R(IS) 6/02
Mr. J. Mesher CIS/4316/1999
7.12.01
Recovery of overpayment - recovery of overpaid supplementary benefit and income support from arrears of Italian retirement pension – whether supplementary benefit and income support to be taken into account when applying Articles 44 to 46 of Council Regulation (EEC) No. 1408/71
The claimant (an Italian national) paid both British and Italian social security contributions in the course of his working life. In 1979 he retired and claimed a UK retirement pension, such claim being disallowed. He was, however, awarded a small amount of graduated retirement benefit (GRB). From November 1980 he was also awarded supplementary benefit. Payment of GRB was subsequently interrupted from 1981 to 1985, apparently on the ground that the Department had lost touch with the claimant. Meanwhile, the claimant had also claimed an Italian retirement pension, for which his Italian contributions, when taken alone, proved to be insufficient. However, in 1993 the relevant Italian authority reached a decision on the application of the aggregation and apportionment rules in Articles 44 to 46 of Council Regulation (EEC) No. 1408/71. It awarded an Italian retirement pension from August 1979 and sent the claimant's arrears (£26,604.46) to the Department of Social Security. The latter had also applied Reg. 1408/71 and had awarded a UK retirement pension from December 1979, such decision being notified to the claimant on 7 December 1993. No award of pension was made for the period during which the payment of GRB had been interrupted. On an unknown date, an adjudication officer decided that there had been a recoverable overpayment of supplementary benefit and income support in the sum of £24,950.24, on the grounds that the benefits would not have been paid had the Italian pension been paid on the proper dates. On 12 August 1996 the claimant was notified of an alteration in the calculation of the overpayment. The claimant appealed. The tribunal gave effect to a small correction in the overpayment calculation, but otherwise ruled that the Secretary of State was entitled to receive the amount of £21,363.93 out of the arrears under section 74(2) of the Social Security Administration Act 1992. The tribunal applied the decision in CIS/12082/1996 which provided that nothing in Reg. 1408/71 or in Council Reg. (EEC) No. 574/72 (on permissible recovery procedures) prevented the application of section 74(2) in cases like the claimant's.
The claimant appealed to the Commissioner, who held an oral hearing. Firstly, in relation to Reg. 574/72, the claimant argued that CIS/12082/1996 was wrong per se, and that, additionally, since the amendment to Reg. 1408/71 in June 1992 (creating the category of special non-contributory benefit), Article 111 of Reg. 574/72 might have no application to recovery of overpayments of income support due to the late receipt of other benefits from Member States. Secondly, in relation to the calculation of "pro rata" benefit under Reg. 1408/71, the claimant argued that where supplementary benefit or income support was paid to bring income from a contributory old age benefit up to a minimum level of subsistence, such benefit was within the meaning of "supplementary allowance" within Article 1(t) of Reg. 1408/71. As such it was to be taken into account as part of the old age benefits from which the "theoretical amount" and the pro rata benefits were to be calculated under Articles 45 and 46. Such an approach would produce a higher UK pro rata benefit for the claimant, which, it was submitted, could not be touched by section 74(2). In making this submission the claimant relied on Swaddling v Adjudication Officer [R(IS) 6/99] to challenge the view expressed in Perry v Chief Adjudication Officer [R(IS) 4/99] that supplementary benefit and income support are not a social security benefit within Article 4(1) of Reg. 1408/71 because they are general social benefits not linked to protection against any of the specific risks listed in Article 4(1). The claimant also sought to rely on the principle laid down by the ECJ in Stinco and Panfilo v Istitutio Nazionale della Providenza Sociale (Case-132/96) [1998] ECR I-5225. In that case the ECJ had held that a supplement, intended to bring a pension to a statutory minimum level, should be included when calculating the theoretical amount under Article 46 and that it did not matter for that purpose that the supplement was listed as a special non-contributory benefit in Annex IIa to Reg. 1408/71. In the present case, supplementary benefit and income support operated practically as a supplement to the claimant's retirement pension (and GRB) and defined a statutory minimum level of income, so that they should be treated in the same way as the Italian supplement in Stinco and Panfilo. Thirdly, the claimant also made submissions with regard to the calculation of the "relevant amount" under section 74(2).
