social care costs which represented the larger proportion (76%) of the total costs.1 The healthcare costs included costs for direct medical care (by health professionals), intermediate and long-term care, travelling related to medical appointments or care and indirect medical care (such as the costs of family members accompanying the persons with dementia to receive medical services).2 Social care costs included both unpaid (informal) care costs which is assessed based on the opportunity costs approach and paid care.3 Unpaid care costs represented 60% of social care costs.4 Hence, from a holistic perspective, unpaid care occupied a significant segment of the total societal costs of dementia in Singapore in 2013. The basic standard of living for the elderly should be assured. This should include not only subsistence (for food, accommodation and transport) but arguably also monies to maintain a basic standard of living to allow the elderly to engage in social activities (Lim 2019a). In fact, a recent local study has found that the adverse health conditions of the elderly may be linked to the fact that some of them live alone (Choo 2019). Further, the issue of basic needs and quality of life is intimately related to the employment and wages of the elderly in Singapore. The level of local wages in certain sectors is in part affected by the influx of low-skilled foreign workers into Singapore in recent years and this has particularly impacted on the low-wage and older workers in Singapore. The State, healthcare professionals, families and caregivers face enormous pressures to alleviate the existing health and social problems encountered by the elderly and to prepare for the future challenges ahead. The government, NGOs and research centres have been actively exploring ways and solutions to deal with these multifaceted problems and challenges. I wish to focus on the legal and policy aspects in this chapter. They will be examined in three inter-related parts: (1) State and family financial support; (2) long-term care; and (3) employment issues relating to the elderly. Though the focus is on the laws and policies applicable to Singapore, brief comparative references will be made to related legal developments in jurisdictions such as Japan, UK and Australia.

1

Abdin et al. (2016), p. 447. Abdin et al. (2016), p. 441. 3 Abdin et al. (2016), p. 442. 4 Abdin et al. (2016), p. 447. 2

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2 State and Family Support for Elderly 2.1

Government Financial Support

The United Nations’ “Principles for Older Persons” state that governments should deal with the elderly according to the principles of independence, participation, care, self-fulfilment and dignity. With regard to ensuring the “independence” of older persons, it is stated that the elderly should be given “access to adequate food, water, shelter, clothing and health care through the provision of income, family and community support and self-help” and the “opportunity to work or to have access to other income-generating opportunities”. It would be useful to bear in mind these UN principles when we assess the level of social and financial support, public assistance, care and employment for the elderly in Singapore. According to the National Survey of Senior Citizens 2011, significant numbers of elderly employees do not treat work as an option. Moreover, the elderly are more likely to be holding low-wage jobs (Ng 2017). In future, due to the lower fertility rate, there will be fewer working children to rely on for elderly support. The Singapore Old-Age Support Ratio (that is, the number of people who are capable of providing economic support to the number of older people who may be dependent on others’ support) has decreased considerably from 13.5 in 1970 to 5.4 in 2016 (Department of Statistics 2016, p. 5). I will highlight the government measures to support the elderly workers financially before examining the public assistance available for the needy elderly. The Singapore Government has implemented a number of policies targeted at improving the financial and income security of older workers. The Central Provident Fund (CPF) system—which mandates the setting up of individual CPF accounts maintained by employee and employer contributions respectively—encourages self-reliance by making each individual responsible for his or her own retirement needs through work, rather than burdening future generations through the tax system. The total CPF contribution rates for older workers (aged 50 and above) was raised in 2012 to encourage older workers to continue working (MOM 2012). Since 2007, Workfare Income Supplements (WIS) via cash payouts and CPF top-ups have been made available for Singapore citizens who are older low-wage workers.5 Under the Wage Credit scheme, the Government co-funds a percentage of the wage increases given by employers to Singapore citizens who are employees earning a gross monthly wage below a specified sum.6 The Special Employment Credit is tiered by employee age to provide stronger support for employers hiring Singaporeans in the older age bands, where employment rates are lower (Nair 2016).

5 Workfare (2018). WIS is for those workers above 35 years old and who earn less than S$2000 a month. 6 S$4000 and below for the period 2013–2020. See IRAS (2018).

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In tandem with the general self-reliance model, public assistance in Singapore is “residual”, “conditional” upon fulfilment of specific requirements and “targeted” at the needy (Teo 2018, p. 160). Elderly Singapore citizens and permanent residents who are unable to work on a permanent basis due to old age, illness and disability and deprived of income and family support may apply for financial support (comprising monthly handouts according to household size and free medical treatment at Government clinics, hospitals and nursing homes) via the Public Assistance Scheme (Singapore Silver Pages 2018) administered by the Ministry of Social and Family Development (MSF). Notably, the largest group of Public Assistance beneficiaries is the “Aged Destitute Persons” followed by “Disabled Persons under 60” and “Persons Medically Unfit for Work” (Ministry of Social and Family Development 2016).

2.2

Law on Maintenance for Elderly Parents and Family Financial Support

Following committee discussions and reports on managing the problems of the aged in the 1980s,7 the Maintenance of Parents Act—which imposes a legal obligation on children to provide financial support to their parents in specific circumstances—was eventually enacted in 1995.8 It was meant to deter a minority of unfilial children who neglect to care for their vulnerable and elderly parents and to provide a safety net for the aged parents.9 However, the statute does not extend protection to irresponsible parents who had neglected or abused their children10 (based on what has been referred to in Parliament as the “principle of reciprocity of care”). In the debates on the subsequent amendments to the statute in 2010, a Member of Parliament11 highlighted that the statute was enacted in “an ageing society that will place increasing stresses on families” and underscored the need for strong enforcement mechanisms to make children provide for their parents (Parliament Report 2010). The private member who introduced the amendments noted that, according to the 2005 National Survey on Senior Citizens, the number of people in the group aged 55 and above who considered their children as the main source of financial support,

7 See report of the Committee on the Problems of the Aged (1984); and Report of the Advisory Council of the Aged (1989). 8 Chan (2004), p. 549. Eleven members of Parliament voted against the Bill and 22 were absent during voting. 9 Parliament Report 1994. The private member who put forth the bill was Nominated Member of Parliament (formerly) Associate Professor Walter Woon. The Bill was sent to a Select Committee: see Report of the Select Committee 1995. 10 Section 5(3). See also KLH v KSW Tribunal for the Maintenance of Parents, 1996; AR v JT Tribunal for the Maintenance of Parents, 1997. 11 Mr. Seah Kian Peng.

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has fallen quite significantly since the enactment of the statute and the dependency ratio has been decreasing since the 1970s. There is an implicit social contract or understanding in Singapore generally that children should support their elderly parents in return for procreation and nurturing by the parents. This is arguably supported by the principle of reciprocity of care, not necessarily weighed in rational (financial) terms but is also dependent on familial feelings and emotions that are not specifically quantifiable. Filial piety in Confucian thought is also based on such natural feelings of kinship. The failure to financially provide for the elderly parents may lie, on the one hand, in a lack of filial piety (or just plain ingratitude) of a minority of children and, on the reverse side of the coin, irresponsible parenting. The obligation imposed on children to financially provide for their elderly parents under the statute is therefore a qualified not an absolute one. The statute is also not meant to legislate filial piety for the entire society. It should also be noted that the “children” liable to maintain parents include not only biological children but illegitimate, adopted and stepchildren (s 2). This broad definition of “children” is generally consistent with the current obligations of parents to maintain both legitimate and illegitimate children and those accepted as members of the family under the Women’s Charter (ss 68 and 70) thereby supporting the principle of reciprocity of care (Chan 2004, p. 556). Under the law, a parent domiciled and resident in Singapore who is of or above 60 years of age and who is “unable to maintain himself” adequately may apply to the Tribunal for the Maintenance of Parents for an order that his child or children pay him maintenance (s 3(1)). A parent is “unable to maintain himself” if his total or expected income and other financial resources are “inadequate to provide him with basic amenities and basic physical needs including (but not limited to) shelter, food, medical costs and clothing” (s 3(4)). For those applicants below 60, they would have to show that they were suffering from infirmity of the mind or body or other special reason (s 3(5)). The overwhelming majority of the applicants are 60 years and above (Tribunal for the Maintenance of Parents 2017a). Furthermore, third party nursing homes and hospitals are entitled under the statute to claim reimbursements from children for expenses incurred in supporting their elderly parents (s 3(2)). The 2010 amendments were passed with a view to streamline and institutionalise the conciliation process via the Commissioner. To prevent or mitigate potential intergenerational disharmony or friction, the statute adopts a “conciliation first” approach with the help of the Commissioner. Legal action serves as a last resort should conciliation fail. The process of conciliation is thereby “strengthened” under the shadow of the legislation (Woon 1994, p. 30). A substantial majority of the cases have been resolved through conciliation and do not proceed to the Tribunal.12 No legal representation is allowed in the process (s 14(4)). Further, that the Tribunal proceedings are held in camera (s 19(1)) and the identities of the parties are not publicised (s 19(3)) help to mitigate the problem of familial conflicts. To strengthen

12 About 90% reached settlement through conciliation at the Office of the Commissioners for Maintenance of Parents from 2011 to 2018: see Tribunal for the Maintenance of Parents (2017b).

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the enforcement of a settlement agreement achieved through such conciliation, the agreement is statutorily designated as a maintenance order enforceable by the courts. The elderly parent must show that the child is able to provide maintenance to the elderly parent after his own requirements and those of his spouse and his children have been met; and the parent is unable, in spite of efforts on his part, to maintain himself through work or from his property or from any other source. The decision is ultimately subject to the Tribunal’s discretion based on grounds of justice and equity taking into account the circumstances of the case such as the financial needs, income, earning capacity, property and the physical or mental disability of the elderly parent as well as the income, earning capacity, property and other financial resources of the child. The average amounts of maintenance payments ordered by the Tribunal have been relatively low and have come from those with low household incomes.13 Overall, the statute serves as one safety net for aged parents with little income and family support. Without this legislative safety net, should the children who are financially able refuse to provide for their parents, the financial burden would have fallen on the charities, welfare organisations and/or the Government and ultimately, the taxpayers. Nonetheless, the solution to provide financial support for the aged parents does not lie merely in imposing a legal obligation on the children to maintain them. The social support schemes mentioned above as well as more pro-active measures to enhance living conditions and facilities for the elderly (including those requiring continuing medical and healthcare) are also necessary.

3 Long-Term Care 3.1

Government Financial Support Schemes

Outside of specific income security policies, we see in the design of other healthrelated insurance policies for the elderly in Singapore the same focus on self-reliance and targeted aid for the truly needy. The MediSave account, as part of the CPF, may be utilised to pay the account-holder’s hospital and certain outpatient expenses and those of his or her family members including elderly parents. MediSave withdrawals of $200 per month are also allowed for long-term care for severely disabled Singapore citizens. The ElderShield, a severe disability insurance scheme launched in 2002, provides security to the elderly for long-term health care needs (MOH 2018a) through fixed payout amounts for up to 6 years. It applies to all Singapore citizens and permanent residents with MediSave accounts at the age of 40 unless they opt out of the scheme.

13

Parliament Report (2013). According to the Minister, between 2011 and August 2013, the average payout was about $300 per month and a substantial majority (about 85%) of the payouts were made by households which earned less than S$2,500 per capita income.

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The Pioneer Generation Package initiated by the Government recognises the past contributions to the economy of the older generation of Singaporeans (who were born in 1949 and before) by granting them additional health services and medications subsidies at polyclinics and Specialist Outpatient Clinics, top-ups to their MediSave accounts and reduced premiums for MediShield Life.14 Similar medical benefits would extend to Singaporeans born during the period from 1950 to 1959 when Singapore had achieved self-governance (Merdeka Package 2018). In 2018, following the recommendations of the ElderShield Review Committee, the Government set up a compulsory long-term care insurance scheme known as CareShield Life for Singaporeans between 30 and 40 years of age. Due to take effect in 2020, the CareShield Life is optional for those above 40 years old. The scheme will cover severe disabilities in situations where the insured would require assistance in at least three activities of daily living (such as washing, dressing and feeding, toileting, and walking or moving around). Essentially, CareShield Life mandates self-reliance for the future needs of these relatively young members of the cohort who will become old in the future. Compared with ElderShield, the payouts under CareShield Life are higher, will increase over time and there is no cap in payout duration. The premiums for CareShield Life can be paid from MediSave accounts. The Government provides for means-tested premium subsidies of up to 30%. Additional premium payment support is available for those who cannot afford CareShield Life premiums even after premium subsidies, use of MediSave and family support (MOH 2018b). CareShield Life is also complemented by the new ElderFund (due to take effect in 2020) for lower income Singapore citizens aged 30 years and above who are severely disabled and need financial support for longterm care. A comparison may be made with Japanese model. Japan undertook a major shift in the 1990s from long-term institutionalised care in hospitals and nursing homes to home programmes and community-based rehabilitation facilities (Olivares-Tirado and Tamiya 2014, p. 19). Japan’s long-term care insurance (LTCI)15—financed partly by insurance and tax payments—requires those above 40 to contribute a sum to the LTCI so that upon turning 65, they will obtain long-term support depending on their needs. The elderly would have to bear 10–20% of the care costs as well as other costs (housing, food and utilities). In Singapore, the MediFund—an endowment fund of the Government—acts as a “safety net” for the needy. MediFund Silver—which forms part of the MediFund (2018)—is targeted at the needy elderly who are receiving treatment from MediFund approved institutions and who still experience difficulties paying their healthcare bills despite having already received government subsidies and payments from other means such as MediShield Life and MediSave.

14 Singapore citizens aged 65 and above in 2014 when the scheme was announced and who had obtained citizenship before 1986 are eligible to receive the benefits: see Pioneer Generation (2018). 15 Tai and Yi (2016). The relevant statute is the Long-Term Insurance Act of 1997.

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Family Care and Government Assistance

Support for the older generation should not be assessed in purely financial terms. We also need to consider the demand on employees’ time and the obligations to take care of their family members. Given the high living costs particularly for housing and car ownership in Singapore, and the attendant stress for the younger working adults to earn a livelihood and establish their careers, the burden is indeed a heavy one. Low-income families in Singapore may be associated with a high prevalence of multi-stressors beyond financial aspects such as low education, single parenthood, physical and mental health problems, criminal history and children’s behavioural issues (Ng 2013). Families in which both husband and wife work full-time may experience additional difficulties in juggling work and caring for elderly parents in the family. The engagement of a foreign domestic worker (FDW) to take care of household chores, for those who can afford one, would constitute additional outlay for the family. To support Singapore’s drive towards economic internationalization, Singapore employees working in multinational corporations have been asked to re-locate outside Singapore for frequent or extended periods of work. This adds to the strain on the employees as well as their families (Chia 2000). In terms of family support, the older people in Singapore rely more on their adult children for income support in the form of co-residence and cash transfers as compared to their counterparts in OECD countries. Correspondingly, the State’s role in Singapore in providing for the families is more limited (Ng 2011). A comparative study has been conducted in Norway, England, Germany, Spain and Israel concerning adult children as net providers of support towards older parents with physical functional limitations.16 An argument has been made that the basis for filial duty towards parents lies in the concept of “moral capital”, that is, a “stock of internalised social values that obligate children to care for and support their older parents” (Silverstein et al. 2012). In this regard, the family is treated as a “moral economy” (Ibid.). To slow down the inexorable tide towards smaller nuclear families in Singapore, the Government (specifically the Housing Development Board) provides Proximity Housing Grants of varying amounts to two categories of Singaporeans intending to purchase government flats. They are (1) extended families living together in the same flat; and (2) family members living in a flat close to their parents (HDB 2018). The avowed policy objective is to promote mutual care and support for both elderly parents and their children. Tax reliefs are also available for working adults who have to support dependants (which include their elderly parents, parents-in-law, grandparents and grand-parents-in-law) with low or no income.

