WRITTEN QUESTION E-3640/02

by Juan Ojeda Sanz (PPE-DE), Manuel Pérez Álvarez (PPE-DE)and Roy Perry (PPE-DE) to the Commission

(17 December 2002)

Subject: Indexing of pensions in Gibraltar

On 3 July 2001 a question (P-1962/01(1)) was put to the Commission concerning the pensions of Spaniards who used to work in Gibraltar. According to the Asociación Linense de Pensionistas Ex-trabajadores en Gibraltar (ALPEG) [an association representing pensioners who formerly worked in Gibraltar], the value of those pensions has not been increased since 1990, a state of affairs which, under Community law, constitutes discrimination on the grounds of place of residence. On 4 September 2001 Mrs Diamantopoulou replied on behalf of the Commission that the latter was considering the issue from the point of view of Community law.

Have the UK authorities sent the Commission any further detailed information (as the Commission requested) concerning the system for the indexing of pensions in Gibraltar?

What action is the Commission intending to take (or has it already taken)?

(1) OJ C 40 E, 14.2.2002, p. 150.

Joint answerto Written Questions E-3544/02 and E-3640/02given by Mrs Diamantopoulou on behalf of the Commission

(21 January 2003)

The questions raised concern the problem of retirement pensions payable by the Government of Gibraltar not being increased or index-linked. The Honourable Members will recall that this matter was already the subject of written questions, in response to which the Commission stated that it would obtain additional information from the British authorities in this connection.

Before a precise answer can be given to the questions concerned, it is necessary to focus on the type of case involved. It should be remembered that the Gibraltar Social Insurance Fund (GSIF), the body created by the Government of Gibraltar with responsibility for paying old-age pensions to workers in the British colony, went bankrupt in 1993, and the British Government has since then been ensuring the payment of pensions, albeit with the sums involved being frozen. This freeze applies to all retired workers regardless of nationality, and is in accordance with Community law.

It should be remembered that in Regulations (EEC) 1408/71(1) and 574/72(2), Community law merely provides for coordination of the Member States' different social security schemes in order to offer social protection to persons moving within the EU. Accordingly, the Member States alone are responsible for determining the conditions under which persons qualify and are eligible for pensions granted in accordance with Community law and above all in keeping with the principle of non-discrimination.

The questions raised by the Honourable Members are also concerned with the existence of two types of benefits granted by the Government of Gibraltar: the Elderly Persons Allowance (EPA) and the Household Cost Allowance (HCA). The questions are more specifically concerned with the legal nature of these two benefits. In the present instance, what has to be determined is whether the existence and payment of two non-contributory benefits is a roundabout way of index-linking retirement pensions which contravenes Community law by making residence a condition of eligibility.

Based on the information obtained from the British authorities, it is apparent that both benefits fall within the scope of social welfare provision and are thus outside the scope of social insurance and thus also Community provisions.

The EPA is run by a private charitable organisation, Community Care Limited, which distributes funds from the Government of Gibraltar subject to the following conditions: those who benefit are persons aged 65 or over who are resident in Gibraltar, have lived there for at least ten of the last 20 years, and do not receive a contributory retirement pension or any other form of social assistance in excess of the EPA. According to the British authorities, this benefit is becoming less and less common and currently is only paid to around a hundred beneficiaries.

As regards the HCA, this is designed to help certain old people meet their household expenses, and eligibility is also residence-based and income-dependent. This benefit is also administered by Community Care Limited.

In view of the above, it can be seen that the legal nature and conditions of eligibility for the two types of benefit mean that they constitute social welfare provision. There is no evidence of any discrimination based on nationality in this connection. Furthermore, social assistance falls outside the scope of Community provisions, as is clearly indicated in Article I.4 of Regulation (EEC) 1408/71.

As far as contributory retirement pensions are concerned, the Commission has not found any evidence of discrimination on the grounds of a worker's nationality. Indeed, the freeze on benefits applies to both British and Spanish nationals who previously worked in Gibraltar.

(1) Council Regulation (EC) No 1408/71 of 14 June 1971 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (OJ L 149, 5.7.1971).

(2) Council Regulation (EEC) No 574/72 of 21 March 1972 laying down the procedure for implementing Regulation (EEC) No 1408/71 on the application of social security schemes to employed persons, to self-employed persons and to members of their families moving within the Community (OJ L 74, 27.3.1972).