Held, allowing the appeal in part, that:
- CIS/12082/1996 was correct in relation to the period before 1992 for the reasons given in that decision, and, as Article 111 did not prevent the application of section 74(2) of the Social Security Administration Act 1992, that result can only be reinforced following the amendment of Regulation 1408/71;
- in terms of binding authority, the reasoning of the Advocate General in Swaddling fell far short of the view accepted by the Court of Appeal in Perry that that income support did not fall within the scope of Article 4(1);
- furthermore, supplementary benefit and income support are so different from the kind of benefit involved in Stinco and Panfilo that they cannot be regarded as part of the benefits to be taken into account under Article 46 of Reg. 1408/71, even with the extension required by the definition in Article 1(t) (such a conclusion resting on the nature of supplementary benefit and income support as general social benefits not specifically linked to protection against any of the risks listed in Article 4(1));
- a "supplementary allowance" within Article 1(t) is one which has specific connections with a specific social security benefit: it does not extend to a general social benefit which may provide a practical supplement to recipients of specific social security benefits, but which provides an income to others in many different circumstances whose resources are inadequate for their needs;
- accordingly the calculation of the claimant's UK pro rata pension was properly restricted to consideration of the retirement pension earned by his contributions in the UK and taking into account his contributions made in Italy (GRB having properly been excluded from that calculation by reason of Reg. 1408/71, Annex VI, Section O, point 8);
- with regard to the calculation of the amount recoverable under section 74(2), the tribunal had erred by taking the view that because the decision of 7 December 1993 was not under appeal, it could not take account of the claimant's entitlement to retirement pension and GRB: a broader approach should have been taken as the question is the identification of what supplementary benefit or income support "would not have been paid" if the Italian pension had been paid on its due dates, and there is no requirement of a review of the previous supplementary benefit or income support decision (or now a revision or supersession) to establish the amount overpaid.
The Commissioner set aside the tribunal's decision, found facts and substituted his own decision to the effect that in the light of his conclusions on the European issues there was nothing to prevent the operation of section 74(2) of the Social Security Administration Act 1992 in the present case on the basis that the claimant's pro rata retirement pension had been correctly calculated as set out in paragraphs 11 to 22 of the Commissioner's decision and that the "relevant amount" under section 74(2) was £20,705.66.
DECISION OF THE SOCIAL SECURITY COMMISSIONER
- The claimant's appeal is allowed in part. The decision of the Liverpool social security appeal tribunal dated 8 February 1999 is erroneous in point of law, for the reason given below, and I set it aside. It is expedient for me to substitute the decision on the claimant's appeal against the adjudication officer's decision issued on 12 August 1996 having made the necessary additional findings of fact (Social Security Act 1998, section 14(8)(a)(ii)). My decision is that the first decision of the adjudication officer under section 74(2) of the Social Security Administration Act 1992, given on an unknown date, falls to be reviewed on the ground either that it was given under a mistake as to a material fact or that it was erroneous in point of law, and that the revised decision is that the Secretary of State is entitled to receive the amount of £20,705.66, representing the amount of supplementary benefit and income support which would not have been paid for the period from 29 November 1980 to 2 June 1993 if the claimant's Italian retirement pension had been paid on the prescribed dates, out of the payment of arrears of that pension. The practical result is that £657.65 is now due to the claimant, as the Secretary of State had retained too much from the arrears.
The background
- The claimant is an Italian national, born on 29 September 1914. He has worked in both Italy and the United Kingdom and has paid social security contributions in both countries. He has lived here now for many years. He retired from work in 1979. He claimed a UK retirement pension. Initially that claim was disallowed, on the ground that the claimant had insufficient UK contributions to qualify, but he was awarded a small amount of graduated retirement benefit (GRB), for contributions under a scheme in force down to April 1975. The claimant had also claimed a retirement pension from the Italian authorities based on his contributions paid to the Istituto Nazionale della Providenza Sociale (INPS). These contributions too were insufficient on their own to qualify him for an Italian pension. The claimant was awarded supplementary benefit from 29 November 1980, calculated on the basis that his only other income was the GRB (and presumably excluding that income for some years of non-payment: see paragraph 4 below). Payment continued through the change to income support down to 1993.
