Decision No. 9 of 6 July 2017 on Constitutional Case No. 9/2016
Referring Authority and Subject Matter of the Case
The case was initiated upon a request submitted by a three-member panel of the Supreme Administrative Court. The subject matter of the case is the constitutionality of the provisions of Article 4b, paragraph 1, Article 4c, paragraph 1, and Article 124a, paragraph 1 of the Social Security Code (promulgated in State Gazette, issue No. 110 of 17 December 1999; last amended and supplemented, issue No. 105 of 30 December 2016). The request alleges unconstitutionality on the grounds that the provisions are contrary to paragraph five of the Preamble, Article 4, paragraphs 1 and 2, Article 6, paragraph 2, Article 17, paragraphs 1 and 3, Article 19, paragraph 1, and Article 51, paragraph 1, first sentence of the Constitution of the Republic of Bulgaria.
Summary of the Court’s Reasoning
The Constitutional Court holds that only public (social) insurance is subject to mandatory statutory regulation. There is no constitutional impediment to the legislative regulation of private (supplementary) insurance, as is done by the Social Security Code (Article 1, item 2 of the SSC). Amendments thereto (within the so-called “capital-funded pillar”), including the relations between it and public insurance (“state public insurance” under Article 1, item 1 of the SSC; the so-called “pay-as-you-go pillar”), which are challenged in the present request, do not, by hypothesis, contravene Article 51, paragraph 1 of the Constitution, as they affect neither the existence nor any of the defining features of public insurance.
The power of disposition is an essential element of proprietary subjective rights. The insured person is free to decide to whom to entrust their private insurance, including by terminating it with the current insurer (Article 171, paragraphs 1 - 3, Article 240, paragraph 2, item 2, and Article 247 of the SSC). The contested provisions expand this power of disposition by allowing a transition from private to public insurance and vice versa. Accordingly, the provisions do not conflict with Article 17 of the Constitution, which governs private property.
Having regard to the considerations concerning the admissibility of the challenge, the Court notes that the mandatory nature of part of the capital-funded insurance, as established by the SSC, is not the subject of examination in the present case. The contested provisions, in the parts challenged, mitigate the consequences of that mandatory nature by allowing the individual, after it has arisen, unilaterally to terminate it by switching to public insurance. The provisions thus broaden the freedom of economic activity, which is in conformity with Article 19, paragraph 1 of the Constitution.
Private (capital-funded) insurance is subject to the rules of competition - Article 125, paragraph 1, item 6, Article 209, paragraph 1, item 6, and Article 260, paragraph 1, item 6 of the SSC. The insurer operates within a competitive environment among other pension insurance companies - Article 171 and Article 247 of the SSC. State public insurance does not constitute an economic activity and therefore does not fall within the scope of Article 19, paragraph 2 of the Constitution. It constitutes a conditio sine qua non for all participants in private insurance and, for that reason, cannot and does not affect competition among them.
The contested provisions do not violate legal certainty as an element of the rule-of-law state, as established in Article 4, paragraph 1, first sentence of the Constitution. Nor do they undermine the legal security of the insurer within the system of private insurance. The insurer remains in the same legal position as prior to the entry into force of the provisions.
The contested provisions apply to all citizens. Each of them is granted the same subjective right - to choose between public and private insurance. Subjects possessing identical legal characteristics are therefore treated equally by the provisions. Any subsequent difference in the legal position of citizens results not from the norms themselves, but from the choice made or not made on their basis. The argument alleging inequality before the law is unfounded.
The Court holds that the legislature enjoys discretion in adopting one or another specific legislative solution in accordance with its social security policy, provided that such solution does not conflict with the principles and requirements of the Constitution (Decision No. 5 of 2000; Decision No. 2 of 2014 of the Constitutional Court).
Grounds for the Ruling and Disposition
Pursuant to Article 149, paragraph 1, item 2 of the Constitution (the competence to rule on requests for a declaration of unconstitutionality of laws), the Constitutional Court rejects the request submitted by a three-member panel of the Supreme Administrative Court for a declaration of unconstitutionality of Article 4b, paragraph 1, in the part reading: “Persons insured in a universal pension fund shall have the right to choose to change their insurance from an universal pension fund to the ‘Pensions’ Fund, respectively to the ‘Pensions for Persons under Article 69’ Fund, with an increased insurance contribution in the amount of the contribution for an universal pension fund”; Article 4c, paragraph 1, in the part reading: “Persons insured in a professional pension fund shall have the right, on a one-time basis, to change their insurance from a professional pension fund to the ‘Pensions’ Fund with an increased insurance contribution in the amount of the contributions under Article 157, paragraph 1, item 2”; and Article 124a, paragraph 1, in the part reading: “Persons under Article 4b, paragraph 1 who have chosen to change their insurance from an universal pension fund to the ‘Pensions’ Fund, respectively to the ‘Pensions for Persons under Article 69’ Fund, may choose to resume their insurance in an universal pension fund” of the Social Security Code (promulgated in State Gazette, issue No. 110 of 17 December 1999; last amended and supplemented, issue No. 105 of 30 December 2016).
The Constitutional Court dismisses the request and terminates the proceedings in the remaining part.