16 Lowenstein and Daatland (2006). The study was based on the inter-generational solidarity under the Bengtson and Roberts (1991) framework with its multi-dimensional nexus of exchange relations and the six foundations: structural solidarity, associational solidarity, affectual solidarity, consensual solidarity, functional solidarity and normative solidarity (or filial piety norms).

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Other Government assistance programmes are available (MSF 2016). Elderly who lack family support and need permanent accommodation plans can stay at Sheltered Homes which are licensed under the Home for the Aged Act (Cap 126A, 2014 Rev Ed). The Ministry of Social and Family Development have also set up Social Activity Centres at the void decks of HDB rental blocks, which conduct activities for the elderly to keep them engaged. The Senior Group Homes (SGH) bring vulnerable seniors with some physical impairments together in a cluster of rental units and provide them with daily living assistance through coordination of social and care services. Seniors aged 50 years and above, and their caregivers, may call the helpline for professional counselling to manage their emotional health, personal and family challenges. The Agency for Integrated Care (AIC), which coordinates Singapore’s long-term care services, adopts a patient-centric approach under the Singapore Programme for Integrated Care for the Elderly (SPICE) to assess care needs of the elderly more holistically. This involves a team of medical, nursing, allied health and ancillary professionals providing a range of medical services (primary, preventative care, nursing care, rehabilitation and personal care) at the SPICE centre or the elderly’s homes. The clients for the abovementioned services are means-tested and subsidised up to a maximum of 80%. Importantly, the programme also seeks to reduce caregiver stress.

3.3

Protection from Elderly Abuse and Neglect

The protection of the elderly from abuse and neglect is another significant aspect of governmental social support.17 This is undertaken by the Director of Social Welfare, approved welfare and enforcement officers, and protectors under the recently enacted Vulnerable Adults Act.18 The statute extends to any adult above 18 years of age who is by reason of mental or physical infirmity, disability or incapacity,

17 18

Section 4. No. 27 of 2018.

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incapable of protecting himself or herself from abuse,19 neglect20 or self-neglect.21 One important category would be the elderly suffering from the abovementioned conditions. It was reported that more than half of the vulnerable adults the Ministry of Social and Family Development (MSF) has encountered are above 60 years old, with most of them being women (Lim 2019b). The Minister for Social and Family Development referred in Parliament to a case of an 85-year-old elderly man who lived alone and developed diabetic-related wounds on his feet which required urgent hospitalisation. He did not bath for months nor keep his medical appointments despite running out of medication, and was not able to take care of his wounds. Finally, the MSF persuaded him to accept medical care in his home, after obtaining assurances that his leg would not be amputated. This was cited as a case of elderly neglect appropriate for early intervention by the authorities or social workers. In terms of legal enforcement, the statute confers social workers the power to enter private premises, assess and, if necessary, remove a vulnerable adult to protect him or her from abuse. The vulnerable elderly are protected from any third party who may cause him or her to suffer from abuse or neglect. The statute allows the vulnerable elderly to be relocated to a safe environment and mandates that the vulnerable elderly or the care-giver, who may have caused the abuse or neglect, to attend counselling or training. The statute also protects the vulnerable adult’s autonomy whether he or she is mentally capable or not.22 In addition, there are enhanced penalties for those offenders who knew or ought reasonably to have known that the victim was a

19

The term “abuse” means —

(a) physical abuse; (b) emotional or psychological abuse; (c) conduct or behaviour by an individual that in any other way controls or dominates another individual and causes the other individual to fear for his or her safety or wellbeing; or (d) conduct or behaviour by an individual that unreasonably deprives, or threatens to unreasonably deprive, another individual of that other individual’s liberty of movement or wellbeing; 20 “Neglect” refers to the “lack of provision to the individual of essential care (such as but not limited to food, clothing, medical aid, lodging and other necessities of life), to the extent of causing or being reasonably likely to cause personal injury or physical pain to, or injury to the mental or physical health of, the individual”. 21 The term “self-neglect”, in relation to an individual, means the failure of the individual to perform essential tasks of daily living (such as but not limited to eating, dressing and seeking medical aid) to care for himself or herself, resulting in the individual —

(a) living in grossly unsanitary or hazardous conditions; (b) suffering from malnutrition or dehydration; or (c) suffering from an untreated physical or mental illness or injury 22

Section 4 states that the following principles are applicable to vulnerable adults:

(a) a vulnerable adult, where not lacking mental capacity, is generally best placed to decide how he or she wishes to live and whether or not to accept any assistance;

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vulnerable adult.23 That being said, the statute is meant to be a last resort and state intervention in family matters should only be undertaken when necessary (Parliament Report 2018). One area that has not been specifically tackled under the statute, however, is financial abuse of the elderly.

3.4

Protecting Caregiver Needs and Interests

As mentioned in Sect. 3.2 above, family members may be under severe stress from their work and other commitments in addition to having to provide financial support and care for their elderly members. From the perspective of informal caregivers of people with dementia in Singapore, a study indicated there were four categories of unmet needs: emotional and social support; information; financial support and accessible facilities (Vaingankar et al. 2013). Another survey on informal caregiving in Singapore—with respect to community-dwelling older adults aged 75 and over who require human assistance with at least one Activity of Daily Living—indicated that caregivers who are older, of higher socioeconomic status (those living in a bungalow, semi-detached or terrace house) and those with higher self-esteem from caregiving are less stressed (Chan et al. 2013). Caregivers who reported significantly higher stress scores are those facing disrupted schedules, health and financial problems due to caregiving. In addition, caring for an elderly person with a higher depressive symptom score leads to more caregiver stress. The Singapore Government is currently undertaking policies to tackle the wideranging problem of caregiver stresses and burdens. There is an increased focus in Singapore to treat caregiving to the elderly as a public concern rather than a mere personal or family issue. The Government has recently announced plans to roll out a Caregiver Support Action Plan to better help those looking after the elderly and infirm (Straits Times 2019). The caregiver services provided by the Government may be grouped into three categories: (1) informational; (2) social and psychological support; and (3) financial support. First, the AIC has set up eight counters at acute and community hospitals for Singaporeans to find out about the range of services for caregivers. Website information include services related to their end-of-life journey, advance care planning and Lasting Power of Attorney.

(b) if a vulnerable adult lacks mental capacity, the vulnerable adult’s views (whether past or present), wishes, feelings, values and beliefs, where reasonably ascertainable, must be considered Mentally incapable elderly persons are further protected under the Mental Capacity Act (Cap 177A, Rev Ed 2010). 23 Penal Code, section 74A.

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Secondly, AIC’s network of community outreach teams target caregivers who have or are at risk of developing depression, anxiety and burnout, and build caregiver support networks across dementia-friendly communities for caregivers. Another form of social and psychological support is the caregiver respite care services. Night respite services with selected nursing home providers provide support to caregivers of seniors with dementia who experience behavioural and sleep issues at night (Baker 2019). Thirdly, the Ministry of Health has introduced a new Home Caregiving Grant in 2019 to defray the costs of caring for elderly persons or the costs of hiring a foreign domestic worker. This grant is currently a monthly cash payout of S$200. More financial support might be needed in future given that the current financial costs of looking after a severely disabled senior at home is reported to reach as high as $3,100 per month before subsidies (ElderShield Review Committee Report 2018, p. 50). The Association of Women for Action and Research (AWARE), a non-governmental organisation, had made recommendations for developing a care economy rather than to merely rely on individual families (AWARE 2016). One of the recommendations was that family home carers be compensated. Any payment to caregivers should ideally not be seen as compensation for the loss they have sustained or as an indication of the value of care they have given. It is preferable to view the payment as a form of assistance to alleviate the caregiver’s financial burden. Moreover, Herring (2013), p. 109 had stressed that the focus should ultimately be to benefit the caring relationship between the caregiver and the care recipient and not merely the caregiver. A jurisdictional comparison may be made to the payment to carers in Australia24 who personally provide constant care at home for a care receiver who is severely disabled, has a medical condition or is frail aged.25 The UK carers’ allowance applies to anyone who provides at least 35 h of unpaid care to a person receiving relevant disability benefit and is available only to those earning less than £123 per week after tax, national insurance and expenses.26 Under the common law tort position in cases involving injuries suffered by victims of accidents, if a family caregiver had to give

24

Section 5(1) of the Australian Carer Recognition Act 2010 states that a carer is an individual who provides personal care, support and assistance to another individual who needs it because that other individual: (a) has a disability; or (b) has a medical condition (including a terminal or chronic illness); or (c) has a mental illness; or (d) is frail and aged. 25 See Australian Government, Department of Human Services 2016, p. 33 at https://www. humanservices.gov.au/sites/default/files/2017/10/8802-1710-annual-report-2016-17.pdf. Accessed 17 May 2019. There are two types of payment: (1) Carer Payment (which is an “income support payment paid to carers who, because of the demands of their caring role, are unable to support themselves through substantial paid employment” and the carer is providing constant care for “an adult or child with a disability or a medical condition, or an adult who is frail aged”); (2) Carer Allowance which is an “income supplement for people who provide additional daily care and attention for an adult or child with a disability or a medical condition, or an adult who is frail aged”. 26 See https://www.gov.uk/carers-allowance/eligibility.

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up his job (that is, work income) in order to provide care for the injured victim, such loss of income is recoverable from the tortfeasor.27 Whilst the home caregiving grant is a step in the right direction, Singapore has yet to enact legislation that specifically recognises or protects caregivers for the elderly. In comparison, the UK has enacted legislation since the 1990s, for example, the Carers (Recognition and Services) Act 1995 to confer a right on carers to an assessment of their ability to provide care. This was followed by the Carers (Equal Opportunities) Act 2004 to impose a duty on local authorities to inform carers of their statutory rights and the Work and Families Act 2006 (Sloan 2013, p. 8). The Australian Carer Recognition Act 2010 through The Statement for Australia’s Carers confers rights, opportunities and choices to carers. In addition, the 2016 Guidelines28 to the statute informs Australian Public Service agencies and associated providers about their responsibilities under the Act and how these responsibilities may be fulfilled. Moreover, carers’ leave is protected under the Australian Fair Work Act 2009.29 The former Speaker of Parliament in Singapore and AWARE have proposed introducing eldercare leave in Singapore, and the possibility of legislation was considered by the Singapore Government (Toh 2018). As a final point, the Singapore Ministry of Health has experimented with regulatory sandboxes to encourage technological innovations including innovations in home-care for the elderly and sick with a view to eventually granting official licenses to approved medicine service providers under the proposed Healthcare Services Act.30 For one of the projects, caregivers may engage mobile medicine providers31 to attend to the medical needs of their elderly care recipients at home after office hours instead of the caregivers having to personally bring the elderly who may have difficulties making the journey to the hospital or clinic due to their physical conditions.32

27

Lee Wei Kong v Ng Siok Tong [2012] 2 SLR 85 at [61]-[62]. The Carer Recognition Act 2010 Guidelines (April 2016). https://www.dss.gov.au/our-responsi bilities/disability-and-carers/publications-articles/carer-recognition-act-2010-guidelines. 29 (No 28 of 2009). Section 97 states that employee is granted paid carers’ leave “to provide care or support to a member of the employee’s immediate family, or a member of the employee’s household, who requires care or support because of: (i) a personal illness, or personal injury, affecting the member; or (ii) an unexpected emergency affecting the member.” 30 Heng (2018). This is under the auspices of MOH’s new Licensing Experimentation and Adaptation Programme (Leap): see https://www.moh.gov.sg/our-healthcare-system/licensing-experimen tation-and-adaptation-programme-(leap)%2D%2D-a-moh-regulatory-sandbox. 31 See e.g., https://www.speedoc.com/. Accessed 1 June 2019. 32 See video at https://www.channelnewsasia.com/news/singapore/more-mobile-medicine-pro viders-join-moh-regulatory-sandbox-video-11092598, 6 January 2019. 28

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4 Employment Policies 4.1

Employment for the Elderly and Discrimination Against Older Workers

The older workers in Singapore are comparatively less educated than the general population as there were less opportunities for education in the past. Moreover, the greater proportion of older workers are in low-skilled jobs with lower wages (Thang 2011, pp. 21–22) and they generally prefer flexible working hours and part-time jobs (Thang 2011, p. 25). The labour force participation rate for older workers (55 and above) in Singapore has increased steadily from 2006 to 2013 (Yap and Gee 2015, p. 16). Based on the 2011 National Survey on Senior Citizens, a greater proportion of the elderly have cited employment as their main source of income for the period between 2005 and 2011 (Yap and Gee 2015, p. 21). The elderly labour force grew due to, amongst others, rising educational attainment, the necessity for the elderly to supplement retirement savings and other income sources, and government policies aimed at enhancing elderly employment (MSF 2011, p. 48). Financial needs was the most cited reason for the elderly respondents opting to work (MSF 2011, p. 52). Apart from financial reasons, a study has noted that “meaningful employment is associated with better psychological and physiological well-being” among the elderly in Singapore (Tan et al. 2017). To enhance employment opportunities for the elderly, it has been suggested that more part-time work be made available for retired civil servants with more flexible work arrangements and that there be a shift away from employer-sponsored group health and surgical insurance plans as the higher costs of providing healthcare benefits for senior workers may have deterred employers from hiring the elderly.33 In the National Survey on Senior Citizens mentioned above, the main challenges for the elderly employed related to physical and mental capacity which affected their ability to work faster, carry heavier things and to process information (MSF 2011, p. 52). A majority (76%) of elderly respondents complained of ageism in the job search process (MSF 2011, p. 55) though an increased proportion of the elderly employed cited that they did not encounter problems at work (MSF 2011, p. 56). Another survey on Singapore employees indicated that employers valued highly older employees for their skills and knowledge and that the older workers also brought with them the benefits of greater experience, higher loyalty and commitment and stronger work ethic (TAFEP and CIPD 2013). To deal with discrimination against the elderly at the workplace, Singapore has tended to rely more on the soft educative approach as opposed to strict legal sanctions. First, the Singapore Constitution does not contain any general protection against age discrimination at the workplace. Article 12(1) states that ‘all persons’ are 33 See https://www.channelnewsasia.com/news/singapore/pap-seniors-group-calls-more-workingopportunities-elderly-.

