Financing Social Security and Regulation (EEC) 1408/71
| DOI | 10.1023/A:1011565623696 |
| Date | 01 March 2001 |
| Published date | 01 March 2001 |
| Author | Herwig Verschueren |
| Subject Matter | Article |
European Journal
of
Social Security, Volume 3/1, 7-24, 2001.
©Kluwer Law International (KLI). Printed in the Netherlands.
HERWIOVERSCHUEREN*
Financing Social Security and Regulation
(EEe) 1408/71
7
Abstract: This article seeks to provide a clearer picture
of
the role
of
methods for
funding social security benefits in EC Coordination Regulation 1408171.l In past
literature and in the case law surrounding Regulation 1408171,this role has seldom
been mentioned. However, this is changing in light
of
increasing numbers
of
ques-
tions emerging at both the policy-making level and at the level
of
Court
of
Justice
proceedings.
The first part
of
this paper deals with the role
of
different methods
of
financ-
ing social security in determining the material scope
of
the coordination regulation
and the question
of
whether the method
of
financing certain benefits has a bearing
on this material scope. The second part deals with the existing link within the coor-
dination context between paying or having paid contributions and entitlement to
benefits. I discuss, inter alia, the extent to which benefit levels are determined by
the same legislation as that which determines contribution levels. I examine the
extent to which Member States collecting contributions are also responsible for
bearing the cost
of
the corresponding benefits and the extent to which a person who
is paying orhas paid contributions is entitled to benefits corresponding to those con-
tributions.
In light
of
this examination
of
the facts as they stand, I endeavour to consider
possible alternatives, including the desirability
of
having a more direct link within the
coordination context between payment
of
contributions and entitlement to benefits.
1. Do METHODS OF FINANCING BENEFITS INFLUENCE THE SCOPE OF REGULATION
1408171
?
Article 4(2)
of
Regulation
1408171
states clearly that its material scope - as defined in
Article 4(1) - is not influenced by the contributory or non-contributory nature
of
*Deputy Head of Unit at the European Commission Free Movement of Workers and
Coordination of Social Security Schemes (DG Employment and SocialAffairs). E-mail:
Herwig.Verschueren@cec.eu.int The views expressed in this paper are personal. The
material has been updated to 1 October 2000.
Regulation (EEC) No. 1408171, as updated by Regulation 118/97
of2
December 1996,
OJ L 28
of
30 January 1997 and as last amended by Regulation No. 1399/1999
of
29
April 1999, OJ L 164 er
so
June 1999.
EUROPEAN JOURNAL OF SOCIAL SECURITY
8
financing the benefits involved. Neither has the Court of Justice, in defining the mate-
rial scope of the Regulation, deemedthis to be relevant. The Court has consistently held
that 'the distinction between benefits excluded from the scope
of
Regulation No.
1408171
and those which fall within its scope is based essentially on the con-
stituent elements
of
each particular benefit, in particular its purposes and the
conditions on which it is granted, and not on whether a benefit is classified
as a social security benefit by national legislation ." In that regard, it has, on
a number of occasions, stressed that a benefit
is
to be regarded as a social
security benefit
if
it is granted to recipients without any individual and dis-
cretionary assessment of personal needs on the basis
of
a legally defined
position and
ifit
concerns one
of
the risks expresslylisted in Article 4(1)...'.2
No reference is made here to the contributory or non-contributory nature of bene-
fits, so it can be assumed this factor plays no role in determining the scope
of
the
Regulation. This means that all general and special rules in the regulation apply
equally to non-contributory and contributory benefits, unless expressly stated oth-
erwise. This holds true for the rules which determine the applicable legislation, in
particular the basic rule that an employed or self-employed person is subject to the
legislation in the Member State in which he or she works (Art. 13(2)).
However, in response to this Court
of
Justice approach, a separate rule was
introduced by the Council
of
Ministers for certain non-contributory benefits. Article
4(2a)3 states that the Regulation applies to
'special non-contributory benefits ... where such benefits are intended: (a)
either to provide supplementary, substitute or ancillary cover against the
risks covered by the branches
of
social security referred to in paragraphs
lea) to (h); or (b) solely as specific protection for the disabled'.
In line with the case law
of
the Court of Justice regarding the material scope
of
Regulation 1408171, the introduction
of
this provision in 1992 did not constitute an
extension of its scope through a new category
of
benefits. These non-contributory
mixed benefits were already covered by the Regulation prior to the introduction
of
this provision.f The 1992 amendment was intended solely to separate these special
non-contributory benefits from the existing scope
of
the Regulation with an eye to
subjecting the separate category thus created to a separate coordination system
introduced at that time, defined in Article lOa.
Such 'mini-coordination' boiled down to the fact that - insofar as they were
included in Annex IIa
of
the Regulation by a Council Decision - non-contributory
mixed benefits had to be provided exclusively by the Member State which was the
place of residence of the person concerned and in accordance with the legislation
of
2 Roever and Zachow,Cases C-245/94 and C-312/94, [1996]
ECR
1-4895, paragraphs 17
and 18.
3Introduced by Regulation No. 1247/92
of
30 April 1992, OJ L 136, 19 May 1992.
4 See Commission
v.
Luxembourg, Case 111191, [1993] ECR 1-817, paragraphs 31-32,
and Yousfi, Case C-58/93, [1994]
ECR
1-353, paragraph 25.
EUROPEAN JOURNAL OF SOCIAL SECURITY
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