WRITTEN QUESTION E-0729/96 by Elly Plooij-van Gorsel (ELDR) to the Commission (26 March 1996)

Subject: Discrimination against women in respect of payment of pension and annuity premiums

1. Is the Commission aware that women contributing to an occupational pension in the Netherlands have to pay higher premiums, and hence bear a greater burden, than men in order to acquire the same pension entitlements?

2. Is the Commission aware that when women take out an annuity they also have to pay higher premiums than men in order to receive the same annual annuity as men?

3. Insurance companies in the Netherlands say that they have to charge these higher premiums because the statistics show that in the Netherlands women live longer, on average, than men. Does the Commission feel this argument holds water?

4. Does the Commission feel it is right that insurance companies should use mortality figures which are based on the situation in the past when women were hardly involved, if at all, in the labour process, whereas women who pay pension payments are, in fact, taking part in that process?

5. Does the Commission think it likely that the mortality figures will look quite different in thirty years' time?

6. Does the Commission feel this is a case of discrimination on the grounds of sex? If so, what action is it going to take?

Answer given by Mr Flynn on behalf of the Commission (7 May 1996)

As regards supplementary occupational pension schemes, the Commission is aware of certain practices which represent continuing discrimination between men and women in the amount of contributions needed to acquire a pension or annuity.

The argument that women live longer than men, used to justify different treatment for men and women and hence the application of different actuarial factors for men and women for the payment of contributions and benefits, has been the subject of questions referred for preliminary rulings to the Court of Justice by national courts, with reference to Article 119 of the EC Treaty on equal pay for men and women and the Barber judgment of 17 May 1990. In this judgment the Court held that the benefits offered by occupational pension schemes should be regarded as pay within the meaning of Article 119 of the EC Treaty and hence that derogations from the principle of equal treatment would no longer be acceptable.

As Article 119 of the EC Treaty constitutes directly applicable primary legislation which prevails over any secondary or national legislation, this meant that Directive 86/378/EEC of 24 July 1986 ((OJ No L 225, 12.8.1986. )) (secondary legislation), which authorised certain derogations from the principle of equal treatment, could no longer apply. Article 6 (h) and (i) of this Directive allows occupational or supplementary schemes to make provision for different actuarial calculation factors according to sex, to take account of the longer life expectancy of women. More specifically, Directive 86/378/EEC states that schemes may take account of actuarial calculation factors which differ according to sex in respect of employer contributions and contribution-defined benefits.

The situation regarding the provisions of Article 6 (h) and (i) has been clarified by the case law of the Court, particularly the judgments of 22 December 1993 (Case C-152/91, Neath) and 28 September 1994 (Case C-200/91, Coloroll).

The Court holds that workers' contributions to an occupational social security scheme must in all cases be the same for both sexes, as they are part of pay within the meaning of Article 119 of the EC Treaty. By contrast, employers' contributions are outside the scope of Article 119 of the EC Treaty. In the view of the Court, the use of different actuarial factors for men and women in connection with the funding of occupational schemes as described by the Honourable Member does not come under the scope of Article 119 of the EC Treaty.

Consequently, the Member States are already required to take the necessary measures to ensure that occupational or supplementary schemes linked to employment relationships apply the principle of equal contributions for workers in accordance with Article 119 of the EC Treaty as interpreted by the Court of Justice in the aforementioned cases.

The Commission feels, with reference to workers' contributions and all occupational schemes, that any reference to taking account of actuarial calculations which differ according to sex should henceforth be disregarded. According to the case law of the Court, discriminations in employers' contributions for men and women are justified in that they correspond to objective actuarial factors.

On 16 May 1995 the Commission presented a proposal for a Directive ((OJ No C 218, 23.8.1995. )) to bring Directive 86/378/EEC into line with Article 119 of the EC Treaty, in order to ensure clarity and legal certainty. However, this proposal for a Directive, which is of a declaratory nature in respect of existing legislation, is still pending before the Council.

In the meantime the Commission has written to the governments of the Member States to remind them that they are obliged, under Article 119 of the EC Treaty, to take the necessary measures to comply with this Article, with retroactive effect dating back to 17 May 1990, the date of the Barber judgment.

Insurance contracts and schemes which grant supplementary benefits on the basis of contributions paid by workers on an entirely voluntary basis do not come under the scope of Article 119 of the Treaty (Case C-200/91, Coloroll). The provisions of directives on insurance, particularly Directive 92/96/EEC, state that insurance companies covering these risks must take account, in calculating premiums and mathematical reserves, of the relevant statistical factors, so that they can meet all their commitments and constitute adequate mathematical reserves. These statistical factors, including demographic factors, must be selected carefully, on the basis of reasonable actuarial hypotheses. The objective of these directives is completion of the internal market in insurance in order to permit free movement of insurance companies and insurance products while ensuring an adequate level of protection for insured persons.