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equal before the law and entitled to equal protection of the law’. Art 12(2) only protects citizens of Singapore against discrimination on four grounds (religion, race, descent or place of birth) but not age insofar as the appointment of the Singapore citizen to an office or employment under a public authority is concerned. Secondly, there is no statute prohibiting age discrimination generally. However, employers are prohibited from dismissing on the ground of age any employee below the retirement age (currently prescribed at 62 years) under the Retirement and Re-employment Act 2012 (s 4). The aggrieved employee is entitled to make a written representation to the Minister of Manpower who is empowered to order reinstatement of job and payment of lost salaries. The employer who violates the Minister’s orders may be imprisoned or fined. Whilst the Government remains open to having limited age discrimination legislation on the books, its avowed stance is that anti-discrimination legislation is no panacea against discriminatory practices. Laws alone do not change the employers’ mind-sets towards employees according to the Singapore Government (Toh 2013). The experience in certain countries34 have also indicated that the existence of anti-discrimination legislation per se does not necessarily result in employers foregoing age as a criterion in the hiring process35 and in other employment decisions. Instead, the focus has been on the educative and promotional approach based on Singapore’s Tripartite Guidelines 2014. These are non-binding guidelines to encourage employers to adopt fair employment practices to manage age discrimination issues at the workplace. For instance, employers are to recruit and select employees based on merit regardless of age. With regard to advertisements, employers should refrain from indicating a cut-off age but instead state the job requirements such as the need for physical handling of heavy equipment (TAFEP Guidelines 2014, p. 6). This is complemented by the Tripartite Standards that organisations are encouraged to adopt such as the specific standards on age-friendly workplace practices. TAFEP has also carried out advertising campaigns against discrimination at the workplace with a view to changing the mindset of the employers and the general public. In the video clip aptly entitled “Ability is Ageless” (TAFEP 2017), we see an older employee, known only as Joe, shunned and overlooked by his boss and younger colleagues. One night, a young colleague Raj who was aware that Joe had been working hard on a project, surreptitiously accessed Joe’s computer, retrieved Joe’s project documents and copied them in a thumb drive. The next day, during a meeting to discuss the project, the superior bypassed Joe as expected and instead asked Raj to present the proposals. The boss et al. were immensely impressed by the ideas presented on the power point slides. When the boss praised Raj for his “work”, the latter, to the shock of his colleagues, pointed to the presentation slides and revealed that “this is all Joe’s work”. Another video clip

34

For example, continuing discriminatory practices against the older workers in the UK despite the Equality Act 2010 and Employment Equality (Age) Regulations 2006: see Balch (2015). 35 See, for example, age discrimination in the hiring process in violation of the New Zealand Human Rights Act (Wood et al. 2004).

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(TAFEP 2018) shows two young children engaged in an argument in which they had unconsciously mimicked the behaviours and exhibited the prejudices and biases of their parents against older workers and female employees at the workplace. The slogan “Your Bias Today, Their Bias Tomorrow” spoke volumes of the potential dangers arising from implicit inter-generational transmission of workplace prejudices and discriminatory practices. Under the Tripartite Guidelines on Fair Employment Practices, blocking off information on age relating to the job applicants is encouraged. They state that the age of the job applicants in the application forms or during interviews should be irrelevant (TAFEP Guidelines 2014, p. 9). Significantly, the TAFEP guidelines specifically emphasise communications between employers and employees in the appraisal of employee performance whether for decisions on promotion or training opportunities (TAFEP 2014a). In addition, there are guidelines on grievance handling of matters involving alleged discriminatory acts of the employer (TAFEP 2014b). Indeed, one major objective in the grievance handling process is the preservation of the employer-employee relationship.

4.2

Retirement and Re-employment of Older Workers

The concept of a retirement age is intimately connected to the notion of intergenerational justice. With longer life expectancy in Singapore,36 employees are encouraged to work for longer periods. Continuance at work should depend on the employee’s productivity and competence whatever the age based on fair equality of opportunity. The employer can assess the costs and benefits of retaining the older employees on the payroll versus employing younger and less experienced workers. In addition to higher wage costs, older employees tend to cost more in terms of payouts for medical and health benefits and insurance. Depending on the industry, certain types of physical or manual work may not be suitable for older employees. The decision whether to retain or fire an older employee will also depend on the firm’s assessment of individual employee performance.37 Taken in this light, stipulating a retirement age appears prima facie to run contrary to the principle of non-discrimination based on age.38 On the other hand, it is recognised that productivity and ability to work will generally decline after a certain age due to natural biological processes of ageing. A statutory retirement age can serve as a reference point by which organisations can reset their headcount with fresh 36

Life expectancy at birth is pegged at a healthy 82.7 years in 2015. The trend of performance management in the UK has been to use a “yardstick of equality” regardless of age and such performance criteria has largely been under the control and influence of the employer: see Williams and Beck (2015), pp. 366 and 368. 38 Note that UK has abolished the ‘default’ retirement age in 2011. Under the UK Equality Act 2010, mandatory retirement is prima facie discriminatory and has to be justified by showing that it is a proportionate means of achieving a legitimate aim: see Vickers and Manfredi (2013). 37

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blood. Further, unless the total number of jobs increase, keeping the older employees for longer periods at the workplace will reduce the opportunities for others seeking to enter the workforce. The interests of the younger generation to have access to jobs and related opportunities should also be taken into consideration (Vickers and Manfredi 2013). In Singapore, as mentioned, the employer is prohibited from dismissing an employee below the stipulated statutory retirement age on the ground of age (Retirement and Re-employment Act 2012,39 s 4(2)). This statutory retirement age has also been raised over time with corresponding changes in life expectancy in Singapore.40 When the retirement age was raised from 60 to 62, the employer’s CPF contributions (a component of wage costs) was reduced to alleviate the financial burden for employers. Whilst the interests of the younger generations seeking employment are important, it is noted that, in view of the ageing population, the number entering the workforce would decline relative to the older workers in the foreseeable future. The retirement policy is combined with new re-employment measures to allow for re-adjustments to employment terms to be mutually agreed by the employer and the older workers. Employees who approach the statutory retirement age may be re-employed up to 67 years of age under the re-employment statute which took effect from 1 July 2017. One plausible proposal is for the retirement age to be re-calibrated and benchmarked against the health-adjusted life expectancy (HALE) which represents the number of years a person can expect to live in a healthy state on average (Gee and Huang 2019). The HALE figure—which is higher than the current retirement age— makes sense as it gives an indication of the average age at which the person is capable of continuing in employment. To protect the older employees, employers are currently not allowed to reduce employees’ wages at age 60 by more than 10% (Retirement and Re-employment Act 2012, s 5(5)(b)). To alleviate wage costs, employers who hire Singapore workers beyond 65 years old will receive wage offsets of a specified percentage of the employee’s monthly wages. Tripartite Guidelines on the Re-Employment of Older Employees were issued41 to prepare employers and employees for the re-employment legislation. In the lead-up to the implementation of Retirement and Re-employment Act on 1 January 2012, a survey of retirement and reemployment practices in the private sector was conducted. Almost all local employees retiring in 2011 were offered re-employment beyond 62.42 Under the re-employment legislation, employers have to consider all available re-employment options to identify suitable jobs for the employees who are medically

39

Cap. 274, 2012 Rev. Ed. The retirement age was 55 years (in 1955). It was increased to 60 years (in 1993) and thereafter 62 (in 1999). 41 These were issued by the Tripartite Implementation Workgroup formed under the aegis of the Tripartite Committee on Employability of Older Workers. 42 Slightly nine in ten of the retiring cohort accepted the offer: see MOM (2011). 40

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fit to continue working and assessed to have performed satisfactorily (s 7). Here open and timely communications regarding performance assessment are crucial for decision-making on the re-employment of the older employees. If employers are unable to offer re-employment despite reasonable attempts, they are required to offer to pay an employment assistance amount in line with the tripartite guidelines (s 7C) not as compensation for loss of income but to tide the workers (especially the low-income workers) over the period of unemployment (Parliament Report 2011). This alleviates the potential adverse financial impact on employees who have performed satisfactorily but who cannot be re-employed due to a lack of suitable vacancies within the organisation. One related concern is that existing organisational structures or conditions may not be accessible to older employees to begin with. To address this issue, in tandem with the re-employment of older workers, the Government has increased funding support via the Job Redesign Grant to allow employers to make the jobs easier, safer and smarter for the older workers.43

4.3

Wage Policies for Elderly Workers

Singapore’s wage system changed from a seniority-based system to a flexible wage system since 1986. According to the seniority-based system, the wage of the employee is linked to the length of his service with the employer. Under the former Government pension scheme for civil servants till 1986, the employee, after working for a specified number of years with the Government, would have received a monthly salary which is a fraction of his last-drawn salary upon retirement from the Government civil service. The seniority-based system did not respond quickly to the economic recession in Singapore in the mid-1980s. In its place, the flexible wage system—based on recommendations by the National Wages Council (NWC)44— allowed for labor market adjustments in an economic downturn to reduce labor costs. The flexible wage system was initially based on annual bonuses and subsequently, the monthly variable component (Chew and Soon 2005). The NWC also recommended a small service increment to reward employees based on their length of service, loyalty and experience (Tan 2007, p. 241). The practical outcome of the flexible wage system was the distribution of economic benefits to the workers through NWC’s recommended wage increases (Phang 1990, p. 318). In Singapore, the influx of low-cost foreign workers has depressed local wages at the lower end, resulting in a higher income divide and Gini coefficient. In particular, the segment of local low-wage and older workers has been the hardest hit. Low wages may be a reflection of the low level of self-respect and social respect given to

43

This scheme is under Workpro since July2016: MOM (2018). The NWC is a tripartite body comprising representatives from the employers, the trade unions and the Government. 44

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the worker (Green 2014, p. 298) and the perceived lack of talents possessed by the worker (Wolff 1998, pp. 114–115). Minimum wage legislation has been advocated to deal with this wage problem, and reference has been made to the experiences in Japan, South Korea, Taiwan and HK (Koh 2015, pp. 233–234) in support of minimum wage legislation. A related concern is that the minimum wage legislation if enacted will adversely affect employment levels for the very group of employees the legislation is intended to protect. Yet, it has been argued that instead of increasing unemployment, legislating a minimum wage will more likely lead to an increase in local employment, and encourage employers to invest in skills training in line with the higher wages paid (Weng 2013). The Singapore Government has not accepted the proposals for minimum wage legislation. Instead, they have in practice ensured a minimum level of wages in certain targeted sectors. To aid the low-wage workers, the NWC had proposed the introduction of quantitative guidelines since 2012 such that the proportion of fulltime resident employees earning a basic monthly wage of $1000 or less have decreased over the years (Lim 2016). In addition, the recently implemented Progressive Wage Model (PWM) is aimed at uplifting the salaries of low-wage workers in specific sectors (cleaning, security and landscape sectors) in which wages have stagnated due to “widespread cheap sourcing” with “high turnover and labour shortages” (MOM 2017). A significant point to note is that the low wage workers in the cleaning and security sectors are predominantly older workers with low education (Shanmugaratnam 2014, para 25). The PWM model—which was incorporated as part of the licensing requirements administered by statutory boards applicable to companies in these sectors45—stipulate in effect minimum salaries for workers at various levels. Importantly, the scheme is mandatory for Singaporeans and Singapore permanent residents (PRs) employed in the abovementioned sectors (MOM 2017).

5 Conclusion In the areas of providing State and family support, long-term care and employment for the elderly, the general developments in Singapore laws and policies seem to be moving in the right direction. However, there is room for improvement in terms of the level of State recognition and support for caregivers as they shoulder the burdens of caring for the elderly, and the need for age discrimination laws as a last resort. The Singapore Government’s approach has been focused on free market forces to foster economic growth, attracting investments as well as protecting the

45

These licensing requirements are administered by various statutory boards: National Environment Agency (cleaning sector); NParks (landscape sector) and Police Licensing and Regulatory Department (security sector).

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disadvantaged segments of society including the low-income workers and, by extension, their families. Legal enforcement against age discrimination remains limited with a focus instead on education and promotional campaigns to change employer mindsets concerning discrimination against older workers at the workplace. Instead, transparency in hiring processes and employer-employee communications are emphasised via the implementation of Tripartite Guidelines on Employment Practices and Standards. The preparatory efforts leading to the legislation on retirement and re-employment and job redesign grants attempt to minimise disruptions to the working environment of employers and the interests of the elderly workers. Consideration should also be given to further raise the wages of the elderly and the retirement age. Meanwhile, the Government’s residual financial and health schemes continue to target the elderly and low-income workers and retirees. The Maintenance of Parents legislation provides a safety net for the elderly coupled with institutionalised conciliation efforts to minimise frictions between generations. Policies on long-term care for the elderly have expanded with the recent introduction of CareShield Life to provide care insurance in addition to the existing policies on medical insurance. Whilst the Government is clearly cognisant of the burdens and stresses of caregivers and has in response provided financial assistance and support, specific proposals to enhance the recognition, protection and support for caregivers of the elderly are still on the table. The challenges to tackle the problems of the elderly in Singapore are enormous and multi-faceted. The legal and policy aspects remain very much a work-inprogress for the Government, healthcare professionals, civil society and citizens to work through as the nation continues to adapt to demographic changes.

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From Tradition to Transformation: How to Provide Long-Term Care to the Elderly People in China? Tianyu Wang

Abstract Under the background of aging, how to provide affordable and sustainable geriatric care services in China has become a crucial issue with social concern. Chinese society has been continuing the tradition of family support for the elderly, which was formed in the long history of agricultural society, based on filial piety culture and big family structure. However, due to the industrialization process since the reform and opening up, a large number of laborers leave the countryside and enter the city. With the influence of the one-child policy, the structure of the Chinese family has changed fundamentally, that is, the small family has become the main form. While the risk of aging accumulates, the state has become the legal subject to provide elderly care, but the specific obligations in practice are still unclear. Longterm care insurance should be the way to provide geriatric care services, and pilot reforms have been carried out in some cities. In the future, the long-term care insurance will be affected by China’s massive demand for geriatric care, the limited financial capacity of the state and the family tradition of caring the aged, which all together will build the long-term care system with Chinese characteristics.

1 Introduction China is a country with a relatively high degree of population aging in the world. It is an unavoidable situation that the elderly population is large, the aging speed is fast, and the task of dealing with population aging is massive. Statistics from the National Bureau of Statistics show that by the end of 2018, China’s population aged 60 and over will be 249 million, accounting for 17.9% of the total population. This figure is expected to exceed 300 million by 2025, accounting for 34.8% of the total population. In 2010, China’s disabled elderly population surpassed 33 million, and it is

T. Wang (*) The Institute of Law, Chinese Academy of Social Sciences, Department of Social Law, Beijing, China e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_13

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expected to reach 61.68 million and 97.5 million by 2030 and 2050, respectively.1 This large number of older adults means a huge demand for long-term care services and the supporting social system Academic circles have put forward a variety of suggestions on how to deal with the social problems of aging and how to provide effective and sustainable long-term care services to the elderly in China.2 As far as geriatric long-term care system is concerned, the state and the family are the primary responsibility bearers. Given China’s long history and profound culture, any feasible suggestion must be rooted in China’s specific background. On the one hand, senior caring has always been the central part of family obligations in history, constituting the ethics of “filial piety” in culture.3 Whether it is a large family back to the agricultural society or a small family since industrialization, Chinese people as family members have always maintained a close relationship. Care for the elderly is a natural extension of this intimate relationship, and also critical access for adults to obtain social, community, and family members’ evaluation. On the other hand, due to the industrialization and urbanization process happened in China during the past 40 years, significant changes have taken place in the family structure of Chinese people. The family structure, which used to support the traditional geriatric long-term care mode, began to disintegrate, and the social members tended to be individualized as a result of labor force flow.4 Besides, the aging of Chinese society happened too fast, which made the senior caring problem turn into one of the leading social risks and required the state to undertake the obligation of public social security.5 These two aspects overlap with each other in the process of social transformation in China. It has reached a consensus that the state should undertake the obligation of guaranteeing long-term geriatric care, while in practice, the scope of the specific responsibilities of the state is not clear. Still, the family bears the principal obligation of geriatric care right now, although the burden of family members is heavy. Therefore, the analysis of long-term care in China should go deep into the context of historical development with the dimension of the state and family, retrospect the origin of family endowment obligations, the formation of endowment culture genes, the rise of state obligations and the transformation of traditional endowment model since industrialization. These factors are the essential conditions to accurately understand and evaluate the development direction of China’s geriatric long-term system, as well as build up an institutional arrangement in the future.

