JUDGMENT OF THE COURT OF FIRST INSTANCE (Second Chamber)

7 July 1998

Joined Cases T-238/95, T-239/95, T-240/95, T-241/95 and T-242/95

Francesco Mongelli and Others

v

Commission of the European Communities

‛Officials — Pensions — Weighting — Determination — Exchange rate’

Full text in Italian II-925

Application for:

first, annulment of the applicants' pension statements in respect of the period from January 1995, in so far as they apply the weighting fixed for Italy at 94.2 by Council Regulation (ECSC, EC, Euratom) No 3161/94 of 19 December 1994 adjusting, with effect from 1 July 1994, the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1994 L 335, p. 1) and, second, payment of arrears, together with default interest at the rate of 8%.

Decision:

Applications dismissed.

Abstract of the Judgment

The applicants, former officials of the Commission employed in Brussels, live in Italy and all receive an old-age pension. Three of them, Mr Mongelli, Mr Capuano and Mr Tinelli, receive their pension in Belgian francs, having elected, pursuant to Article 45 of Annex VIII to the Staff Regulations of Officials of the European Communities (Staff Regulations), to have their pensions paid in the currency of the country in which the institution to which they belonged has its seat. Mr Castagnoli and Mr Sadini receive their pensions directly in Italy, in lire.

On 19 December 1994 the Council adopted Regulation (ECSC, EC, Euratom) No 3161/94 adjusting, with effect from 1 July 1994, the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1994 L 335, p. 1) (Regulation No 3161/94). That regulation entered into force on 24 December 1994 and replaced Council Regulation (Euratom, ECSC, EC) No 3608/93 of 20 December 1993 adjusting, with effect from 1 July 1993, the remuneration and pensions of officials and other servants of the European Communities and the weightings applied thereto (OJ 1993 L 328, p. 1), which had fixed a weighting for Italy of 101.2.

Article 6(1) of Regulation No 3161/94 fixes, with effect from 1 July 1994, a weighting of 94.2 for Italy, applicable to pensions pursuant to Article 6(4) of that regulation.

In the pension statements for January 1995 the Commission applied that weighting to the payments made to the applicants.

The applicants noted that the amounts of their respective pensions were lower than the monthly pension paid during the previous year owing to the application of the weighting and considered that reduction illegal and discriminatory; accordingly, in April 1995 they filed a complaint under Article 90(2) of the Staff Regulations against their pension statements for January 1995. The Commission rejected their complaints by decision of 6 September 1995. The decision rejecting their complaints was notified to the applicants by letter of 14 September 1995, which they received between 18 and 25 September 1995.

Substance

First plea, alleging a breach of Article 64 of the Staff Regulations

In order to ensure that all officials' remuneration has the same purchasing power, irrespective of their place of employment, the first paragraph of Article 64 of the Staff Regulations provides that an official's remuneration expressed in Belgian francs is to be weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment. On the basis of the second paragraph of Article 64 and of Article 65 of the Staff Regulations, the weighting is 100 for Brussels and Luxembourg and, for other countries, is determined by the Council, acting by a qualified majority on a proposal from the Commission (paragraph 23).

As regards the pensions referred to in Articles 77 to 81a of the Staff Regulations, which include the old-age pensions of former officials, the second subparagraph of Article 82(1) of the Staff Regulations provides that they are to be weighted at the rate fixed for the country where the recipient proves he has his residence. Although it does not refer expressly to Article 64 of the Staff Regulations, which is applicable to the remuneration of officials, Article 82 of the Staff Regulations none the less refers to the weighting fixed for each country, which is precisely established on the basis of the criteria set out in that article (paragraph 24).

See: T-285/94 Pfloeschner v Commission [1995] ECR-SC II-889, para. 48

In the present case the applicants claim that the weighting fixed for Italy by Regulation No 3161/94 is contrary to Article 64 of the Staff Regulations on the ground that the rules for the calculation of the weighting are based on a criterion which is not covered by that article, namely a relationship between economic parities and exchange rates (paragraph 25).

Regulation No 3161/94 is a regulation implementing the Staff Regulations, expressly based on Articles 63 to 65a and 82 of the Staff Regulations and on Annex XI thereto, and for that reason may not, by virtue of the principle of the hierarchy of legal rules, depart from the principles set out in those provisions. It is therefore lawful that Article 6(1) should fix a weighting for Italy, applicable to pensions under Article 6(4), calculated on the basis of the relationship between, on the one hand, economic parity between Brussels, the reference town, and the capital of the Member State concerned and, on the other, the official exchange rate of its currency referred to in the second paragraph of Article 63 of the Staff Regulations, namely the exchange rate used for the implementation of the general budget of the European Communities on 1 July of the year in question, in that it guarantees on that date the equivalence of purchasing power between pensions paid in Brussels, to which a weighting of 100% applies, and those paid in Italy (paragraphs 26 and 27, and 29 to 33).