- In 1993 INPS reached a decision on the application of the aggregation and apportionment rules in Articles 44 to 46 of Council Regulation (EEC) No. 1408/71. This is a complex process which requires calculating a theoretical amount of pension which the person would have been entitled to if all the person's contributions had been paid in the Member State (ie here Italy) concerned and then apportioning that amount according to the proportion of the total contributions paid in Italy. The result was an award of retirement pension beginning in August 1979. The award seems to have been made, or at least the arrears payable were sent, to the Overseas Directorate of the Department of Social Security on 3 June 1993. I cannot find in the papers a direct statement of the amount of the arrears and the dates, but it is not in dispute that the total when converted to pounds sterling was £26,604.46 and that the dates were as above, and that the weekly amounts of Italian pension received from 29 November 1980 onwards were as set out on the various calculations of the amount of overpayment, starting with that on pages 2 and 3.
- The Department of Social Security had also applied the aggregation and apportionment rules under Regulation 1408/71 and decided that the claimant was entitled to a retirement pension with effect from 6 December 1979. It is not clear when the calculation was done (see page 1M), but the notification of the decision to the claimant was dated 7 December 1993. The award first covered the period from 6 December 1979 to 1 July 1981, after which payment of the GRB had apparently been stopped on the ground that the Department had lost touch with the claimant. It then resumed on 25 July 1985 and covered the period down to the rate in payment from 13 April 1993. It appears that no payment of arrears was made for the period from 29 November 1980, because they were abated on account of the consequent overpayment of supplementary benefit and income support. So far as I can tell no appeal has ever been made against the decision notified on 7 December 1993, nor has there been any application on behalf of the claimant to review the decision.
The adjudication officer's decision
- On a date which cannot now be identified, the adjudication officer made a decision on the recovery of overpaid supplementary benefit and income support out of the arrears of the Italian pension. The first decision was that £24,950.24 had been overpaid, ie would not have been paid if the Italian pension had been paid on the proper dates. Therefore, the balance of the arrears, £1,748.82, was transferred to the claimant. That calculation had been made on the basis that the claimant's only other income throughout the period (apart from dates from 15 April 1993 onwards) was his GRB, but included the GRB in the years for which it had not been paid. In a letter dated 12 August 1996 the claimant was notified of an alteration in the calculation of the overpayment, on the ground that the wrong rates of UK retirement pension had been used. Although neither the part of the letter now in the papers or the written submission to the appeal tribunal mentions the question of review, the new decision could only have been given following the review of the first decision on the ground of mistake of material fact or of error of law. The new calculation (pages 6 and 7) took into account the retirement pension and the GRB for the weeks down to 5 July 1981 and from 1 August 1985. That produced a figure for the overpayment of £21,376.85 and a further £3,478.61 was paid to the claimant.
- The claimant appealed against the decision notified on 28 August 1996, through his representative, Mr. Pietro Molle of Patronato Acli (Italian Workers' Social Services). The appeal raised the question of why retirement pension was not taken into account in the calculation from 1981 to 1985. It also made the argument that supplementary benefit and income support were paid as a supplement to retirement pension and so were social security benefits under Articles 4(1) and 1(t) of Regulation 1408/71, so that recovery would be contrary to Article 12. After exchanges of written submissions and postponement to await a Commissioner's decision, the appeal was eventually heard on 8 February 1999.
The appeal tribunal's decision
- The appeal tribunal for all practical purposes dismissed the appeal. It gave effect to a small correction in the calculation which the adjudication officer had spotted, which reduced the overpayment to £21,363.93. The appeal tribunal decided that the Secretary of State was entitled to receive that amount under section 74(2) of the Social Security Administration Act 1992. It followed my decision in CIS/12082/1996 for the ruling that nothing in Regulation 1408/71 or in Council Regulation (EEC) No. 574/72 prevented the application of section 74(2) in cases like the claimant's. On the question of the non-payment of retirement pension and GRB and the effect on the calculation of the overpayment, the appeal tribunal said that the non-payment would follow from a decision not before the appeal tribunal and which would have to be the subject of a separate appeal.
The appeal to the Commissioner
- The claimant now appeals against the appeal tribunal's decision, with the leave of Mr. Commissioner Sanders. There have been extensive written submissions. An oral hearing took place in January 2001. There has been a considerable later delay while an unsuccessful attempt was made to obtain figures from the Department to quantify calculations now supported in principle by the Secretary of State. At the oral hearing the claimant was represented by Mr. Molle. The Secretary of State was represented by Mr. Leo Scoon of the Office of the Solicitor to the Department of Social Security, as it still was at the time. I am grateful to both representatives for their assistance in a difficult case.