1

Li (2015). Zhang and Goza (2006), Lu et al. (2015), Gu et al. (2009), Zhang et al. (2012), Woo et al. (2002) and Lu et al. (2017). 3 Stuifbergen and Van Delden (2011). 4 Seeborga et al. (2000). 5 Woo et al. (2002). 2

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2 Family Role: The Elderly Caring Tradition in China 2.1

The Tradition Formed in the Long History of China as an Agrarian Society

China has been an agrarian society for a long time in history and has established a unique oriental tradition of providing for the aged in terms of economic foundation, political environment, legal policies. Land dependence, family farming, selfsufficiency of small-scale peasant economy production mode and financial form, laid the foundation for the mode choice of long-term family care.6 The main structure of the small peasant economy has been continuing, whether it is the wellfield system, the equal-field system, or the land system of free trade. Because of the restriction of land, families stay together for generations, forming a simple reproduction and family long-term care to support parents as one of the highest values of life.7 The feudalism and autocratic monarchy of Chinese society gave birth to the family form of traditional clan structure. Comparing family structure with the state system, the relationship between father and son in the family is, in fact, the relationship between the monarch and the minister in the traditional country.8 There are two kinds of connections: one is the affiliation. The son is owned by the father and the minister by the monarch. The second is the feedback relationship. Father gives birth to a son, and son repays father. When a monarch promotes a minister, he must be loyal to the monarch. The autocratic monarchy system continuously strengthens the family system, and the family long-term care model is steadily solidified. The reason why long-term family care can last for thousands of years in China is that the core motive force is the traditional ethical values linked by blood, which is embodied in filial piety.9 The core of the family long-term care model is the value of blood relatives, which is the responsibility of family members to identify with their elders consciously. The ethical concept of filial piety has become the internal mechanism to maintain the regular operation of long-term family care, and in reality, it presents a simple idea of responsibility and obligation among generations of families.10 Based on filial piety, the ideological basis of China’s rural old-age security system has been generalized and condensed more widely. Moreover, it was strengthened by “benevolence, filial piety” in Confucianism, and the sublimation of the ethical system centered on “etiquette.”11 After the formation of universal

6

Pan (2009). Yang (2007), p. 50. 8 Yao (2001), p. 112. 9 Ikels (1993), p. 123; Sher (1984). 10 Zhang et al. (2014). 11 Luo and Zhan (2012). 7

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social recognition, the dominant social public opinion force made the family old-age security obtain external binding force. To ensure the stability and continuity of long-term family care in China and promote filial piety, the rulers upgraded traditional ethics to policies and laws. In the history of China, the measures to safeguard the function of family endowment mainly include supporting and caring for the elderly with close relatives, strengthening the fulfillment of the obligation of supporting the elderly by their children and grandchildren, commending filial piety for punishing unfilial piety, allowing those who have no children to recruit their son-in-law for the aged, emphasizing the principle of reciprocity between child support for parents and property inheritance. Ancient Chinese laws imposed severe penalties for “unfilial piety,” such as the “ten evils” in the Northern Qi Law(北齐律)and the “ten felonies” in the Kaihuang Law (开皇律), which included the crime of “unfilial piety.” The Tang Law Shuyi Famous Rules(唐律疏议
名例律)lists filial piety as one of the “ten evils” and punishes it severely once it is violated.12 That is to say, in ancient China, “family long-term care” was adopted. Children had the duty to support their parents, grandparents, and other elders’ lineal relatives, and the etiquette law stipulated it. If violated, they would be investigated for responsibility and severely punished.

2.2

Family Structure as the Traditional Basis

The reason why China chooses family long-term care is closely related to the family structure of China’s agricultural society. The mode of production of the small-scale peasant economy and the political environment of feudal monarchy gave birth to the patriarchal clan structure linked by a blood relationship, which enabled the family long-term care to be selected, developed and continued. The clan is two words in ancient Chinese society, namely “Zu”(族)and “Zong”(宗). The Zu is the natural aggregation of people with blood relationship, and the Zong is the manager of the clan organization.13 Its form of expression is patriarchal clan in ancient times and patriarchal clan in later generations. A clan is an enlarged family, which has become an organization to guide members’ behavior and to some extent has shared the maintenance function of public order and stability.14 Under the patriarchal clan system, the large-family structure formed by blood relationship plays a dominant role in the family structure in the traditional agricultural society of China. Family organizations established based on blood relationship often built “backbone families,” usually characterized by large populations and large families, which played a dominant role in ancient China.15 On the one hand, land

12

Wang (2015). Zhong and Li (2016), p. 51. 14 Zhang (2009). 15 Zhong and Li (2016), p. 53. 13

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capital is relatively fixed, and the input of labor capital directly determines the output of family organizations. Because labor force is very cheap relative to land capital, with the increase of household investment in the labor force, the number of population is increasing, and the size of households is expanding, forming a large family structure of multi-generation co-habitation. The high family status of the elderly and the stable sharing of aging risks provide internal motivation for the choice, development, and continuation of long-term family care. Under the patriarchal clan system in traditional Chinese society, the elderly are the head of the family, the owner of family property, and are often rich in production experience, so they play a dominant role in family life.16 Care and respect for the elderly have become a social norm. At that time, the family population structure was a pyramid shape, that is, at the top of the pyramid were the elderly with a small population, at the middle of the community was middle-aged, and the youth with the largest population was at the bottom.17 Such a family structure is very stable, so there will be substantial economic affordability, a large number of people to assume support obligations, can disperse the risk of senior care.

2.3

Combined: Caring Responsibility, Land Ownership, and Its Inheritance

Chinese traditional society has not formed the concept of rights and obligations as Western countries but built an internal exchange relationship through family intergenerational tradition. The most concise summary is “raising children to provide against old age.” Raising children and supporting the elderly are social problems that must be solved. Chinese traditional society adopts feedback mode to solve this problem. In the process of “pay-back” of “raising children and preventing old age,” inheritance system and land ownership are the social basis and real motivation to stimulate family long-term care. In terms of inheritance system, the most important means of production and livelihood under the small-scale peasant economy—land ownership is the core. In the land ownership possession and distribution, in the traditional agricultural society of China, the elderly can uniformly distribute the property of the family, and centrally adjust the income and risk of family members, which is precisely the economic condition for the family to bear the long-term care. In the form of inheritance of land ownership, with the emergence and development of private ownership, the family property inheritance system came into being. Every dynasty from the Qin and Han Dynasty to Ming and Qing Dynasty implements the law of succession of various sons.18 The inheritance of family property is manifested 16

Yang (2007), p. 50. Buhui (2016), p. 168. 18 Liu (2016), p. 121. 17

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in two stages: the first stage is to inherit part of the family property by dividing the family before the parents are born, the precondition is to protect the authority of the parents; the second stage is to distribute the surplus heritage behind the parents for the second time, so as to ensure the survival and development of their sons and heirs. Confucianism emphasizes the concept of a large family, advocates that family property should be shared by the family and attaches importance to the control and domination of family property by elders. In addition to the most critical land ownership in an agricultural society, the objects of inheritance include the experience and knowledge of production and life as well as family status. In the production model of the small-scale peasant economy, the problems encountered in production mainly depend on the accumulation of experience and life knowledge. Experience plays a crucial role in traditional agricultural production, and the most experienced in society is the elderly, who can better arrange agrarian production, which also establishes their core position in the family, thus forming the social foundation of respecting the elderly in a traditional agricultural society.19 Foundation. Supporting the elderly is also closely related to the inheritance of land ownership and the transfer of power in the family.

3 The State Steps in: Tradition Needs to Be Transformed When Industrialization Comes 3.1

Young People Leaving the Land: The Call of Industrialization

The transfer of rural labor to non-agricultural industries and cities is a general rule in the process of industrialization and urbanization. Since China’s reform and opening up, a large number of rural population and labor force have shifted to industries and cities, which are also caused by industrialization and urbanization. Industrialization and the rapid expansion of non-agricultural sectors, such as industry and commerce, have led to the transfer of large-scale labor from rural to urban areas and from agriculture to industry.20 Higher urban “expected” income and better urban living standards will attract young rural labor force and thus be “pulled into” cities. Some scholars have made a sustained study on the rural population mobility in Western China since the 1990s. According to the survey in Gansu, Sichuan, Ningxia, and Shaanxi, 55.69% of the migrants are over 28 years old, 44.31% are under 28 years old, and 80.7% are under 40 years old.21 It can be seen that the primary migrants in rural areas are young and middle-aged workers. In recent years, with the rapid development of industry and commerce, the demand for the labor force in cities 19

Ding (2003), p. 38. Fang et al. (2009). 21 Zhang and Liu (2010). 20

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has further increased. In the case that the young and middle-aged workers in rural areas have gone out to work, the tendency of middle-aged men and women, whether married or not, to go out has increased significantly. The transfer of labor force is not only a process of economic development but also a means of social change. Both economic factors and non-economic factors influence it. Labor mobility in the process of industrialization is the result of the interaction of individual motivation and macro motivation. At the personal level, the pursuit of workers provides the motive force for mobility, while the general interest potential difference caused by macro-motivation creates conditions for the large-scale structural mobility of labor from agriculture to non-agriculture.22

3.2

Family Structure Changed Fundamentally

There are two leading social factors influencing the change of urban family structure in modern China: one is the impact of population policy, because of the implementation of family planning policy, most urban families have only one child, and these only children will not appear in the traditional big family regardless of the way they choose to live after marriage; the other is the impact of social reality on the change of urban family structure. With the progress of human civilization and the further improvement of marriage and family system, the concept of marriage and family in contemporary cities has been renewed and varied, which affects people’s choice of residence after marriage, and ultimately manifests itself in the influence on the change of family structure in contemporary cities.23 On the other hand, a large number of rural people migrate to cities to work, which leads to the transformation of family structure. Husband and wife usually have to share different obligations, such as going out to work and taking care of their families. Therefore, separation has become the norm of rural families.24 In terms of family size, whether urban or rural, under the influence of family planning policy, the miniaturization and simplification of family size have become one of the essential characteristics of family structure in China, which has a far-reaching impact on family long-term care. The decrease in the number of children in families means the increase of family support cost, which, to a certain extent, weakens the bearing capacity of family to support the aged. Especially for the only-child families, they even face the “4-2-1” family structure in the intergenerational structure.25 Compared with the pyramid structure of the large family in the traditional agricultural society, it has reversed.

22

Xin (2012). Liu (2006), pp. 100–108. 24 Li (2012), pp. 145–159. 25 Sun (1998) and Flaherty et al. (2007). 23

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Economic growth has led to the gradual decline of traditional multi-generation families. The relationship between parents and children in rural areas has distinct exchange characteristics. The dependence of elderly parents on their children is rigid and replaced by supplementary lessons. The dominant and dependent relationship highlights the social transformation in traditional rural areas, which has a significant impact on the intergeneration relations of lineal families. The absence of the main substituted labor force in the family will make it challenging to maintain multigeneration families.26 On the other hand, the relaxation of the urban household registration system will promote the overall mobility and even migration of couples and children. Therefore, parents with only one adult son may also lose the underlying conditions for forming multi-generation cohabiting families. This change may weaken the family support base of the rural elderly population, and the social security system needs to be further analyzed.

3.3

The State’s Role Is Transparent While the Obligation Is Not

The Social Insurance Law promulgated in 2010 establishes the legal system of social insurance for urban and rural co-ordination and clarifies the state responsibility for social protection. Compared with the previous social insurance system, the Social Insurance Law has made many new provisions, one of which is to clarify the state responsibility of social insurance.27 The state or government is the main body responsible for social protection. As a state or government, it is responsible for establishing a social insurance system, undertaking the operation of social insurance and providing financial support for social insurance. Social insurance is a kind of public product. The state should provide every citizen with the necessary survival guarantee, to solve the citizens’ living worries, to promote social stability and development. It has been established that the government should bear the responsibility in the endowment insurance, but the question is to what extent the government should limit the liability and points out that the government responsibility in the field of endowment insurance should include: institutional design responsibility, implementation responsibility, and bottom-up responsibility. Institutional design responsibility refers to the responsibility of the government to construct and improve the legislation of endowment insurance, to carry out system construction and to formulate policies and measures. Executive responsibility refers to the obligation of the government to raise, operate, and pay funds. Bottom-up responsibility refers to any link in the

26 27

Giles et al. (2010). Lin (2011), p. 62.

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operation of the whole system.28 The government is responsible for solving the failure of any subject except the government. The vagueness of the specific obligations undertaken by the state in social security is mainly reflected in the rural social security system. Take the new rural insurance system for example, state obligations is not clear. The legislation of rural social endowment insurance has a low level of effectiveness and lacks authority and stability. Besides, procedural protection obligations are absent, judicial remedies are imperfect, payment obligations are not conducted in place, and financial support is weak.29

4 Where the Future Goes: The National Long-Term Care System with Chinese Characteristics 4.1

The Eve of Transformation: The Current Pilot Reform of Long-Term Social Care

Since 2016, China has carried out a pilot reform on long-term care insurance in some cities, such as Hebei, Jilin, Heilongjiang, Shanghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Shandong, Hubei, Guangdong, Chongqing, and Sichuan, adopting the social insurance model. The reasons for this pilot reform lie in: on the one hand, the insufficient supply of commercial insurance market in China; on the other hand, the social insurance model can promote the cultivation and development of longterm care market, promote the reform of medical system, release employment space and develop facilities.30 As far as the pilot projects have been carried out, the long-term care insurance system has realized the relative separation of long-term care insurance and basic medical insurance system. Long-term care insurance funds are allocated from necessary medical insurance funds according to specific standards, independently set up accounts, independently supervised, and relatively independent in content, focusing on meeting the medical and nursing needs of the disabled and semidisabled elderly.31 The pilot project of long-term care insurance benefits the insured patients, develops medical institutions for the aged, makes rational use of medical resources, and realizes the sustainable operation of the long-term care insurance fund. It explores a new way to solve the problem of socialized care for the disabled and semi-disabled elderly. However, some problems inevitably arise in the experimental process of long-term care insurance: lack of independence in system and operation, limited scope of protection; unstable sources of fund-raising, affecting the 28

Pu (2016), pp. 15–20. Yang et al. (2010) and Xue (2012). 30 Li (1999). 31 Gu and Vlosky (2008), pp. 52–84. 29

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sustainability of the system; increased overall pressure on financial expenditure, unbalanced payment capacity among regions; classification standards and fees for long-term care.32 The objective and standard are not uniform, and it is challenging to meet the actual needs: insurance payment lacks the necessary industrial support; the gap between urban and rural areas is still prominent in the field of nursing services; the service personnel is insufficient, and supervision is even more complicated. As to the long-term care insurance financing scheme, the current financing channels are generally single, mainly through adjusting the structure of basic medical insurance funds and personal accounts.33 In the pilot areas, only Shanghai embodies corporate responsibility in the source of financing. Because the primary source of funding for long-term care insurance funds in pilot cities is the transfer of basic medical insurance funds, the current medical insurance in China adopts a “low level, wide coverage” model, so the overall level of financing for long-term care insurance is not high. Also, the pilot long-term care insurance coverage is limited to urban workers and residents, and rural residents are generally not included in the coverage.