See: C-30/96 P Abello and Others v Commission [1998] ECR I-377; T-536/93 Benzler v Commission [1994] ECR-SC II-777, paras 32 and 33; T-544/93 and T-566/93 Abello and alters v Commission [1995] ECR-SC II-815, para. 40

It follows from all these factors that the first plea must be rejected (paragraph 35).

Second plea, alleging a breach of the principle of equality of treatment

The principle of equality of treatment is guaranteed to recipients of pensions in the sense that the applicable weightings are intended to ensure that all former officials receive benefits having the same purchasing power, irrespective of their place of residence. For that purpose, the second subparagraph of Article 82(1) of the Staff Regulations provides that pensions are to be weighted at the rate fixed for the country where the recipient proves he has his residence, notwithstanding the fact that the amount of the pension paid may be spent in a country other than the country of residence. The choice of the country of residence as the criterion of reference for the purpose of evaluating the living conditions and purchasing power of recipients of pensions is justified by the fact that the concept of residence, within the meaning of Article 82 of the Staff Regulations, is to be understood as the place where the former official has actually established his centre of interests and, accordingly, as the place where he is deemed to incur his expenditure. Consequently, although the amount of a pension may in theory represent a different purchasing power depending on the country in which the recipient concerned chooses to incur expenditure, such a circumstance cannot constitute a breach of the principle of equality of treatment (paragraphs 41 to 43).

See: 284/87 Schäflein v Commission [1988] ECR 4475, para. 9; Pfloesclmer v Commission, cited above, para. 47

As regards, moreover, the claim that the rate of inflation in Italy was not taken into consideration in calculating the weighting in question, in so far as a higher weighting was fixed for the other Member States with a strong currency, it is sufficient to point out that the applicants reveal a misunderstanding of the precise mechanisms for calculating the weightings, as fixed by Article 3(5) of Annex XI to the Staff Regulations and based on the relationships between economic parities and exchange rates (paragraph 44).

The second plea must therefore be rejected (paragraph 45).

Third plea, alleging a breach of the principle of protection of legitimate expectations

An official may not rely on the principle of the protection of legitimate expectations in order to challenge the legality of a new provision in the Staff Regulations, especially in an area whose subject-matter is undergoing constant change according to changes in the economic climate, such as that of the fixing of weightings affecting officials' pensions, in the absence of precise assurances on the part of the administration (paragraphs 52 to 54).

See: 33/87 Christianos v Court of Justice [1988] ECR 2995, para. 23; T-98/92 Di Marzio and Lebedef v Commission [1994] ECR-SC II-541, para. 68; T-177/95 Barrata and Others v Commission [1996] ECR-SC II-1451, para. 47

It follows from these factors that the third plea must be rejected (paragraph 55).

Fourth plea, alleging a breach of the second paragraph of Article 63 of the Staff Regulations and Article 45 of Annex VIII thereto

It follows from the applicants' pension statements that, contrary to their allegations, no ‘double conversion’ operation was carried out in respect of those among them who had elected to be paid in Belgian francs (paragraph 63).

Article 45 of Annex VIII to the Staff Regulations, which provides that beneficiaries of pensions may elect to be paid in the currency either of their country of origin or of the country of residence or of the country where the institution to which the official belonged has its seat, and to which the fourth subparagraph of Article 82(1) of the Staff Regulations refers, covers only the detailed rules for the payment of benefits. It follows that the applicants' election of the currency in which their benefits were to be paid could not constitute an obstacle to the application to their pensions of the weighting fixed for Italy, where they live, in accordance with the second subparagraph of Article 82(1) of the Staff Regulations, and determined on the basis of the relationship between economic parity for Italy and the official exchange rate of its currency referred to in the second paragraph of Article 63 of the Staff Regulations, namely the exchange rate used for the implementation of the general budget of the European Communities on 1 July of the year in question (paragraphs 68 and 69).

See: 127/80 Grogan v Commission [1982] ECR 869, paras 14 and 15

It follows from these factors that the fourth plea must be rejected (paragraph 70).

Operative part:

The applications are dismissed.