- There were three general strands to Mr. Molle's argument. Two were based on EC Regulations and the third was on the calculation of the recoverable amount under the UK legislation. I look at the European points first.
Article 111 of Regulation 574/72
- One was on the effect of Article 111 of Regulation 574/72 on the permissible recovery procedures. Mr. Molle submitted that my decision in CIS/12082/1996, and other Commissioners' decisions to the same effect, were wrong in law, so that the appeal tribunal erred in law in applying the same approach. However, in his written submission he had put much less emphasis on Article 111 and much more on how he argued that the aggregation and apportionment rules should work. Mr. Molle also suggested that since the amendment to Regulation 1408/71 on 1 June 1992, creating the category of special non-contributory benefit, Article 111 might have no application to recovery of overpayments of income support due to the late receipt of benefit from other Member States. I am not at all sure about the details of his argument. However, I have no doubt that CIS/12082/1996 was right in relation to the period before June 1992, for the reasons I gave there and need not repeat. As the result was that Article 111 did not prevent the application of section 74(2) of the Social Security Administration Act 1992, that result can only be reinforced following the 1992 amendment. Therefore, I concentrate on Mr. Molle's main point on EC law, and deal with the more general issues there.
The calculation of the pro rata benefit under Regulation 1408/71
- It is necessary to look at Chapter 3 of Part III of Regulation 1408/71. Chapter 3 applies to old age and survivors' benefits and lays down how the rights to benefits of a worker who has been subject to the social security legislation of more than one Member State are to be determined. Article 45(1) states the general rule on the aggregation of contributions:
"1. Where the legislation of a Member State makes the acquisition, retention or recovery of the right to benefits, under a scheme which is not a special scheme within the meaning of paragraphs 2 or 3, subject to the completion of periods of insurance or of residence, the competent institution of that Member State shall take account, where necessary, of the periods of insurance or of residence completed under the legislation of any other Member State, be it under a general scheme or under a special scheme and either as an employed person or as a self-employed person. For that purpose, it shall take account of these periods as if they had been completed under its own legislation."
The claimant's circumstances then fall within Article 46(2) and (3) on apportionment:
"2. Where the conditions required by the legislation of a Member State for entitlement to benefits are satisfied only after application of Article 45 and/or Article 40(3), the following rules shall apply:
(a) the competent institution shall calculate the theoretical amount of the benefit to which the person concerned could lay claim provided all periods of insurance and/or of residence, which have been completed under the legislation of the Member States to which the employed person or self-employed person was subject, have been completed in the State in question under the legislation which it administers on the date of the award of the benefit. If, under this legislation, the amount of the benefit is independent of the duration of the periods completed, the amount shall be regarded as the theoretical amount referred to in this paragraph;
(b) the competent institution shall subsequently determine the actual amount of the benefit on the basis of the theoretical amount referred to in the preceding paragraph in accordance with the ratio of the duration of the periods of insurance or of residence completed before the materialization of the risk under the legislation which it administers to the total duration of the periods of insurance and of residence completed before the materialization of the risk under the legislations of all the Member States concerned.
3. The person concerned shall be entitled to the highest amount calculated in accordance with paragraphs 1 and 2 from the competent institution of each Member State without prejudice to any application of the provisions concerning reduction, suspension or withdrawal provided for by the legislation under which the benefit is due.
Where that is the case, the comparison to be carried out shall relate to the amounts determined after the application of the said provisions."
The actual amount of benefit under Article 46(2)(b) is commonly known as the pro rata benefit.
- Article 46a contains rules on applying national legislation on reduction, suspension or withdrawal of benefits in the case of the overlapping of benefits of the same kind or of different kinds, but Article 46b(1) provides:
"The provisions on reduction, suspension or withdrawal laid down by the legislation of a Member State shall not be applicable to a benefit calculated in accordance with Article 46(2)."