4.2

Social Insurance Is a Must in the Long Run

The goal of long-term care is to meet the health and daily living needs of people with various diseases or physical disabilities, including a range of regular and long-term services ranging from dietary and living care to emergency or rehabilitation treatment. China’s 12th Five-Year Plan put forward for the first time “to explore the longterm care system for the elderly,” and the 13th Five-Year Plan continued to put forward “to explore the establishment of long-term care insurance system.” On account of family miniaturization, empty nesting, and population mobility, more and more families are facing the problem of insufficient caregivers. However, China has a tendency to place more emphasis on medical care rather than long-term care, which lead to the situation that long-term care has not been included in the critical agenda, and there are severe shortcomings in investments in long-term care personnel, facilities and financial resources. For example, China needs at least 10 million senior nursing staff, but the actual number of employees is less than 1 million. The gap rates of home care for the aged and community day care are more than 55% and 70% respectively.34 China’s long-term care service security is not sound. So far, China’s public and private senior service institutions are not connected with long-term care insurance, and the elderly who are involved in such institutions are “paying the fee” by themselves. Moreover, senior service is often confused with long-term care. The

32

Lu et al. (2017), Deng and Deng (2007) and Yang (2017). Wang et al. (2018). 34 Chi (2019). 33

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quality of care provided by various senior care service institutions is uneven, while qualified senior care service institutions with affordable prices, and skilled services are still in short supply.35 As a result, the low-income families have no access to suitable long-term care services. Under the background of the only-child family structure, ordinary people can hardly bear the cost of nursing the elderly. Meanwhile the existing social security system cannot meet the needs and the government resources are quite limited. Establishing a long-term care insurance system is not only to meet the needs of geriatric service and population aging but also to promote the development of old-age service industry and accelerate the transformation and upgrading of economic structure.

4.3

Family Role Is Still Under Consideration

While pursuing the socialized long-term care system, the family tradition with filial piety culture cannot be abandoned. The elderly need care not only to improve their daily living quality, but also to meet their spiritual needs. Care within the family is usually a natural emotional connection between the elderly and caregivers, which has obvious advantages compared to socialized and market-oriented care services.36 At present, a majority of China’s long-term care is still based on family. The longterm family care caters to the values of the elderly, and the elderly are more likely to accept this “family as the core, community as the support, professional services as the backing”, that is to provide services to the elderly living at home to solve the difficulties of daily life.37 On the other hand, the development of long-term family care can significantly reduce the expenditure of long-term care. At present, China’s existing institutional care costs are relatively high, which cannot meet the needs of most disabled and mentally retarded elderly, especially in rural areas. Data from the fourth national survey on the living conditions of the elderly in urban and rural areas show that about 95% of the elderly who need care can receive care, but the main body of providing care is not institutional care, nor social or market-oriented community and home care, but care provided by members of the family.38 The problem of cost is an essential reason for the low occupancy rate of senior care institutions. It can be seen that home-based community care services play a more fundamental role in the policy system of China’s senior care services.

35

Zheng (2018). Pan et al. (2017). 37 Zhang (2012), pp. 99–102. 38 Wang (2018), pp. 26–30. 36

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5 Conclusion: Developing Country and Small Family Work Together The change of China’s population age structure not only reflects the general law of population aging at the same time in the process of continuous improvement of income level but also shows the particularity that the speed of population aging is faster than that of income level. The gap between demographic transition and per capita income increase can be described as “old before rich.” Starting from China’s national conditions, China’s old-age security system will be shaped by limited financial capability and small family structure in the future. China is still a developing country. Although the total economic volume is enormous, the per capita disposable income is still relatively low. The state and local finance cannot afford to pay insurance premiums with a large budget at all. With the transformation of government functions, it can only adhere to the principle of separation of government affairs and management according to the requirements of socialization, mainly in the formulation of planning, appropriate investment, promotion of legislation, improvement of policies, creation of environment and cultivation of the city. The family care established by Chinese society through filial piety and consanguinity is an important component of the long-term care system. In modern society, socialized care resources began to diversify, such as wage income, operating income, property income, transfer income. However, human resources satisfied with life care and spiritual comfort have not changed much and still rely mainly on family members. Social service can never wholly replace children’s support to their parents, which is also the vitality of family long-term care. Family long-term care, as the basic long-term care model inherited so far, still shows principal value in the process of being replaced by social long-term care model. Generally speaking, the long-term care for the elderly is the responsibility of the children, and also the unavoidable responsibility of the state and society as a whole. In 2011, the 12th Five-Year Plan for Ageing proposed that we should develop a moderately inclusive social welfare undertaking for the elderly and revised the policy concept of long-term care service to “home-based, community-backed and institution-supported.” Long-term care’s transformation from private service to public service is becoming the consensus of social policy around the world. However, limited by the economic level of developing countries, it is impossible for China to provide long-term care funds to cover all its citizens at current stage. Therefore, China’s future long-term care system for the elderly would be shaped by limited finance and small family structure together. Family care can enable the elderly to receive spiritual support and emotional comfort in a familiar living environment, and benefit the physical and mental health of the elderly. At the same time, long-term care insurance would be positioned as public financial support.

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Solidarity Between Generations in South Africa: Contemporary Challenges and Prospects Chanda Chungu and Evance Kalula

Abstract Intergenerational solidarity is one of the most critical and important topics requiring urgent attention in South Africa. Given the history of the country and increase in the old age population of the country in the last two decades, steps need to be taken to maintain balance and minimise conflict between generations. The focus of this paper will be on how solidarity amongst generations can be secured through strategies targeting towards older persons. The authors will attempt to highlight steps already in place to deal with this matter and develop additional and stronger routes that could complement attempts made, specifically with regards to the increasingly ageing population. This paper will opine that the combination of encouraging an active aging population, adequate health care and a three-tier pension system will be necessary to ensure the ageing population in South Africa seamlessly adapt in old age, whilst simultaneously strengthening linkage to the younger population in the country.

1 Introduction Intergenerational relations in contemporary South Africa are related to its Apartheid past, which was characterised by social and political segregation for the greater part of the twentieth century.1 The Apartheid system dictated where people were allowed to stay and work.2 An important feature of the Apartheid state was the separation of South Africa into mainland “white” citizens of South Africa and tribal homelands, which were ostensibly black African. “Able bodied” young men left the homelands

1 2

Beinart and Dubow (1995). See Native Lands Act of 1913 and Population Registration Act of 1950.

C. Chungu (*) School of Law, University of Zambia, Lusaka, Zambia E. Kalula Faculty of Law, University of Cape Town, Cape Town, South Africa e-mail: [email protected] © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9_14

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and sought employment in the cities, where they were not allowed to stay with their families.3 Although significant changes have taken place in the last sixteen years since the birth of constitutional democracy in 1994,4 the legacy of the Apartheid system is nevertheless still experienced in the current state of intergenerational relations in contemporary South Africa.5 Two main roles of intergenerational solidarity are in care giving and economic support that is given by one generation to another. To receive care and be given economic support is crucial to individuals from the time of infancy until one reaches adult years as well as when one is in twilight years. It is also crucial during times of crises, when one is sick or is in financial trouble. Co-residence between generations during crucial stages of life cycle is an important indicator of the level of support between generations. South Africa, like many countries in the world has policies that support families, which include tax exemptions for children, and child support is tax deductible.6 Non-contributory old age pension and the child support grants, which target poor families, play a big role in enabling generations to support each other.7 In addition to a number of laws pertaining to family welfare, a draft family policy is in place that seeks to strengthen South African families and maintain their well-being through specific programmes and actions.8 Nevertheless, it is only recently that the government has initiated a national dialogue with the aim of drafting a national framework to build intergenerational solidarity. Many of these strategies are being discussed by government and civil society. This paper will focus on how solidarity amongst generations can be secured through strategies targeting towards older persons.9 The authors will attempt to highlight steps already in place to deal with this matter and develop additional and stronger routes that could complement attempts made, specifically with regards to the increasingly ageing population.10

3

Makiwane, M. The changing patterns of intergenerational relations in South Africa (unpublished paper). 4 Leibbrandt et al. (2010). 5 Posel et al. (2006), pp. 836–853. 6 UNICEF (2010). 7 Mpedi et al. (2003). 8 2001 Draft National Policy Framework for Families. South African Department of Social Development (DSD). 9 Samson et al. (2007). 10 Statistics South Africa (2009) and Triegaardt (2005).

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2 Solidarity Amongst Generations Ageing is a process which no individual can escape. However, the impact of ageing can vary depending not only on genetic factors but also reflecting a range of characteristics, such as profession, income, lifestyle or quality of life. Viewed from a societal perspective, the structure of the population can deviate considerably between countries, as a result of the interaction of demographic events—such as fertility rates or migration rates—and other factors, such as lifestyle choices or the provision and efficiency of healthcare services.11 South Africa’s population structure is changing and becoming progressively older—The number and proportion of elderly persons aged 60 years and older relative to those aged 59 and younger has increased over the period 1996–2011. The number has increased from 2.8 million in 1996 to 4.1 million in 2011, and the proportions from 7.1% in 1996 to 8.0% in 2011. Projections show that the older population will continue to increase and by 2030 there will be approximately seven million elderly persons in South Africa. A steady increase in life expectancy across in South Africa over the last 20 years has led to increased longevity. This developments impact upon demographic ageing, a process that has become established in South Africa in the last two decades and which is expected, by many, to become further entrenched during the next half century, as the absolute number and the relative importance of the population of older persons continues to grow.12 These demographic changes will lead to significant challenges for families and individuals—for example, it could become commonplace for people to move into retirement while still having one or both of their parents alive. These profound changes present a key challenge to society, with the ageing of the population having serious implications for public policies and budgets. At the current moment, there are severe constraints on fiscal policies and a strong need for fiscal consolidation over a number of years in the EU, aggravating adverse budgetary developments arising from ageing. Many of the challenges that arise from population ageing are universal and include: • • • • •

adjusting the economy and in particular workplaces to an ageing labour force; strains on pension and social security systems; labour market shortages as the number of working age persons decreases; pressure on public budgets and fiscal systems; higher demand for healthcare services and long-term (institutionalised) care;

In addition to the above challenges, the potential conflict between generations over the distribution of resources could also prove to be a serious issue affecting

11 12

Hochschild (1975). Van der Berg (1997).

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solidarity between generations. To this end, a strategy needs to be devised in South Africa to guard against this conflict. At the same time, changes in the demographic profile of South Africa will also impact on labour and product markets, families and individuals. In order to tackle the challenges posed by population ageing, a long-term view seems necessary, well beyond the horizon of electoral cycles. The authors will seek to highlight how reform of South Africa’s pension system will be the best way to address the challenges and issues facing an increasingly aging population in South Africa.

3 Strategies to Maintain Solidarity with a Focus on Older Persons in South Africa While some older South Africans lead active, healthy and participative lives well beyond their retirement,13 many others are faced with problems, such as poverty, illness or disability, that can potentially confine or restrict their lifestyles.14 Various measures seek to address these challenges, including efforts to: • promote the active participation of older persons;15 • provide accessible and effective healthcare services that promote early detection of diseases and help older people to maintain their health and capacity to live independently, while ensuring that healthcare spending remains under control;16 • ensure that older persons have adequate incomes generally through pensions systems and support mechanisms that seek to reduce the proportion of older persons that are at-risk of-poverty.17 As can be seen from the above, the concept of active ageing is based on three pillars mentioned in the definition: participation, health, and security.18 These elements will be examined in detail below, in the context of South Africa.

3.1

Active Participation of Older Persons

It is clear that the key to tackling the challenges of an increasing proportion of older people in our societies is “active aging”:19 encouraging older people to remain active 13

Bohman et al. (2008). HelpAge International (2003). 15 Biggs (2007). 16 Makiwane et al. (2004). 17 Makiwane (2010). 18 Walker (2009). 19 Loretto (2016). 14

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by working longer and retiring later, by engaging in volunteer work after retirement, and by leading healthy and autonomous lives. Active ageing is defined by the World Health Organization (WHO) as ‘the process of optimizing opportunities for health, participation and security in order to enhance quality of life as people age’.20 The definition therefore includes the notion of extending the activity of older persons, both within the labour force, through delaying their retirement, and within society, through participation in a range of social, economic, civic or cultural activities. According to the WHO, the key aspects of active ageing are: – autonomy which is the perceived ability to control, cope with, and make personal decisions about how one lives on a day-to-day basis, according to one’s own rules and preferences; – independence, the ability to perform functions related to daily living—that is the capacity of living independently in the community with no and/or little help from others; – quality of life that is an individual’s perception of his or her position in life in the context of the culture and value system where they live, and in relation to their goals, expectations, standards, and concerns. It is a broad ranging concept, incorporating in a complex way the person’s physical health, psychological state, level of independence, social relationships, personal beliefs, and relationship to salient features in the environment.21 As people age, their quality of life is largely determined by their ability to maintain autonomy and independence and healthy life expectancy which is how long people can expect to live without disabilities. Within this context, it is perhaps revealing to look beyond basic measures of demographic change, such as the rising proportion of older persons in the total population or gains in life expectancy and to supplement this with a focus on indicators that measure the propensity of older people to continue in work, to participate in society and to lead an active retirement with a high quality of life. To this end, it is important to emphasise the increasingly important role that older persons will occupy in society in the coming decades, through a portrayal of their lifestyles. Neither the Pension Fund Act nor any other law bars old age people from receiving a pension benefit and continuing to work. Thus, many old people can explore this route, and this can be encouraged by institutions so as to ensure protection for the active population towards the goals of solidarity amongst generations. Civil society is composed of a range of organisations, for example charities, non-profit making bodies, community groups, faith organisations, professional or business associations, trade unions, sports clubs, or groups of people that meet to

20 21

WHO (2002). Harper et al. (1998).

