Fédération de Russie

THE RIGHT TO SOCIAL SECURITY IN THE CONSTITUTION OF THE RUSSIAN FEDERATION

 

Machulskaya Elena Evgenjevna 

 

The Constitution of the Russian Federation (the Constitution) was adopted on December 12, 1993 and came into force on December 25, 1993.[1] The Constitution has the supreme juridical force, direct action and is used on the whole territory of the Russian Federation. Laws and other legal acts adopted in the Russian Federation shall not contradict the Constitution.

According to the 2^nd article of the Constitution: “Man, his rights and freedoms are the supreme value. The recognition, observance and protection of the rights and freedoms of man and citizen shall be the obligation of the State”.

The Constitution of the RF contains all human rights and freedoms, including civil, political, economic, social, cultural and other rights, which are enumerated by the Universal Declaration of Human Rights 1948, International Pact on Economic, Social and Cultural Rights 1966, European Social Charter (revised) 1996 and other international treaties.

The Constitution provides for human rights and freedoms according to the universally recognized principles and norms of international law as they constitute a component part of its legal system (part 4 art.15).

In accordance with the Federal Law of 15.07.1995 N 101-FZ “On International Treaties of the Russian Federation”[2] an international treaty devoted to human rights (including the right to social security) should be ratified.

The article 15 (4) of the Constitution gives domestic legal force to those international treaties on social security which are ratified by the Russian Federation. Any international treaty on social security becomes part of the Russian legal system upon its ratification, more precisely, upon official publication of a law on the ratification of the treaty. This means that dualistic approach to application of international norms is used by the Russian legal system.

If the ratified international treaty or agreement of the Russian Federation fixes other rules than those envisaged by law, the rules of the international agreement shall be applied.

The Constitution affirms that the fundamental rights and freedoms shall not be interpreted as a rejection and derogation of other universally recognized human rights and freedom. The rights and freedoms of man and citizen may be limited by the federal law only to such an extent to which it is necessary for the protection of the fundamental principles of the constitutional system, morality, health, the rights and lawful interests of other people, for ensuring defense of the country and security of the State (part 3, art.55).

Coordination of issues of health care; protection of the family, maternity, paternity and childhood; social protection, including social security is in the joint jurisdiction of the Russian Federation and the subjects of the Russian Federation. Legislation of the subjects of the RF (laws and other normative legal acts of the territories, regions, cities of federal importance, autonomous regions or autonomous areas) in the field of social protection should correspond to federal legislation. In cases of contradiction federal legislation has the supreme force. This means that regional legislation can be applied only in those parts that don’t contradict to federal legislation.

In general the subjects of the RF are not able to decrease federal standards in the field of social protection that are established by legal normative acts. But they have the jurisdiction to increase federal standards for population, residing within their territory, at the expense of regional budgets.

The basis for socio-economic rights is laid by article 7 of the Constitution which proclaims that Russia is a social state in which policies should provide conditions for a worthy life and a free development of a person. This means that in Russia labour and health of people shall be protected, a guaranteed minimum wages and salaries shall be established, state support ensured to the family, maternity, paternity and childhood, to disabled persons and the elderly, the system of social services developed, state pensions, allowances and other social security guarantees shall be established.

The main aim of a social state is common development on the values of social justice, social solidarity and mutual responsibility between the state and its citizens. These values acquire not only a mere declarative but a fully normative, binding content. The social state has the constitutional obligation to intervene into market economy for the purpose of redistribution of resources in order to prevent and reduce poverty, inequality, social exclusion and social insecurity, and to ensure decent life to every member of the society.

Persons, who are able to work, should earn for themselves and their families. Thus, the Constitution entails the right to work in the article 37: ”Labour is free. Everyone shall have the right to freely use his labour capabilities, to choose the type of activity and profession.

Everyone shall have the right to labour conditions meeting the safety and hygienic requirements, for labour remuneration without any discrimination whatsoever and not lower than minimum wages and salaries established by the federal law, as well as the right to protection against unemployment.”

The social state is supposed to intervene only in cases of incapability for work when the needs of a human being can’t be satisfied due of social contingencies (social risks) – unemployment, sickness, maternity, industrial injury, professional decease, old age, invalidity, death of breadwinner, poverty, etc.

It’s worthy to mention that the constitutional content of the notion “social state” was clarified by the Constitutional Court of the Russian Federation. Thanks to its activities many Constitutional provisions (especially in the field of social security) were transformed from mere declarations (slogans) into a really effective legal rules having supreme legal force and capable to become a real means of protection of social rights.

According to the decision of the Constitutional Court of the Russian Federation of 16.12.1997 N 20-P[3] the existence of developed social security system is one of the main features of the social state. The social state is responsible for establishing and promoting of the state social security system, protection family, motherhood, fatherhood and childhood. Development of the state social security system is the necessary pre-condition for the achievement of the aims of social policy.

The Constitutional Court derives from the social state’s clause a constitutional right to a minimum social subsistence, although not to concrete social services or provisions which are defined by federal and regional legislation. The constitutional duty of the state is to guarantee social protection to everyone in cases of social risks at a minimum level. The state should find the due balance between social demands of population and available economic resources. But this minimum should guarantee human dignity of the beneficiary. In the cases of social risks a person shall have the right to decent life and human dignity.[4]

The notion of “decent life” is still one of the most disputable between scholars and politicians. It’s obvious that they will never come to an agreement on all the aspects of this notion. But there is unanimity of positions on the minimum standards decent life. Thus, the minimum subsistence floor should be guaranteed to everyone irrespective of the economic situation.

