Posted by: mbconsulting | June 25, 2010

ALERT Romania – Constitutional Court said NO for cutting pensions

Constitutional Court announced and a press – release was submitted:

“Plenum of the Constitutional Court, composed of the nine judges sworn according to article 146 of the Constitution and Article 15 of Law nr.47/1992 the organization and operation of the Constitutional Court met in session on June 24 and 25, 2010, to settle in before the promulgation of control, complaints about the constitutionality of the Law on measures needed to restore budgetary balance and the Law on the establishment of measures relating to pensions, adopted under the provisions of art.114 par. (3) of the Romanian Constitution, republished, liability arising from the Government before the Chamber of Deputies and the Senate, in joint session on 7 June 2010.
On these laws, the complaints of unconstitutionality were formulated as follows:
I. The Law on measures needed to restore budget balance by:
– Sections of the High Court of Cassation and Justice;
– A total of 30 senators and 60 deputies belonging to the Parliamentary Group of the Alliance political PSD + PC;
– A total of 54 members of Parliament belonging to the Liberal Party Parliamentary Group.
Following deliberations, the Plenum of the Constitutional Court, by majority vote, found that:
1. The provisions of Articles 1-8 and 10 -17 of Article of the Law on measures needed to restore budget balance are constitutional.
2. The provisions of Article 9 on a 15% reduction in the gross amount of pension due or in payment of the allowance and disability retirees companions degree and those on the pension point value of 622.9 lei used Law regarding measures necessary to restore budget balance are unconstitutional.

II. The Law on the establishment of measures relating to pensions, the unconstitutionality objections were made by:
– Sections of the High Court of Cassation and Justice
– a number of 37 senators belonging Political Alliance Parliamentary Group PSD + PC.
Following deliberations, the Plenum of the Constitutional Court, by majority vote, found that:
1. Law on the establishment of measures on pensions is constitutional complaints against the 37 senators.
2. The provisions of Article 1 a), b), d)-i) and Article 2-12 of the Law on the establishment of measures in relation to pensions are constitutional issues raised by sections of the High Court of Cassation and Justice.
3. The provisions of article 1, letter c) of the Act establishing measures relating to pensions are unconstitutional in light of the constitutional sections shown in referral of the High Courts of Cassation and Justice.

Argument in the reasoning adopted by the Plenum of the Constitutional Court handed solutions will be presented in the decision, to be published in the Official Gazette, Part I.
Decisions are generally final and binding and shall notify the President of Romania, Presidents of both Chambers of Parliament and Prime Minister.

Here are the articles that were rejected as against Romanian Constitution:

Article 9. the law on pensions and cut wages

1.With effect to the rights of June 2010, the gross amount of pension due or in payment and attendant allowance for degree of disability pensioners is reduced by 15%.

2. In determining the gross amount of pensions and attendant allowances for pensioners of disability degree, to be determined or granted since the entry into force of this law, pension point value is used to 622.9 lei.

Article. 1 from the Special Pensions Act

On the entry into force of this Law, the following types of pensions based on previous legislation, pensions are in the Law no. 19/2000 on public pension and other rights of social insurance, as amended and supplemented previous:

c. service pensions of judges, prosecutors and judges, magistrates that nurses at the Constitutional Court.

The immediate consequences are:

  • 1. The measures assumed by Romanian government are be partially approved, therefore the agreement with IMF is partially fulfilled. The budget deficit is partially corrected.

    2.The next tranche from IMF will not be approved in Julie, as was estimated.

    3. Under the Constitution, the articles declared unconstitutional by the decision of the Court must be amended within 45 days by Romanian Parliament.

    Under Article 147 para. 2 of the Constitution, “in cases of unconstitutionality of laws before their promulgation, the Parliament is obliged to reconsider those provisions for their consent to the Constitutional Court decision.

    4. A new set of measures must be issued by Romanian government in order to reduce the budget deficit, most probably the VAT will be increased.

    5. A new letter with new amendments to the agreement between IMF and Romania must be issued. Probably new discussion between IMF and Romanian government to be held or take into consideration the last discussions.

  • On a long-term the budget deficit for 2010 and estimated one for 2011 will increase and will go out the preliminary estimations.

    P.S. Until reading in full the arguments of the Constitutional Court, I keep my point of view, the reduction of pension is constitutional.

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