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practice a range of sports, past-times and hobbies. These social networks are a key facilitator of participation in society, providing an opportunity for older persons to continue learning and to share their knowledge and experience, while also offering the opportunity to engage with friends, family, neighbours and other generations. Furthermore, voluntary work may be seen as an important contribution to civic participation—promoting social cohesion and social inclusion. There is evidence to suggest that voluntary work increases mental well-being among older persons. Volunteer work also has the potential to provide an exchange of experiences between the generations; for example, older people reading stories to the young at a nursery centre. In South Africa, like in some European Union (EU) countries, an increasing number of older people take-up opportunities to learn about a new subject or to refresh their knowledge in a particular study area by attending courses at universities and other educational institutions. However, adult learning extends beyond employment-related activities to include personal, civic and social skills in formal education and training systems or other settings. It may be the case that, the older that people get, the more likely it is that their participation in education and training activities will be for personal fulfilment (for example classes to develop computing or foreign language skills) or social contact. Another aspect of active ageing is the continued access of older people to political and civic processes. This contributes to ensuring that the voice of older persons is heard and that the needs of older persons are considered when policy matters are debated in local, regional and national contexts, while also helping to broaden the participation of elderly people in society. The active participation of older persons in political life may be measured through their participation rates in elections or through the number of older persons who are representatives directly elected to municipal, regional or national representative bodies. Apart from playing an active role in the workplace or community after retirement, older people have the potential to provide support within families, for example childcare support to parents with dependent children so the latter may remain within the labour force, thereby increasing solidarity within families.22 Therefore, increasing opportunities for old and young people to meet and exchange ideas in modern societies, whether in families or beyond needs to be explored. Constant contact and interaction between generations is very likely to decrease the risk of conflict. However, for this to succeed, the barriers to interaction need to be extinguished. For example, younger people might feel they are facing the burden of paying for the social assistance schemes for older people that are financed from taxes and long-term care of increasing numbers of older people, while older people might feel vulnerable or marginalised by changes in society.23 It is clear that the government of South Africa can do more in facilitating participation by a number of considered incentives to government and other private

22 23

Reed et al. (2003). Depp and Jeste (2006).

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sector organizations that accommodate flexible participation of older persons. This would enhance skills and knowledge transfer across generations.24 Multipurpose centres where old people can receive health care, entertainment but also where they in turn can provide a service to children and youth. People of different generations must share physical environment and be encouraged to engage in formal and informal interactions.25 Lastly, it is worth noting that the ageing population has led to increasing concerns about pensions and their future sustainability.26 Much of the dominant policy discourse around ageing and pension provision over the last decade has focused on postponing retirement and prolonging employment.27 These measures are central to productive notions of ‘active ageing’.28 Whereas this paper has carefully advocated for active ageing, the authors will opine below that development of a sustainable pension scheme is also equally important in maintaining solidarity across generations.29

3.2

Health Care

The WHO defines health by referring to the ‘physical, mental and social well-being’ of individuals. A comprehensive understanding of health implies that all systems and structures which govern physical, social and economic conditions should permit individuals to lead a productive life, irrespective of their bodily or functional limitations (for example, by enhancing the participation of disabled persons).30 Active ageing policies, together with health-related technological advances and improving living conditions have led to increased life expectancy for the South Africa’s elderly population.31 There is no doubt that poor health is perceived as a key driver of early retirement. As such, maintaining the autonomy and independence of the elderly generations has become a goal for some policymakers, as better health has the potential to: • improve the well-being of individuals; • extend their working lives—providing a stimulus for economic growth; • reduce the overall strain on health and social care systems.

24

Hinrichs and Aleksandrowicz (2006). Weyman et al. (2012). 26 Smeaton et al. (2014). 27 Corsi and Samek (2010). 28 Walker and Maltby (2012). 29 Foster (2010). 30 Harrison (2009). 31 Duflo (2000). 25

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The promotion of health over the whole of an individual’s life, aiming to prevent health problems and disabilities from an early age (promoting a healthy lifestyle through actions that seek to increase levels of physical activity, encourage the adoption of a healthy diet, or reduce individual’s dependence on the use of tobacco, alcohol or illicit substances). Further, a commitment to tackle health inequalities that are linked to social, economic and environmental factors.32 In 2019, the South African Parliament passed the National Health Insurance Act. The National Health Insurance (NHI) is a health financing system that is designed to pool funds to provide access to quality affordable personal health services for all South Africans based on their health needs, irrespective of their socio-economic status. NHI is intended to ensure that the use of health services does not result in financial hardship for individuals and their families. The Act seeks to realise universal health coverage for all South Africans. This means that every South African will have a right to access comprehensive healthcare services free of charge at the point of use at accredited health facilities such as clinics, hospitals and private health practitioners. This will be done using an NHI card. The services will be delivered closest to where people live or work. NHI is being implemented in phases over a 14-year period that started in 2012. It will be established through the creation of a single fund that will buy services on behalf of the entire population. The funding for NHI will be through a combination of various mandatory pre-payment sources, primarily based on general taxes. The introduction of the National Health Insurance is seen as a progressive step, specifically as it relates to solidarity across generations amongst other benefits such as fulfilling one of the basic social protection floors. The older generation is expected to put additional demands for a range of health and health related products and services. This new initiative, which is expected to be fully implemented by 2026 will go a long way to boosting security for older people. The promotion of health care broadly, through the NHI shows a commitment to solidarity across generations given that it promotes the health of all in the population. Maintaining this high level of social protection, which is universal therefore leads to the positive effect on the daily life of all the generations and its shock absorber effect and guards against susceptibility to this social risk. The potential implication of the NHI is that more financial resources through budget provision would have be allocated towards prevention and healthy lifestyles, to avoid or delay the onset of chronic diseases and dependency. Quality health and care services are essential for a decent life of all, and as such they need to be accessible and affordable for all, and particularly to the most disadvantaged groups of our society. To improve the quality of health services through the NHI, public authorities should strive to improve the coordination and integration of health and long-term care services, to move towards community and home care and to develop better working conditions to attract and retain qualified care professionals. The

32

Loretto and Vickerstaff (2015).

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highly feminised care sector is characterised by high levels of part time work, temporary contracts and high levels of migrant workers. As will be seen below, the NHI and old age grant critically demonstrate the role played by the South African government in fulfilling its obligations to the elderly people in poverty. The question, however, is whether this should be the only route followed, given the financial drain it can be on the resources of the government.

4 South Africa Social Protection System for Older Persons As alluded to above, two routes to securing solidarity across generations are encouraging an active workforce and better health care. In relation to the first recommendation, governments are likely to face a significant challenge in trying to encourage the older generation to stay in the labour market rather than retire early, as previous generations have tended to do. As it pertains to the second, the introduction of the NHI in South Africa will protect several people in their old age but the administrative and financial cost it will place on the government will need to be alleviated through the promotion of adequate social protection systems for older persons. Therefore, the third recommendation in relation to social protection pension schemes needs to be explored. In South Africa, the protection against the social risk of old-age is split into two forms of implemented interventions: social insurance and social assistance. Social insurance schemes that cover unemployment, maternity, road traffic accidents and occupational injuries, illness and disease depend upon contributions made by an employer and employer. Social assistance schemes, in the form of old-age, disability, and various child support grants are non-contributory, usually financed from the general revenue of the State. As it relates to social assistance, South Africa has a system of old age grants administered by the South African Social Security Agency (SASSA), in terms of the Social Assistance Act.33 This grant is targeted for vulnerable and poor older person and is thus an income-tested, monthly payment. It is paid to around 3 million older persons in South Africa, reaching up to 100 per cent coverage in some jurisdictions. The old persons grant is given to citizens, permanent residents and refugees with legal status. Applicants have to provide information about their income and financial assets for the means test. If a grant needs to be reviewed, additional documentation is required, including greater details on the reported income and a life certificate to prove that the beneficiary is still alive. SASSA conducts the review and must notify beneficiaries three months prior to the review. In cases where payments are made electronically, the review automatically takes place once a year.34

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No. 13 of 2004. Department for Work and Pensions (2013).

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However, just as it relates to the NHI, the strain of social assistance on the state could be difficult to sustain. This is because in most cases, the younger, working class population finance the expenditure on these initiatives and this does little to boosting solidarity. Thus, the authors would like to explore the use and expansion of social insurance through pensions to the older protection as a way of ensuring solidarity across generations. Currently, there aren’t any national or public social insurance schemes dealing with retirement—these contingencies are, from an insurance perspective, mostly covered by occupational-based and private arrangements. However, reforms that might eventually lead to the introduction of public schemes in these areas are foreseen. The Pension Funds Act 24 of 1956 (PFA) in particular regulates occupational-based retirement funds. Certain more specialised laws create the framework for special categories of pension beneficiaries. See, amongst others, the Government Employees Pension Law Proclamation 21 of 1996, the Military Pensions Act,35 the Special Pensions Act36 and the General Pensions Act.37 Therefore, in short, South Africa does not have a public pension system covering the entire workforce. The Inter-Department Taskforce Team (IDTT) identified this aspect as “the most notable gap in the South African social security system”. Responding to this particular challenge the South African IDTT proposed the formation of a National Social Security Fund (NSSF) with the view of providing an earnings-related, public DB-arrangement. The objective for the proposed new overall pension system is to ensure a minimum replacement rate of 40% for full career workers. However, the NSSF will only cover income above the level covered by the NSSF—a ceiling of R 178,000 is indicated—and workers with earnings above this level will not meet this target through the NSSF alone. Hence, higher-income earners will need to build supplementary savings to achieve an adequate retirement income. Therefore—and as a complement to the NSSF—a new tier-3 arrangement is proposed. The 3rd tier will be auto-enrolment based, private arrangements. 3rd tier arrangements can be existing arrangements. An approved funds framework (AFF) for funds managing tier-3 savings is proposed to ensure adequate quality in 3rd tier offerings. Hence, the proposal is to create a special framework for pension funds operating tax-incentivised supplementary savings—e.g. tier-3 savings. The approved funds framework will establish standards relating to disclosure, investment strategy, risk management, administration and governance. The auto-enrolment offers choice options to employers as well as the individual employee. The overall objective is to encourage workers to make supplementary pensions and insurance contributions. All employers will be obliged to enroll their employees in the company’s occupational scheme or another suitable arrangement. Hence, participation in this arrangement comes on top of the proposed mandatory

35

No. 84 of 1976. No. 69 of 1996. 37 No. 29 of 1979. 36

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NSSF. The employee can choose not to join. Employees who do join may be permitted to choose their level of contribution. Employees will also be allowed to opt-out of the scheme designated by the employer and join the default fund operated by NSSF should they deem it more suitable. The NSSF-default will also cater to workers whose employer does not offer an occupational scheme or another suitable arrangement. The default fund will be operated by NSSF (NSSF-Default). As such, NSSFDefault will enter into direct competition with private funds. The NSSF-Default will not be underwritten by the state. Different types of pension arrangements—i.e. public and private—can serve different objectives. They can share and address risks in different ways just as their exposure to different risks vary. Public pensions are well placed to address a broad range of basic income needs, poverty alleviation and redistribution because they can mitigate and allocate risk, address uncertainty and redistribute in ways that are not readily available to private systems. Also, they can cater to incomereplacement needs up to one or another level. Private pensions on the other hand are well placed to smooth income over the lifecycle while their capacity to share risk is more limited.38 Private pensions can only address risks that are insurable, while policy driven objectives may be outside their scope. Private pensions are complementary to public pensions. South Africa shares this basic condition with all other countries.39 The combination of a strong 2nd tier and a strong 3rd tier is essential in this context. In fact, the formation of a universal basic public pension system is the most important element in any strategy to close the pension gap, and therefore IDTT viewed the formation of the NSSF as the key element in the overall South African reform agenda. Complementing this 2nd tier public DB-system a strong 3rd tier is essential to improving pension coverage and pension adequacy and to the distribution of responsibilities between public and private spheres.40 The different elements of the tier-3 proposal have different roles. High private pension coverage for the target group as such is essential to ensuring pension adequacy in the new overall pension system. The proposed auto-enrolment based platform serves to encourage workers to make supplementary pensions and insurance contributions and increase private pension coverage. The proposal for a tier-3 default fund operated by the NSSF is to protect participants who are not satisfied with the option offered by the employer, while the adoption of an approved funds framework is to ensure value for money for all tier-3 participants. The importance of the different elements varies by income. While the 1st and the 2nd tier will be vital for low- and mid-income groups, private tier-3 benefits may dominate for higher income groups.

38

Reed et al. (2003). See for example Taylor and Earl (2016). 40 Crawford et al. (2013). 39

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5 Reform of Pension System South Africa has embarked on efforts to significantly strengthen its social security system—so as to be better protect its older population, and in turn secure solidarity between generations. Efforts to do so have been under way for more than two decades and in this course multiple analytical input and political debates have matured the agenda. Particularly important contributions are the 2002 Taylor report, the 2012 Inter-Department Taskforce Team (IDTT) report on comprehensive social security and a series of reports issued by the National Treasury in 2012–13.41 The 2012 IDTT-report provides the template for the current deliberations. This report was endorsed by cabinet in 2016, and it was then submitted to the National Economic Development and Labour Council (NEDLAC) for consultation. As part of its considerations, NEDLAC issued a set of first comments in September 2018 and considering these comments the IDTT document is currently being updated. Private pension coverage is low in South Africa—especially in the private sector. The current approach is based on a voluntary model, where employers can decide to offer an occupational pension scheme or where such schemes can be set up by collective agreement. However, voluntary models are generally not efficient in ensuring high coverage, and typically they do not reach out to lower income sectors of the labour market and smaller enterprises. The recent regulatory reforms cannot be expected to increase private pension coverage significantly. On the one hand the changes may make the choice to provide an occupational arrangement more appealing to some employers. However, occupational arrangements will remain voluntary, and there is no indication that the changes alone will improve the accessibility of private pensions in lower income sectors and for smaller enterprises. As will be discussed in this paper, the best way to ensure solidarity amongst generations in South Africa would be through the adoption of a 3-tiered proposal has the potential to significantly increase private pension coverage in the longer term— even in an auto-enrolment based regime. This proposal will entail combining South Africa’s old-age grant with an earnings-related public defined benefit pension scheme and private arrangements—so as to ensure as a comprehensive support structure and social security mechanism for older people.

6 Private Pensions and Their Current Contribution to Solidarity Across Generations Over the years private occupational and voluntary schemes have been established to fill—or help fill—the pension gap for particular groups in South Africa. Hence, South Africa has a sizeable private pensions industry managing total assets of around

41

See National Treasury (2012e, f, 2013).

