OREANDA-NEWS. February 04, 2014. Legal amendments adopted by the Riigikogu in late 2012 abolished pension adjustments based on changes in the underlying salary. Instead, the amendments provided for judges’ pensions to be pegged to the highest uniform wage level index as set out in the Salaries of Senior Public Servants Act. The new indexing system would have saved the State EUR 270,000 annually.

The amendments entered into force on 1 July 2013. At the same time, the Salaries of Senior Public Servants Act was extended to judges, resulting in an overall wage increase. After that, 18 judges applied to the Social Security Board for an adjustment of their pensions on the basis of the increased salary despite changes in legislation. After the Board rejected their applications, the judges filed a complaint with the administrative court. The applicants sought annulment of the Board’s decision and adjustment of their pensions to the salary level in force since July 1st.

According to the applicants, their legitimate expectation was to receive a retirement pension equivalent to 75% of the salary of their pre-retirement post. However, as judges’ pensions would no longer be adjusted since July 1st, their pensions would remain pegged to 2009 salaries.

Furthermore, judges would be treated differently depending on the time of retirement. While the pensions of judges retired before July 1st remained pegged to the frozen 2009 salary, those retiring at a later date would have their pensions based on the newly established salary level.

The court satisfied the complaint of all 18 retired judges and ruled that cuts in judges’ pensions during the austerity period were unconstitutional. The ruling stresses that the legislator had not duly justified unequal treatment and acting contrary to the principle of legitimate expectations. The objective of the amendment – to save public finances – did not comply with the principles of the Constitution. Judges’ pensions are not merely a social privilege but also a universal guarantee that judges can administer justice independently and without outside influence in accordance with the Constitution, the laws and their conscience.

The ruling could have far-reaching effects as it may call into question the constitutionality of other aspects of fiscal reform as well.

The clients were advised by partners Allar Joks and Carri Ginter.