Finally, and crucially in Mr. Molle's submission, by Article 1(t):
"(t) `benefits' and `pensions' mean all benefits and pensions, including all elements thereof payable out of public funds, revalorization increases and supplementary allowances, subject to the provisions of Title III, as also lump-sum benefits which may be paid in lieu of pensions, and payments made by way of reimbursement of contributions;"
- Mr. Molle submitted that, where supplementary benefit or income support was paid to bring income from a contributory old age benefit up to a minimum level of subsistence, it came within the meaning of a "supplementary allowance" and so was to be taken into account as part of the old age benefits from which the theoretical amount and the pro rata benefits were to be calculated under Articles 45 and 46. That would produce a higher UK pro rata benefit for the claimant, which Mr. Molle submitted could not be touched by section 74(2) of the Social Security Administration Act 1992, so that the amount which the Secretary of State was entitled to receive out of the arrears of the Italian pension would be reduced (he calculated to £17,761.68). He relied on a number of decisions of the European Court of Justice in support of that submission.
- Mr. Molle first challenged the view set out in a number of Commissioners' decisions that supplementary benefit and income support are not a social security benefit within Article 4(1) of Regulation 1408/71 because they are general social benefits not linked to protection against any of the specific risks listed in Article 4(1). That view had most recently been expressed in my decision in CIS/863/1994, now reported as R(IS) 4/99, mainly I think for the judgments in the Court of Appeal in Perry v Chief Adjudication Officer in which my decision was upheld. Mr. Molle submitted that that view had been shown to be incorrect by the case of Swaddling v Adjudication Officer (Case C-90/97) [1999] ECR I-1077, also reported as R(IS) 6/99. The ECJ held there that, by virtue of its listing in Annex IIa to Regulation 1408/71, income support had to be accepted as a special non-contributory benefit within Article 4(2a) and the regime created by the amendments in force from 1 June 1992. From that date there can be no doubt that income support comes within the general scope of Regulation 1408/71, but that does not convert it into a social security benefit within Article 4(1) if it was not such a benefit before.
- Mr. Molle relied particularly on what Advocate General Saggio said in his Opinion. In paragraph 9 he expressly disagreed with the view that income support was not within the scope of Regulation 1408/7 because it was a general social benefit not sufficiently linked to one of the specific risks referred to in Article 4(1). And in paragraph 12, having just argued that income support had to be accepted as a special non-contributory benefit, he continued:
"In any event, even leaving aside such formal - though compelling - evidence, it is impossible to conclude otherwise. Income support is undoubtedly linked, albeit in a complementary or ancillary manner, to one of the situations contemplated in Article 4(1) and, in particular, to the risk of unemployment. One of the preconditions of income support, as I recall, is that the claimant must not be engaged in remunerative work (or, if he is a member of a couple, the other member must not be so engaged) and must be available for, and actively seeking work."
I shall not go into the misunderstanding of what view I, as the Commissioner referring the questions to the ECJ in Swaddling, actually expressed. It is plain that Advocate General Saggio was putting forward the opinion that income support could be regarded as an unemployment benefit within Article 4(1). That can be taken to support the view that, in the case of someone retired from the labour market, it is an old age benefit as well.
- The ECJ did not find it necessary to state a view on that part of the Advocate General's Opinion. It was enough for it to rule that income support was a special non-contributory benefit. However, in paragraph 19 of it judgment it referred without dissent to my view that income support did not fall within the scope of Article 4(1). That must at least weaken the authority of what the Advocate General had said. In my view the force of his reasoning is insufficient to displace what I accepted in R(IS) 4/99. In terms of authority binding me, the Advocate General's view falls far short of displacing the view accepted by the Court of Appeal in Perry. I therefore reject this part of Mr. Molle's submission.
- But that still leaves what I think is a much stronger submission based on the decision of the ECJ in Stinco and Panfilo v Istituto Nazionale della Providenza Sociale (Case-132/96) [1998] ECR I-5225. This concerned a provision of Italian legislation that where the total old age, disability or survivors' pension payable (including any pension payable by another Member State) fell below a minimum level, a supplement was payable to bridge the difference. INPS calculated pro rata pensions for the claimants, who had also worked in France and the UK respectively, by reference to the theoretical amount of contributory pension, not taking into account the supplement. When pension from France/UK was added to the pro rata Italian pension, the total exceeded the minimum level and no supplement was awarded. The ECJ held that a supplement intended to bring the pension to the level of the statutory minimum should be included when calculating the theoretical amount and that it did not matter for that purpose that the supplement was listed as a special non-contributory benefit in Annex IIa to Regulation 1408/71.
