When Can the Pension Fund Refuse to Recalculate a Civil Servant Pension?
The absence of a statutory right to pension recalculation may constitute grounds for refusing such recalculation in the future.
A person who has spent many years in public service, including service in the tax authorities, may reasonably expect that the pension guarantees associated with that service will continue to provide an appropriate level of social protection after retirement. However, changes in pension legislation may significantly affect the rights of former civil servants and the possibility of recalculating pensions that were granted under earlier legislation. This issue was considered by the Supreme Court in the case discussed below.
A former employee of the tax police applied to the relevant territorial authority of the Pension Fund of Ukraine requesting recalculation of his pension as a former civil servant. He argued that his pension should be recalculated following an increase in the salaries of serving civil servants under Resolution of the Cabinet of Ministers of Ukraine No. 288 of 6 April 2016.
The courts that considered the dispute reached the same conclusion: at the time the claimant submitted his application to the Pension Fund, the legislation then in force did not provide either a substantive right to have a civil servant pension recalculated following an increase in the salaries of serving civil servants or a procedure and conditions for carrying out such a recalculation.
The Supreme Court provided a more detailed explanation of the legal grounds for this conclusion.
The Court analysed the relevant resolutions of the Cabinet of Ministers governing the remuneration of civil servants and the documents used for pension purposes. It concluded that the applicable regulatory framework did not establish a mechanism under which the claimant’s previously granted pension could be recalculated solely because the remuneration of serving civil servants had subsequently increased. In particular, a salary certificate intended “for granting a pension” could not, by itself, create a legal basis for recalculating a pension that had already been granted.
The Supreme Court also emphasised that the refusal to recalculate the claimant’s pension did not reduce the amount of the pension he was already receiving. Therefore, the Court rejected the argument that the subsequent changes in legislation unlawfully restricted an existing pension right.
An important element of the Supreme Court’s reasoning was the distinction between the right to a pension and the right to a subsequent recalculation of that pension. According to the Court, entitlement to recalculation arises when the circumstances and statutory conditions giving rise to such recalculation occur, rather than automatically at the time when the original pension is granted.
Accordingly, the fact that a person retired under legislation previously applicable to civil servants does not necessarily mean that all mechanisms for future pension recalculations existing at that time remain permanently available. A legal basis for the particular recalculation must exist when the circumstances giving rise to the claimed recalculation occur.
Having considered the arguments raised in the cassation appeal, the Supreme Court dismissed the appeal and left the judgments of the lower courts in force. The case therefore illustrates an important principle in pension disputes: an increase in the salaries of serving civil servants does not automatically create a right to recalculate a previously granted pension unless such a right and the relevant mechanism are provided for by the applicable legislation.
