Information Note on the Court’s case-law No. 176
July 2014
Markovics and Others v. Hungary (dec.) - 77575/11, 19828/13 and 19829/13
Decision 24.6.2014 [Section II]
Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Peaceful enjoyment of possessions
Conversion of service pension into service allowance with consequent reduction in net income: inadmissible
Facts – These three applications concerned the restructuring of retired servicemen’s pensions in Hungary. By virtue of paragraph 5(1) of Act no. CLXVII, which entered into force on 1 January 2012, service pensions of persons born in or after 1955 were transformed into a “service allowance” which, unlike the pensions, was subject to personal income tax. As a result of this change, the applicants suffered a reduction in their net income after tax with the first applicant’s income dropping by 16% and the second and third applicants’ by 12% each.
In their applications to the European Court the applicants complained under Article 1 of Protocol No. 1, taken alone and in conjunction with Articles 13 and 14 of the Convention, that the abolition of their service pensions amounted to an unjustified and discriminatory interference with the peaceful enjoyment of their possessions for which there was no effective domestic remedy.
Law – Article 1 of Protocol No. 1, taken alone and in conjunction with Articles 13 and 14: The core issue of the three applications was the conversion of the service pensions into an allowance which was subject to the general personal income tax rate. That conversion had interfered with the applicants’ right to the peaceful enjoyment of their possessions and pursued the legitimate aim of serving the general interest of economic and social policies.
Rather than totally losing their entitlements, however, the applicants had continued to receive an allowance. The amount of benefits they received had been decreased in comparison to their previous pensions but the reduction was reasonable and commensurate. The applicants had not been totally divested of their only means of subsistence or placed at risk of having insufficient means with which to live. The curtailing of the benefits had not, therefore, imposed an excessive or disproportionate burden on the applicants or impaired the essence of their right to the peaceful enjoyment of their possessions.
As to the complaint under Article 14, even assuming that the legislation had resulted in a difference in treatment, it could be seen as respecting a reasonable relation of proportionality between the aim pursued (the rationalisation of the pension system) and the means employed (a commensurate reduction of benefits).
Lastly, as regards the alleged lack of an effective remedy before the domestic courts, the Court reiterated that Article 13 of the Convention did not go so far as to guarantee a remedy allowing a Contracting State’s laws as such to be challenged before a national authority on the ground of being contrary to the Convention.
Conclusion: inadmissible (manifestly ill-founded).

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