- There was an exceptionally illuminating Opinion from Advocate General Jacobs. His view was that even if the supplement under the Italian legislation was conceptually separate from the basic old age pension payable, the definition in Article 1(t) meant that the supplement should be part of the benefits in Article 46(2). The amendments to Regulation 1408/71 to create the category of special non-contributory benefits were aimed at different problems and were irrelevant to the operation of Articles 45 and 46. Advocate General Jacobs and the Court followed the earlier decision in Office Nationale des Pensions (ONP) v Levatino (Case C-65/92) [1993] ECR I-2005, which held that a means-tested guaranteed minimum income for elderly persons with inadequate resources was an old age benefit which had to be taken into account in calculating the theoretical amount under Article 46(2). Exactly that provision had been held in Frilli v Belgian State (Case 1/72) [1972] ECR 457 to be an old age benefit within Article 4(1), so that it was a benefit which for that reason had to be taken into account in the calculations under Articles 45 and 46. The step forward in Stinco and Panfilo was therefore that the supplement in question, which fell within Article 4(2a) as a special non-contributory benefit, rather than under Article 4(1), also had to be taken into account under Articles 45 and 46. Advocate General Jacobs referred to the case-law on the scope of Article 4(1), but neither he nor the Court made their conclusion dependent on the supplement being classified as a social security benefit within Article 4(1).
- Mr. Molle submitted that in the present case supplementary benefit and income support operated practically as a supplement to the claimant's retirement pension (and GRB) and defined a statutory minimum level of income, so should be treated in the same way as the Italian supplement in Stinco and Panfilo. Mr. Scoon disagreed. He submitted that the principle in that case should be restricted to legislation giving effect to a statutory minimum pension and that supplementary benefit and income support did not represent such a statutory minimum. Mr. Molle submitted that there was at the least sufficient doubt about the position that there should be a reference to the ECJ. Mr. Scoon submitted that the outcome was sufficiently clear that there should not be a reference.
- I have hesitated over that last point in particular, but have in the end reached a clear view against Mr. Molle.
- It is in my judgment significant that the ECJ's ruling was in quite specific terms, referring to a supplement intended to bring a pension to the level of the statutory minimum, as had been Advocate General Jacobs' suggested answer. That partly reflected the form of the question asked by the Italian court and partly, I think, the argument made for INPS relying on Article 50 of Regulation 1408/71. Article 50 provides that a recipient of benefits under Chapter 3 may not receive less from the Member State in which he resides than the minimum benefit fixed by the legislation of that State for a period of insurance or residence equal to all the periods of insurance taken into account under Articles 45 and 46. It was held in Torri v Office National des Pensions pour Travailleurs Salariés (Case 64/77) [1977] ECR 2299 and R v Social Security Commissioner, ex parte Browning (Case 22/81) [1981] ECR 3357 that Article 50 only applies where national legislation includes a specific guarantee the object of which is to ensure for recipients of social security benefits a minimum income which is in excess of the amount which they may claim solely on the basis of their periods of insurance and contributions. The minimum does not refer to the theoretical amount under Article 46(2). In view of the purpose of Article 50 as explained in those cases and by Advocate General Jacobs in Stinco and Panfilo, a minimum benefit for its purposes is one which results from a specific legislative guarantee to make up for deficiencies in the a record of contributions or residence for the social security benefit in question. Thus, in Torri no-one thought of suggesting that the Belgian minimex (a general social benefit) established a minimum benefit for the purposes of Article 50, nor did anyone in Browning think of suggesting that supplementary benefit established a minimum benefit in the UK.
- I do not think that the principle of Stinco and Panfilo is restricted to benefits which fall within Article 50. For that reason it makes little difference that the UK's declaration under Article 5 specifies that its legislation contains no minimum benefits within Article 50 (see the history in Browning). And in any case the absence of a declaration is not in itself conclusive of the status of a benefit. However, the context and the specific terms used by the Advocate General and the Court indicate to me that the principle was intended to apply to a benefit which applied a statutory minimum to recipients of specific social security benefits and thus operated to provide a supplement closely linked to the specific risk relevant to the social security benefit in question. In Stinco and Panfilo (although the information provided by the national court and the parties on the Italian legislation was both sparse and confusing) the Italian supplement was apparently one restricted to recipients or potential recipients of contributory old age, disability and survivors' benefits. The cases referred to by Advocate General Jacobs as part of the background to Levatino, where supplementary allowances had been held to be within Article 4(1), displayed a similar structure.