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R 4,146 Bio. (year-end 2016). 58% of this capital was held in privately managed pension funds (46%) and underwritten funds (12%),42 while the remaining 42% were held in the dominant public sector pension fund GEPF and a few other much smaller public sector funds. A very small portion was held by foreign funds. The number of pension funds43 in South Africa is very high and the vast majority of funds are small. There are some 5140 privately managed pension funds and underwritten funds out of which some 1650 funds are active and receive new contributions (by year-end 2016). The 100 largest funds hold 75% of the total accrued pension savings, and the largest 25 funds hold 50%. Scale matters greatly in private pensions. Absence of scale can have significant negative effects on costs, management capacity and performance. The vast majority privately managed pension funds and underwritten funds are not likely to have the scale to be managed efficiently. This aspect is illustrated for example by the fact that 43% of the funds fail to meet the very basic requirement of submitting their financial statement on time. A large fraction of the contracts is related to participants with so-called unclaimed benefits. I.e. the participant has earned rights in a pension fund, is no longer paying contributions, has not claimed a pre-retirement pay-out and has not claimed benefits. Referring to privately managed pension funds and underwritten funds. While the number is high the average account balance in these contracts is low. A recent internal FSCA project found that only some 2% of total assets relate to unclaimed benefits. The large number of contracts with unclaimed benefits is a critical challenge. There are many reasons as to why participants end up as participants with unclaimed benefits. However, tracking the participants and paying the benefits due remain the responsibility of the pension fund and its board of directors. The numbers indicate a poor track record in this respect. This aspect is critical, as the rights of a large group of participants are not adequately served, and as it weakens the role of private pensions and erodes its credibility. Private pension coverage is not high. The STATS SA labour force survey from Q3 2018 indicate that some 45% of the employed workers report that pension contributions are being paid on their behalf, but it does not provide further detail on the accrued savings or other. Private pension coverage varies according to income, sector and degree of unionization and it is skewed towards higher income segments with stable labour market careers in the formal sector. To the extent lower income workers are covered, this is mainly facilitated through provident funds rather than pension funds.

42 An underwritten fund is a fund enrolled in an insurance arrangement with an insurance company. Underwritten funds are exempted from among other requirements to appoint an auditor and a valuator and from annual audits and valuations. 43 In this context the term “pension funds” refer to pension funds, provident funds and retirement annuity funds.

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Actual private pension coverage is difficult to assess. As noted above, 11.1 Mio. contracts received contribution in 2016. Some participants will have paid contributions to more than one contract and hence, there will be a—potentially substantial— element of double counting involved, when moving from the number of contracts to the number of actual participants. The available data does not allow this issue to be solved. For comparison the 15–64-year-old population was 36.9 Mio., the work force 21.3 Mio., and the employed work force stood at 16.6 Mio. in Q4-2016. Regular pension benefit payments were made under 950,000 contracts in 2016. A little less than half—458,000—of these contracts were in privately managed pension funds and underwritten funds. The number of contracts from which a retirement related lump-sum was paid in 2016 is not available. Total benefit payments from private pension funds amounted to R 326 Bio. in 2016. 18% of total benefit payments are pension benefits, while another 38% are lump sum payments related to retirement or disability—i.e. 44% of all payments from pension funds are pre-retirement withdrawals not related to retirement or to disability. There are some differences between public and private sector funds in this respect. Hence, the total fraction of benefit payments related to retirement or disability is more or less the same, while the fraction paid as regular pension benefits is substantially higher in public sector pension funds—36% as opposed to 11%.44 11% of all benefit payments from privately managed pension funds and underwritten funds are pension benefits and another 44% are lump sums related to retirement or disability. The numbers indicate that around 40% of all payments are pre-retirement withdrawals. This also indicates a low level of preservation for workers terminating their job. The strong preference for lump sum payments and the high pre-retirement payment rate and low preservation reduces the role of private pensions substantially. Private pension coverage, contribution density and preservation are low. A 2009 assessment found that, some 6.2 million formal sector workers are not covered by private pension arrangements.45 Other research has concluded: “Currently, only an estimated 6 per cent of South Africans are able to maintain their lifestyle and replace their income fully at retirement”.46 Related research found that further to low and skewed coverage, the potential of private pensions is reduced by short labour careers, low contribution density, weak preservation and portability and widespread early withdrawals (National Treasury 2012c, d). Pension adequacy in South Africa is low—even among private pension participants. Recent research even found pension adequacy among private pension participants to be deteriorating. Hence, the proportion of members thought to be able to maintain their standard of living in retirement is on the decrease. Currently it is estimated at just 19% of participants in stand-alone funds and only 14% of members in umbrella funds (institutions providing pension management to a large number of

44

Registrar of Pension Funds Annual Report 2016. IDTT 2009: Annexure C: Governance and benefit protection in approved funds. 46 National Treasury (2014). 45

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small pension funds). The contribution rates applied are highly variable and they are on the decrease. The average employer contribution is estimated at 9.9% of salary in 2017 while the average employee contribution rate stands at 5.7% of salary. Both numbers have decreased in recent years. 13% of all funds indicate that members are able to choose their own contribution rate.47 The data coverage on private pensions and their contribution to social security is weak. The ad hoc nature of the cited research is a signal of this aspect. Apart from the basic observation that private pension coverage and density is low, the fact is that little is known about the contribution of private pensions to social security and its development in this respect. Hence, there is no data available allowing a strong analysis of the contribution of private pensions to social security in old-age and little is known about, for example the coverage of private pension benefits among the elderly and their effects on income distribution.48 The weak data availability has repercussions for policy and policy design. Hence, the platform for evidence-based policy development and evaluation is not strong. Improved data availability and improved room for research and evaluation is essential going forward—not only to policy formation but also to private pension market development.

7 Recent Private Pension Reform Efforts The assessment of the private pensions industry has been rather critical. The critique has targeted parts of the industry and it has touched on a wide range of issues—for example, lack of transparency, slow case handling, high and in-transparent fees and costs, weak and insufficient governance and poor adherence to fiduciary responsibility. Further, the framework appears complex with many different types of fund arrangements. The number of funds has come down in recent years. Even so, the number of active funds as well as the number of small funds remain high as indicated above (see for example National Treasury 2013) and there are clear signs of significant inefficiencies with many of the funds. Scale matters in private pensions and while a high number of funds—particularly small funds—incurs higher costs it does not in itself ensure efficient competition. A smaller number of more capable and transparent institutions with scale is a to be preferred. This process, however, should not lead to the formation of de facto monopolies. Private pensions have important roles to play and remains an important element in the overall pension system.49 Therefore, it is important to address the critique and ensure that the industry adequately and prudently serves its role and that private

47

Sanlam 2018: Benchmark survey 2018. Olivier (2012). 49 Grady (2016). 48

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pensions meet key standards on issues such as good governance, transparency, management, design and costs. While stronger private pensions do not make the need for a strong public pension system any smaller, it strengthens the ability of private pensions to serve its role and it strengthens the robustness of the overall pension system.50 The 2012 Budget Review condensed the critique voiced in public debates. Hence, the review made the observation that “too few South Africans receive an adequate income in retirement. Many are unable to put enough money aside for their future or do not have access to appropriate savings vehicles”. Further, the 2012 budget review undertaken by South Africa’s National Treasury pointed to four concerns.51 • Inadequate lifetime savings: Many households maintain unsustainable consumption levels, and do not save enough to provide for economic shocks and postretirement needs. • Low levels of preservation and portability: Workers often withdraw their retirement savings when they change jobs rather than moving their accumulated funds to a new employer or preservation fund. • High fees and charges: Pension, provident and retirement annuity funds impose fees and administrative charges on their participants’ savings. In some cases, these fees are excessive and substantially reduce the value of participant benefits. • Low levels of annuitization: At retirement, participants of provident funds seldom convert the lump sum they receive into an annuity. As a result, they risk outliving their savings. Annuities, which pay a guaranteed monthly income until death, are the best way of mitigating this risk, but certain products incur high up-front costs or management fees, and do not offer value for money to workers who do not expect to live long after retirement. The 2012 Budget Review also set out a reform agenda for private pension regulation. Hence, while reiterating governments’ commitment to pursue the creation of a mandatory, social insurance based public pension scheme—the NSSF—it set out a reform agenda addressing the principal concerns listed above. This effort was followed up by five technical discussion papers focusing on these issues in 2012 and 2013.52 Upon consultation, the process led to a range of reform proposals targeting the retirement funds industry. The reforms were summarized under 6 headlines.53 • • • •

50

Reducing the costs of retirement products. Reforming the annuities market. Requiring preservation and portability. A uniform approach to the tax treatment of retirement fund contributions.

European Commission (2010). National Treasury (2012a), p. 80. 52 See National Treasury (2012c, d, e, f, 2013). 53 Quoted from National Treasury (2012b). 51

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• Improving fund governance and the role of trustees. • Tax incentives to promote retirement and other investment products.

8 Recent Changes to Private Pension Regulation and Impact on Solidarity Amongst Generations Most of the private pension reforms announced from 2012/13 onwards in South Africa have since been adopted, while some are on their way. Section 36 of South Africa’s Pension Fund Act54 provides a rather broad right for the Minister of Finance to issue complementary regulations as needed. Most of these changes is implemented through Regulations 37–39 issued in accordance with section 36. Regulation 37 specifies that DC savings arrangements to which “members belong as a condition of employment, must offer one or more default investment portfolios” and the regulation stipulates the obligation of the board to “ensure, and be able to demonstrate to the Registrar on request, that default investment portfolio(s) are appropriate for the members who will be automatically enrolled into them”.55 The regulation also defines a few broadly defined standards that such arrangements must comply with. Investments options in a default investment portfolio can include both active and passive investments.56 Regulation 38 specifies that workers, who are “enrolled into a pension or provident fund as a condition of employment, the rules of that fund must provide for members who leave the service of a participating employer before retirement to become paid-up members”.57 The regulation seeks to protect paid-up members by stipulating equal treatment as regards investments and by abolishing any form of discrimination through costs or charges and by strengthening savings mobility. Participants are still able to withdraw their retirement savings when they leave the service of an employer or preserve their funds with another fund or insurance policy. Participants wishing to withdraw or transfer their retirement savings should be given access to a retirement benefits counsellor.58 Regulation 39 specifies that pension, pension preservation and retirement annuity funds must establish an annuity strategy and it extends a similar obligation to provident funds where participants can choose an annuity. Further, the board must “ensure, and be able to demonstrate [. . . . that. . .] the proposed annuity or annuities as per the annuity strategy are appropriate and suitable for the specific classes of members who will be enrolled into them”. Further, the regulation seeks to protect participants by stipulating that “fees and charges [must be] reasonable and 54

No. 24 of 1956. Lloyd (2015). 56 Ministry of Finance 2017, Reg. 37.1-2. 57 Regulation 38. 58 Ministry of Finance 2017, Reg. 38. 55

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competitive” and that “their impact on members’ benefits are disclosed”, and it must be well communicated to participants, and be reviewed regularly.59 Further to the annuity regulation in regulation 39, recent changes to the income tax legislation adjusts the requirements for mandatory annuitization. Hence, amendments increase the accumulated savings threshold for annuitization from R 75,000 to R 247,500 while maintaining the requirement that participants with savings above the threshold must spend at least 2/3 of these savings to purchase an annuity—either a guaranteed lifelong annuity or a living annuity. Also, the tax treatment of pension contributions across different types of pension funds have been harmonized on the contribution side and annuitization requirements will be aligned by 2021. Recent changes to the pension fund act seek to strengthen governance. The regulatory changes which came by way of the Financial Services Laws General Amendment Act60 stipulate among other things that a pension fund must be registered with the supervisory authority before taking up its business. Further, they stipulate the fiduciary duty of the board of directors towards fund and participants, and ensure “that the interests of members in terms of the rules of the fund and the provisions of this Act are protected at all times”,61 and they stipulate that board members “must attain skills and training as prescribed by the Registrar, within 6 months after taking up office”.62 The changes protect board members from joint and several liability, if they act independently, honestly and exercise their fiduciary obligations.63 The private pension regulation reforms address identified challenges in the private pension set-up. As such the overall effort supports the development of stronger private pension sector and it strengthens the ability of the private pension industry to contribute to social security in South Africa. The changes are recent and therefore their full effects are still unknown. It should be noted, that efforts typically affect new savings and leave existing savings untouched. While this approach may reflect political as well as legal concerns, it also prolongs the time to effect for the reforms.64 The private pensions agenda set out by the National Treasury, in 2012 seeks to strengthen private pension regulation and improve standards and products. The

59 Regulation 39.1-2 of Government Gazette No. 41064. Further regulation complementing regulation 39 by addressing the pay-out profile of so-called living annuities are currently under consultation (deadline mid-January 2019). A living annuity is a variable annuity—in essence an investment product—where the annuity holder assumes all risk. In return the participant escapes being locked into low return safe assets throughout retirement and retains some ability to vary payments and access capital underway. 60 No. 45, 2013. 61 Section 7C.a of the Financial Services Laws General Amendment Act. 62 Section 7A.a of the Financial Services Laws General Amendment Act. 63 Section 7F of Financial Services Laws General Amendment Act. 64 Cichon et al. (2004).

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analyses and evidence leading up to this effort are compelling and addressing the identified challenges is relevant. As such the initiatives taken are important, and they touch on many different aspects. The tier-3 proposal is partly shaped in view of the shortcomings and issues outlined above. Key aspects in this respect concern private pension coverage, preservation and mobility, value for money, costs and charges, governance and transparency. Some of these aspects are addressed through the recent private pension reforms. Therefore, it is relevant to consider how the recent reform efforts can be expected to affect the key drivers behind the tier-3 agenda.65 The contribution of private pensions to overall social security rests on some fundamental preconditions. Hence among other things, private pension coverage must be high, contribution rates must match objectives, contribution density must be high, contribution leakage must be low and across the industry scheme and product designs must align with overall retirement policy objectives. If these conditions are not met, private pensions cannot contribute effectively to overall pension policy objectives.66 Some of these issues reside outside the pension system and must be addressed through other policy efforts—particularly labour market policies and policies supporting the formalisation of the economy. Design is important to outreach.67 Hence, a classic issue in pension policy is how to ensure that private pensions are attractive for workers with low—and often unstable—income, and how to ensure that they reach out to low income sectors and small enterprises.68 This issue is particularly important in the context of the South African economy as it is marked by great diversity in labour market affiliation and perspectives and by great material as well as immaterial inequality.

9 The Reforms Will Improve Preservation, While Contribution Leakage Is Likely to Persist Up until now, early withdrawals and weak preservation has hampered the potential of private pensions as part of overall social security in South Africa.69 The savings culture has given priority to individual choice and pre-retirement access to pension capital over the underlying retirement objective.70 The tax regulation seeks to disincentivise early-withdrawals by imposing an indirect penalty on early withdrawals. Hence, the tax treatment of payments from pension funds applies a twinned set of tax rates as regards lump sum payments. 65

See Kalula et al. (2007). Department for Work and Pensions (2013). 67 Olivier (2000). 68 Richter et al. (2010). 69 Olivier (2000). 70 Scheiwe (1997). 66

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Lump sum retirement payments up to R 500,000 are tax exempt. If a lump sum is taken out as an early withdrawal before the retirement age (55 years) the threshold for tax-free payments is only R 25,000. The very high rate of early withdrawals seems to indicate that the disincentive is weak71 and/or poorly understood. Reforms do not limit early withdrawals as such. Regulation 38 seeks to change the pattern by stipulating access to preservation, equal treatment and by improving the ability to transfer savings to another pension fund. Further, the regulation seeks to counter the cultural aspect of the present practice by stipulating that funds must provide access to benefit counselling for paid-up members wishing to make early withdrawals.72 Early withdrawals are likely to be prevalent even in the longer term. The new regulation marks an important step in terms of improving access to and the terms for preservation, but it does not abolish or limit early withdrawals, and therefore it cannot be expected to effectively reverse the current practice. The 3rd tier may be subject to tighter preservation rules and rules limiting early withdrawals, thereby increasing private pension density for the participants.

