Judgment No. 2615
The complaint is dismissed.
This explanation is hardly satisfactory [i.e. “[t]he fact that the Finance Committee did not have a copy of the actuarial review or an opportunity to hear a presentation from the actuary […] cannot have a bearing on the lawfulness of the Council’s decision. Indeed […] according to the applicable rules and regulations, it is the Governing Board that must receive and discuss actuarial reviews of the Pension Fund. The Finance Committee and the CERN Council are informed of its opinion and decide whether to follow the recommendations it issues.”]. Procedural rules which provide for prior consultation or discussion, and which entrust certain bodies with the task of formulating an opinion or a recommendation before a decision is taken, are established particularly in order that the decision-making authority may be informed as objectively and fully as possible about interests worthy of protection which its decision may harm; this should make it easier to gain the support of those concerned by the decision and should ultimately contribute to its smooth implementation. Advisory bodies can naturally play their role only if they have access to all the relevant information necessary for the formulation of their opinion.
advisory body; consultation; impartiality
The purpose of the pension adjustment provided for in Article II 1.15 of the Rules of the Pension Fund is to protect retired staff members from the adverse repercussions of a rise in the cost of living on their purchasing power and hence in theory to maintain the standard of living their pension initially secured for them. When making this adjustment active members and retirees must be treated equally as far as possible.
Nevertheless, consideration should be given to preserving retirees’ standard of living not just in the short term. They must be protected not only against the periodic erosion of their purchasing power but also against management measures that are liable to jeopardise the actual maintenance of their pension payments. Consequently, the obligation to adjust pensions from time to time in line with a rise in the cost of living is limited by the need to ensure the health of the pension scheme (see Judgment 2089).
ILOAT Judgment(s): 2089
pension adjustment system
Of course the Tribunal realises that this decision imposes a particular sacrifice on the beneficiaries of a retirement
pension. But in view of the short-term nature of this sacrifice, its relatively limited scope, a reference rate of inflation of 1.7 per cent and the fact that it forms part of a package of measures, the Tribunal cannot hold that in adopting such a measure the CERN Council abused the discretion it must be allowed in deciding whether to adjust pensions in the light of the financial capacity of the Pension Fund over which it exercises supreme authority.
pension; pension adjustment system; discretion