- It is always a most difficult question to decide how far what the ECJ says in a particular context, related to the particular case before it, can be extended to other cases where some features of the first case are absent. However, I have concluded that supplementary benefit and income support are so different from the kind of benefit involved in Stinco and Panfilo that they cannot be regarded as part of the benefits to be taken into account under Article 46 of Regulation 1408/71, even with the extension required by the definition in Article 1(t). That rests on the nature of supplementary benefit and income support as general social benefits not specifically linked to protection against any of the risks listed in Article 4(1). In my judgment, a "supplementary allowance" within Article 1(t) is one which has the specific connections with a specific social security benefit, as exemplified by the Italian supplement in Stinco and Panfilo. It does not extend to a general social benefit which may provide a practical supplement to recipients of specific social security benefits, but which provides an income to others in many different circumstances whose resources are inadequate for their needs. I am sufficiently certain of that conclusion that a reference of any questions to the ECJ is not necessary.
- Accordingly, the calculation of the claimant's UK pro rata pension was properly restricted to consideration of the retirement pension earned by his contributions in the UK and taking into account his contributions made in Italy. The appeal tribunal did not err in law by adopting that calculation as the basis of its decision. I also note that, as Mr. Molle accepted, the GRB was properly excluded from that calculation also (Regulation 1408/71, Annex VI, Section O, point 8).
The calculation of the amount recoverable under section 74(2)
- Section 74(2) of the Social Security Administration Act 1992 provides:
"(2) Where--
(a) a prescribed payment which apart from this subsection falls to be made from public funds in the United Kingdom or under the law of any other Member State is not made on or before the date which is the prescribed date in relation to the payment; and
(b) it is determined that an amount (`the relevant amount') has been paid by way of income support or an income-based jobseeker's allowance that would not have been paid if the payment mentioned in paragraph (a) above had been made on the prescribed date,
then--
(i) in the case of a payment from public funds in the United Kingdom, the authority responsible for making it may abate it by the relevant amount; and
(ii) in the case of any other payment, the Secretary of State shall be entitled to receive the relevant amount out of the payment."
The crucial matter is to identify the "relevant amount" in the claimant's case.
- Mr. Molle submitted, first, that section 74(2) was subject to the ECJ rules on pro rata benefits and overlapping, so that the claimant could not be deprived of his pro rata benefit properly calculated. I do not have to work out all the interactions, as I have decided above that the existing calculation of the pro rata benefits was correct. He submitted, second, that the appeal tribunal should have considered the correctness of the decision about retirement pension notified on 7 December 1993. He did not need to argue that the appeal tribunal could alter the award or the decision on payability for the missing years from 1981 to 1985, as he submitted that it should have taken into account the proper position in calculating the relevant amount. Mr. Scoon agreed that I should deal with the question of the claimant's proper entitlement to retirement pension in the missing years and its effect on the calculation of the relevant amount. That entails agreement that the appeal tribunal erred in law in taking a different approach.
- I am satisfied that the appeal tribunal did err in law in taking the view that, because the decision of 7 December 1993 was not under appeal, it could not take account of the claimant's entitlement to retirement pension and GRB. A broader approach should have been taken, as the question is the identification of what supplementary benefit or income support "would not have been paid" if the Italian pension had been paid on its due dates. There is no requirement of a review of the previous supplementary benefit or income support decision (or now a revision or supersession) to establish the amount overpaid. In my view the proper position in relation to other benefits which can affect the amount of supplementary benefit or income support is something which can be considered in establishing what would have happened in the hypothetical situation of the income in question having been paid on time.