10

Conclusion

The formation of a national pension system is a key element in the comprehensive social security agenda in South Africa.73 As has been discussed in this article, the proposed system of combining the existing 1st tier old-age grant, a new 2nd tier—i.e. an earnings-related public defined benefit pension scheme under the discussed NSSF—and a 3rd tier auto-enrolment based, private arrangements.74 While all three elements are crucial to pension coverage and pension adequacy, and securing protection for older generation in the country. they serve different objectives. It is submitted that this system coupled with the NHI and encouragement of an active population are the most sustainable ways of achieving the solidarity across generation in South Africa.75 They share and address risks in different ways and their exposure to different risks vary. Public pensions are well placed to address a broad range of basic income needs, poverty alleviation and income replacement up to one or another limit. Also, they can mitigate and allocate risk in ways that are not available to private systems. Private pensions on the other hand are well placed to smooth income over the

71 Many other countries—e.g. Denmark and Sweden—apply penalty taxes on early withdrawals substantially above the standard income tax rate. 72 Foster and Walker (2015). 73 Fultz and Pieris (1999). 74 Olivier (2005). 75 This would be in line with the balance called for by ILO Recommendation 202.

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lifecycle and offer additional income replacement while their capacity to share risk is limited to insurable risks only.76 Private pensions are complementary to public pensions,77 rather than the status quo in South Africa where private scheme are the only form of old-age social insurance.78 The contribution of private pensions to social security depends first and foremost on their coverage, contribution rate, contribution density and preservation. Therefore, the assignation of a prominent role in the overall pension system to private pensions should be accompanied by policies ensuring high coverage and high contribution density across the target group. It should be noted that good pension policy—public and private arrangements alike—needs the support of e.g. labour market policies and policies supporting the formalisation of the economy. Looking to the proposed 3rd tier, the analysis in this report gives rise to a set of recommendations. These concern tier-3 regulation in general and the design of the NSSF-Default. These recommendations are fitted to the overall tier-3 perspective as it has been set out, and they draw on international experiences and peer examples from other countries and contexts. As the 3rd tier is expected to be auto-enrolment based measures to support participation should be considered—so as to ensure protection for older persons if they do not receive the grant or covered by the proposed NSSF.79 Secondly, there would be a need to ensure alignment between 2nd and 3rd tier, by stipulating same pension age in the two tiers and by abolishing pre-retirement withdrawals in the 2nd tier and by abolishing—or tightly limiting—pre-retirement withdrawals from the 3rd tier. Looking to the design of the NSSF-Default, legislators would need to adopt a lifecycle design on the investment side based on a building block approach taking account of the fact that risk appetite varies by age—i.e. a lifecycle glide path.80 Consideration of adopting a risk-based lifecycle glide path—an investment policy focused on maintaining a certain risk level—rather than an approach with an age-related fixed asset allocation.81 The objective is to allow efficient risk management and generic adaptation to changes in risk patterns in the financial market—this making it more sustainable in the long run. Additionally, there would be a need to avoid a complete separation of the savings phase and the pay-out phase and let the lifecycle glide path continue into retirement—i.e. with risk reduction continuing into retirement. The objective is to allow more risk-taking on the investment side after retirement. This should be accompanied by considering alternatives to the use of traditional guaranteed annuities and avoid locking into very low long-term interest rate at retirement.

76

Hofäcker (2015). Ginn and Macintyre (2013). 78 Olivier and Mpedi (2009). 79 Cf Ofei-Kwapong (2013). 80 Mensah-Bonsu (2012). 81 Swartz and Bhana (2009). 77

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The key alternatives are variable annuities or a combination of a variable instalment payment and a life-long annuity kicking in at high age. The adoption of an approach without return guarantees in the savings phase and without benefit guarantees in the pay-out phase would defeat the purpose of protection and safeguarding solidarity.82 This strategy should be coupled with strengthened fiduciary responsibilities, strong prudential requirements and strong and stringent prudential supervision.83 The reason for this is the fact that guarantees are typically costly with little real value for the individual. Solidarity across generations calls for transparency, accountability and comparability by ensuring strong disclosure requirements and by devising key figures to be published and to be reported to a common neutral information service.84 In this paper, the authors have opined that a combination of various factors is needed to safeguard and enhance solidarity across generations in South Africa. Each mechanism is necessary to maintain the delicate balance of the objective set out.85 Looking to tier-3 regulation more broadly, its success will be predicated upon ensuring a simple fee structure. At its simplest an adequate fee structure could have a percentage fee levied on assets financing asset management and a capped fee levied on assets financing administration. The former will rule out perverse redistribution in favour of high-income participants, the latter will keep admin costs proportional to savings while avoiding excessive admin fees.86 Further, limit the use of transactionbased fees and by stipulating that transaction-based fees must reflect the actual transaction costs and ensure that elements of individual free choice on the product side are simple and easy to manage, and that the provision of individual choice options does not become a cost driver will become critical to ensure it is a comprehensive scheme to protect older persons and maintain the solidarity desired. A clearinghouse model may be considered—as is the case in Sweden.87 Under such a model, the clearinghouse acts as a custodian and gatekeeper for the 3rd tier on behalf of the participants. Under such a model, the fund managers are required to sign up as tier-3 providers with the clearinghouse,88 comply with design requirements and other criteria set out by law and operate under the terms set and overviewed by the clearinghouse. Such a model can strengthen the representation of participants interests and support market discipline while inviting the strong participation of private pension funds.89

82

Karakayali (2001) and Kaufman (1997). Stewart F Pension funds risk-management framework: regulation and supervisory oversight. IOPS Working Papers on Effective Pension Supervision, No. 11. 84 Van der Berg (2009). 85 See for example the approach taken by the European Union. Eurostat European Commission (2012). 86 Ibid. See also Phillipson and Smith (2006). 87 https://www.oecd.org/finance/private-pensions/36328090.pdf. 88 See Palmer E Sweden: competition in the pensions sector – a low cost model. Swedish Social Insurance Agency. 89 Foster (2018). 83

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While the formation of a 3rd tier remains relevant and important, the effects of recent changes to private pension regulation should be considered. Improvements of private pension regulation are important in their own right. However, better private pension regulation alone cannot ensure high coverage in a voluntary, occupational pensions framework. Also, better private pension regulation alone cannot ensure access to simple yet attractive arrangements accessible for low-income sectors and small enterprises just as they may not ensure vehicles relevant to low- and mid-income workers and workers with patchy contribution records. Hence, better private pension regulation is not a substitute for a 3rd tier.90

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Questionnaire on Solidarity Across Generations

1. Preliminary questions: General and non-legal questions on society and family 1-1. Questions on the demographic situation and forecast Please indicate the most recent statistics (in specifying the year) concerning the demographic situation of your country, specifically; • The Fertility rates • The proportion of the elderly population (65 year olds and more, % of the total population) • The proportion of the working age population (15–64 year olds, % of the total population) What are the current important issues in your country regarding the demographic situation and its forecast? (Aging society, declining birth rates, retirement of the baby boom generation, etc.). 1-2. Questions about the social situation of different generations, potential and real conflicts between generations Please indicate the most recent statistics (in specifying the year) concerning the social situation of different generations in your country, specifically; • The participation rates by age group (15–24 year-olds, 25–54 year-olds, 55–64 year-olds, 65 year olds and more) • The employment rates by age group (15–24 year-olds, 25–54 year-olds, 55–64 year-olds) • The poverty rate by age group (0–17 year-olds, 18–65 year-olds, 65 year-olds or more). What are the major issues, if any, that generate conflicts between different generations in your country? What are the social and financial situations of women of different generations? Is there problem of poverty among women of certain age in your country? © Springer Nature Switzerland AG 2020 E. Kasagi (ed.), Solidarity Across Generations, Ius Comparatum – Global Studies in Comparative Law 49, https://doi.org/10.1007/978-3-030-50547-9

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Questionnaire on Solidarity Across Generations

1-3. Questions about social spending, and its distribution between different generations Please indicate the most recent statistics (in specifying the year) concerning the scale of social spending and its distribution in your country, specifically; • • • •

The scale of social spending1 (% of GDP) The scale of public pension spending2 (% of GDP) The scale of the family benefit spending3 (% of GDP) The scale of the public unemployment spending4 (% of GDP)

Please describe, if any, issues and debates around the distribution of social expenditure between different age groups. Is the methodology of generational accounting often adopted in your country, not only by economists but also in politics? If yes, please describe the concrete examples. 1-4. Questions on intergenerational family relationship How often two or three generations (Parents—adult children—grandchildren) do live together in your country? What are the major reasons recognized by the literature? Are there often practical and financial supports/transfers from parents to adult children? What about those in the opposite direction (the transfers and supports from adult children to retired parents)? Please specify the concrete nature of supports/ transfers, as much as possible. If they exist, please indicate statistical data about these subjects. What kind of roles the grandparents play in relation to small children (babysitting, education, financial support, etc.) in your country? Is there any statistical data about these roles? Is there any change in these roles recently? What kind of change for what reason(s)?

1

Defined as cash benefits, direct in-kind provision of goods and services, and tax breaks with social purposes. Benefits may be targeted at low-income households, the elderly, disabled, sick, unemployed, or young persons (Definition by OECD). If the statistical data to which you have access do not provide the indicators which correspond to this definition, please specify the definition of the indicators you consider. 2 Defined as all cash expenditures (including lump-sum payments) on old-age and survivors pensions (Definition by OECD). If the statistical data to which you have access do not provide the indicators which correspond to this definition, please specify the definition of the indicators you consider. 3 Defined as public spending on family benefits, including financial support that is exclusively for families and children (Definition by OECD). If the statistical data to which you have access do not provide the indicators which correspond to this definition, please specify the definition of the indicators you consider. 4 Public unemployment spending is defined as expenditure on cash benefits for people to compensate for unemployment (Definition by OECD). If the statistical data to which you have access doesn’t provide the indicators which correspond to this definition, please specify the definition of the indicators you consider.

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2. Questions regarding the pension systems 2-1. Please describe the overview of system (systems) of mandatory retirement, including those run by private entities. (ex. social insurance or tax-funded system, level of benefit/contribution, duration of contribution, retirement age, funding system or pay-as you go system (with a significant reserve or not), point-based system, etc.). 2-2. Please describe the legal and financial solidarity between different generations that these pension systems embody. 2-3. Who are the principal actors who organize and manage pension systems? (State, social partners, pension funds, etc.) Please indicate the allocation of powers between the different actors. 2-4. If your country’s pension system has a public pension reserve funds, please describe the internal and external governance mechanisms and investment controls for these pension funds. 2-5. What is the replacement rate of the pension—the ratio between the pension amount and the amount of salary at the end of the career of an employee? If it exists, please describe the household or employee model that is applied as a reference for political decisions concerning the pension level. 2-6. Is it possible to receive the pension benefit and continue working? Under what conditions? 2-7. Which actor(s) has(have) the authority to decide and change the pension level (including the retirement age)? Under what conditions and by what legal means (Legislation, administrative decision, collective agreement, etc.) the pension level (already liquidated pension or unliquidated pension) can be cut? Are there limits— legal, constitutional or of other nature—for the reduction of the retirement benefits? By which legal grounds the limits can be imposed? Describe if there are legal challenges against the reduction of retirement benefits. 2-8. In your country, do you consider that the right to the retirement benefits becomes legally inviolable at a certain point (after liquidation for example)? If there is a legislation, a doctrine, or a court decision, which admits the inviolability of the right to pension benefits under certain circumstances, please describe it. 2-9. Is the fact that the pension system works by funding system or pay-as you go system thought to affect the inviolability of the right to the retirement benefit? 2-10. If they exist, please mention examples of reduction of the pension benefit, justified by the government directly or indirectly in relation with the interests of the future generation—for example, the protection of future generation’s interest, pension system sustainability, or long-term financial stability of the pension system? Please describe if there are court decisions that have adopted this kind of reasoning to recognize the legitimacy of the pension benefit reduction.

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Questionnaire on Solidarity Across Generations

2-11. In connection with the previous question: in the context of administrative and constitutional laws in your country, are there in general possibilities for the state to restrict certain freedoms or rights, in the name of protection of the future generation? 3. Democracy and pension The reform of social protection, including that of pension system, can require a vision for a long term. In addition, it can deeply divide the population into different categories, among those who lose and those who gain. Are there any discussions which challenge or doubt, for these reasons and others, the legitimacy of traditionally democratic processes, typically parliamentary one—for pension reform? 4. Questions concerning other dimensions of social security systems, particularly the care of the dependent elderly 4-1. Is there a social security system for the care of the dependent elderly (we call it in this questionnaire ‘Long term care’, LTC)? If yes, how is the system financed? Are the working-age generations funding this system? In what way? Please explain the solidarity between generations you think to be realized in this system. 4-2. If the system LTC exists: do family members themselves always support dependent elderly people, at least partially? In which way? (Physically or financially) What are the reasons? (The inadequate level of social benefits, the wish of the elderly themselves or family?) Are there any support for these family care? (Allowance, leave, etc.) Is the state trying to promote the contribution of family? Or, instead, does it try to release the family of this charge? 4-3. If the system LTC does not exists: Who do actually support (physically and financially) elderly people when they become dependent? Does the lack of public support attract academic discussions as well as media attention? Is there a legislation program already scheduled or discussed? 4-4. Is there a public assistance system designed only for seniors? If so, why is this system distinguished from other public assistance systems? 4-5. Please cite and describe the social security systems, except those we have already discussed, which play, in your eyes, important roles from the viewpoint of solidarity between generations, or the policy against poverty in old age. 5. Employment policy 5-1. Does it exist any legal retirement age (the employer may legally terminate the employment contract when the employee has reached this age) in your country? If so, what is it? Is there any recent change in this system? 5-2. Please describe, if it exists, the policy favoring the employment of elderly people—its content, the social context, the effect, etc. Please indicate whether this policy is influenced by certain reforms of pension system. 5-3. Please describe, if any, policy that promotes and supports employment of young people—the content, the social context, the effect, etc.

Questionnaire on Solidarity Across Generations

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5-4. Please describe, if any, social policy that links these two issues—the employment of elderly people and employment of young people. 5-5. Please describe if there is a coherent vision in your country for the employment policies of the different generations. 6. Questions about the family duties of supporting and social assistance 6-1. Please describe support duties of family members, particularly that of parents towards their children and the adult children to their parents. Of which kind of nature are these duties? What content? 6-2. Is it often the case, in your country, that these support duties are emphasized in discussions about welfare? Do social assistance laws contain provisions concerning these duties? 7. Questions about the role of elder people in the family and in the community 7-1. Are there any legal mechanisms that promote or support the contributions, transfers or supports (financial or practical) in the family, for example that of grandparents towards their grandchildren? 7-2. Are there any legal mechanisms that promote or support non-professional activities (typically volunteer) of the elderly people in the community where they live? 8. Open question Please describe, if any, issues, reforms, doctrine, jurisprudence, etc., which have, in your eyes, any connection with the above issues or with ‘solidarity across generations’ in general, and which deserve to be addressed. (For example: The issues concerning inheritance, different childcare systems, the tax law, etc.)