EU court to Italy: Working abroad can’t cost you a pension bump

(CN) — Splitting your career between countries shouldn’t cost you your disability pension. But in Italy, it did — until Europe’s top judges stepped in Thursday, faulting rules that made it harder for migrant workers to qualify for a minimum pension.

Under EU law, working across borders cannot put someone at a disadvantage when social security rights depend on contribution history. National authorities must place mobile and non-mobile workers on the same footing, counting insurance periods completed abroad as if they were earned at home.

Italy’s system fell short of that standard, the Court of Justice of the European Union said. By forcing workers with part of their careers abroad to meet a higher contribution threshold than those who stayed put, the rules penalized cross-border work in a way EU law does not allow.

“Italian law appears in that way to impose stricter conditions as regards the period of contribution in Italy on workers who have exercised their freedom of movement than the conditions applicable to workers who have not exercised that freedom,” the court wrote.

F.F., the claimant in the case, is an Italian resident whose career unfolded across borders. Court records show he paid social security contributions in Switzerland from 1991 to 1994, before returning to Italy, where he worked and contributed between 2002 and 2012. That period of Italian employment amounted to 260 weeks of contributions, about five years, with further credits added for spells of unemployment in 2012 and 2013.

When F.F. later applied for an Italian disability allowance, national social security agency INPS accepted that he qualified based on his Italian record. But the agency refused to add the supplement needed to bring the benefit up to the statutory minimum, saying he did not meet the national conditions.

INPS rooted that decision in the structure of Italy’s pension system, which was reshaped by a major reform that took effect on Jan. 1, 1996. From that point on, Italy moved toward a contributions-based model under which pensions built entirely on contributions paid after 1995 generally no longer qualify to be boosted to a base level.

Alongside that shift, lawmakers kept a rule dating back to 1969 for people whose work histories span more than one country. Under that rule, access to the minimum supplement is available only to those who can show at least 10 years of contributions paid in Italy itself.

Those arguments carried weight in the lower courts. A tribunal in Turin held that F.F.’s Swiss contributions could be counted when calculating the basic amount of his disability pension, but not when deciding whether he qualified for the minimum supplement. An appeals court backed that view, saying because all of his Italian contributions were made after 1995, he fell under the contributions-based system and was excluded from the supplement.

Italy’s Supreme Court was less persuaded. Doubting that the distinction could sit comfortably with EU law, it asked Europe’s top judges to step in and clarify whether Italy’s rules complied with EU protections for cross-border workers.

In its answer, the EU court stressed that national autonomy over social security systems has clear limits. Member states remain free to design their own schemes, the judges said, but they cannot do so in ways that deter people from working abroad by stripping away advantages they would have kept had they stayed at home.

The court pointed to the core logic of EU social-security coordination. Workers must be treated equally, regardless of where they built their careers, and insurance periods completed abroad must count on the same footing as those completed domestically.

Measured against that standard, Italy’s system did not hold up. By demanding a longer contribution record from workers with cross-border careers, while allowing purely domestic workers to qualify on easier terms, the rules placed mobile workers at a disadvantage EU law does not permit.

Frans Pennings, emeritus professor of labor and social security law at Utrecht University, said the ruling fits squarely within the court’s long-standing case law on free movement. Minimum pensions, he said, are designed to prevent benefits from falling below a basic floor, and EU coordination rules exist to ensure that work completed abroad, including in Switzerland, is not ignored.

As Pennings put it, “The Coordination Regulation prohibits rules that treat workers who have exercised their right to freedom of movement within the EU less favourably than workers who have not exercised that freedom.”

The court did not order Italy to pay F.F. directly but sent the case back to national authorities to apply the ruling themselves. The judgment is final and binding, leaving Italian institutions to reassess his entitlement under the same contribution rules that apply to workers whose careers remained entirely at home.

Lawyers for F.F., the social security agency INPS and the Italian government did not immediately respond to requests for comment.

Courthouse News reporter Eunseo Hong is based in the Netherlands.