- Neither Mr. Molle nor Mr. Scoon could understand why, when the retirement pension decision was made for a past period, the fact that the Department did not have the claimant's address during part of that period could affect his entitlement to or the payability of his retirement pension. Neither can I. I can make a guess at what happened on the GRB which was actually being paid from the outset. There is a rule that where the right to payment to a sum of benefit has arisen, but payment is not obtained within 12 months of the date the right arose, that right is extinguished. I presume that that rule was applied to the claimant's GRB when, for whatever reason, the Department lost touch with him. That would fit with 12 months of arrears of GRB (from 25 July 1985) having been paid in July 1986 when the Department became aware of the claimant's address. Thus the claimant had never ceased to be entitled to GRB and it never ceased to be payable to him, but his right to payment of it was extinguished. That was a factor which could not have been relevant when the decision was made in 1993 on the amount of retirement pension to be awarded under Article 46 of Regulation 1408/71 from 6 December 1979.
- How then is the letter of 7 December 1993 to be interpreted? The letter mixes the language of entitlement and payment. It says that the claimant is entitled under Article 46 of Regulation 1408/71 to UK retirement pension at the weekly rates shown. It then gives figures for various dates with a gap from 27.11.80 to 25.7.85. The letter continues:
"The reason for the gap in payment between 1980 and 1985 is because we lost touch with you for this period and were therefore unable to pay benefit."
That statement is, for the reasons given above, incoherent in purporting to explain the gap in payment at a time when the Department was in touch with the claimant. It seems to me that the letter must be interpreted as notifying a decision that the claimant was entitled to the retirement pension from and including 6 December 1979, whereas the rates from various dates were simply notifications of the rates of payment. Similarly, the information about the gap in payment is to be taken as a statement that retirement pension was not going to be paid for the period from 6 July 1981 to 24 July 1985, ie as a statement about payment by the Secretary of State, not a notification of a decision on entitlement by an adjudication officer. It has since emerged from the submissions dated 6 March 2001 and 23 August 2001 on behalf of the Secretary of State that all of the documents relating to the award of retirement pension, and indeed to the calculation of the overpaid supplementary benefit and income support, have been destroyed and that no alternative information can be found. In those circumstances, I see no reason not to adopt my interpretation of the letter of 7 December 1993. There is therefore no difficulty in regarding the claimant, for the purposes of the section 74(2) calculation, as entitled to and notionally having received his UK pro rata retirement pension throughout the period from 6 December 1979 onwards. I do not need to bother with the period from 18 October 1982 to 22 December 1982, when the claimant was abroad, as no supplementary benefit was paid for this period and no recovery can be required.
The Commissioner's decision
- Accordingly, I set aside the appeal tribunal's decision as erroneous in point of law, for the reason given above. It is plainly expedient for me to give the decision on the claimant's appeal against the adjudication officer's decision issued on 12 August 1996, having made the necessary additional findings of fact above. In the light of my conclusions on the European issues, there is nothing to prevent the operation of section 74(2) of the Social Security Administration Act 1992 in the present case on the basis that the claimant's pro rata retirement pension has been correctly calculated as confirmed in paragraphs 11 to 22 above. The remaining question is to identify the "relevant amount" under section 74(2).
- Following the oral hearing I gave the Secretary of State time to put forward a calculation based on Mr. Scoon's acceptance at the hearing that account should be taken of the retirement pension properly payable in the missing years. Unfortunately there was then some confusion as the Secretary of State's representative purported to adopt calculations put forward by Mr. Molle on the assumption that his submissions on Stinco and Panfilo were accepted. After this had been pointed out, the Secretary of State's representative, in the light of the destruction of all relevant information in the Department, still felt unable to challenge those calculations. But for me to adopt that result would be inconsistent with my ruling rejecting Mr. Molle's submission on Stinco and Panfilo. Mr. Molle in his most recent submission, dated 14 September 2001, has very helpfully submitted a calculation on the assumptions that I did take that view and that account was taken of retirement pension payable in the missing years, as I have in fact decided. The figures are at pages 184 and 185 of the papers. That calculation also takes into account the GRB that would have been paid in the missing years. I conclude that that is right because those amounts would have counted as notional resources for supplementary benefit purposes as sums available on application (Supplementary Benefit (Resources) Regulations 1981, regulation 4(2)(a)). Therefore, I accept and adopt that calculation.
- The result is that the "relevant amount" and the amount receivable by the Secretary of State out of the arrears of the Italian pension is £20,705.66. That is £657.65 less than the Secretary of State has to date retained out of the arrears. It will now be for the Secretary of State to release the £657.65 to the claimant.
Date: 7 December 2001 (Signed) J Mesher
Commissioner