The Constitutional Court of the RF is the only judicial body that gives official interpretation of the Constitution, its judgments are obligatory across the entire territory of the Russian Federation for all legislative, executive and judicial bodies.

The Constitutional Court has the jurisdiction to declare unconstitutional laws, presidential and governmental decrees if it finds that they are contrary to the Constitution (i.e. they violate certain rights and freedoms of citizens enumerated in and protected by the Constitution). In such instances, that particular law becomes unenforceable, and governmental agencies are barred from implementing it.

The Constitutional Court is not entitled to judge constitutionality of laws on its own initiative; the law may be submitted to the Constitutional Court by the President of Russia, the government of Russia, the State Duma and some other bodies. Any federal court may also request the Constitutional Court to judge on the constitutionality of a law if the law is to be implemented in a case, and a judge of the federal court is in doubt about whether the law is contrary to the Constitution. Also, any private citizen may submit in the Constitutional Court a claim challenging constitutionality of a particular law if that law was implemented in a particular case and thus violated rights of that citizen.

According to statistics one third of all complaints submitted to the Constitutional Court deal with social benefits: pensions, grants, allowances and the like.

 

The right to social security is specified in the article 39 of the Constitution. It states that everyone shall be guaranteed social security at the expense of the state in old age, in case of an illness, disableness, loss of the bread-winner, for upbringing of children and in other cases established by law.

State pensions and social allowances are established by law.

Promotion is given to voluntary social insurance and the creation of additional forms of social security and charity.

Thus, the Constitution lays the basis for social security legislation. To elaborate this legislation is the constitutional obligation of the social state in order to protect persons who suffered from social risks (Decision f the Constitutional Court of 15.05.2006 N 5-P).[5] Discretionary freedom of legislative bodies is limited by the Constitution. While elaborating statutes they should bear in mind the values of social justice, equality, human dignity, etc.

Among 35 decisions of the Constitutional Court concerning different aspects of the constitutional right to social security in 24 cases legal regulations were found not compatible with the Constitution.

In order to give some illustrations it’s necessary to describe the national social security system.

The term social security is used in the art.39 of the Constitution in the broad sense. Article 39 is brought into practice through the state social security system which consists of three main branches:

• obligatory (compulsory) social insurance;
• budget schemes for special professional groups (military men , civil servants, etc);
• social assistance for persons whose income is below the regional subsistence level.

These branches differ from each other by the scope of coverage, sources of financing, kinds and amounts of payments, administrative organization.

The main government body (organ) dealing with the social security system in Russia is the Ministry of Labour and Social Protection.

 

Compulsory social insurance covers all employees working under the contract of employment. Foreigners and stateless persons, permanently living and working in Russia, are insured on equal grounds with the Russian citizens. Migrants working under temporary contracts of employment are insured according with conditions of international treaties (reciprocity clause).

Self-employed persons and persons, working under contract for services, are covered only for the purposes of pension and health insurance. They can join obligatory (compulsory) social insurance scheme voluntarily. In this case they have to pay fixed contributions to Social Insurance Fund and will be entitled to sickness and maternity benefits.

Social insurance contributions are transferred by employers into three extra-budgetary funds: the Pension Fund of the Russian Federation (PFR), Social Insurance Fund (SIF), Health Insurance Fund (HIF).

The amount of contributions is calculated on the basis of payroll.

 

Labour pensions (Federal Law on “Labour Pensions in the Russian Federation” N 173-FZ, 17.12.2001)[6] are established and paid within the obligatory pension insurance (OPI). Employees, self-employed persons, and independent farmers are covered by OPI.

Labour pensions are financed by contributions. Payment of contributions is employer’s responsibility. Insured employees don’t have any contributions obligations. More than 10 million employers pay contributions to the State Pension Fund (PFR) for more than 72 million of employees.

The amount of contributions is calculated at a rate of 22 percent of payroll. Since 2010 the amount of employee income subject to insurance contributions was capped. Each year the government sets the threshold of employee’s annual income for contribution purposes.

Contributions are transferred to the State Pension Fund (PFR). About 38 million pensioners receive pensions through the Pension Fund. The PFR sets up and pays the pensions, both within the system of obligatory pension insurance and state pension security. In addition, the PFR provides with pension benefits 170 thousand citizens living in 99 states. The structure of the PFR includes 8 Offices in federal districts, 81 Branches of RF Pension Fund in constituent entities of the Russian Federation, as well as the Branch in Baikonur (Kazakhstan), and nearly 2,500 regional offices in all regions of the country. The system employs more than 133 000 specialists.

Employer’s duty to pay social insurance contributions is the necessary pre-condition for pension entitlement. Besides, there is direct interrelation between the amount of labour pension and the amount of paid contributions.

The Constitutional Court pointed out that the right to a pension has a special significance and social value in a state with the rule of law. The obligations of the state to respect and to protect the rights and freedoms of a person and citizen as a highest value presume a legal order which is able to guarantee everyone such protection.

The effectiveness criterion of social insurance includes procedural possibilities for obtaining a pension in full and in time. The Court stated that in the case that the employer has not fulfilled his duty to pay social insurance contributions, the state has to guarantee the social security system and take subsidiary responsibility. The Court pointed out that social insurance contributions by an employer are a necessary condition for a stable and autonomous system of labour pensions, built upon universal principles of fairness and equality.

The Court concluded that the current legal mechanism didn’t provide for enough guarantees for the protection of the rights and freedoms of employees and invited legislative intervention (Decision of the Constitutional Court 10.07.2007 N 9-P).[7]

In this judgment, “value” is interpreted as a contextual category which is connected to obligations on the part of the social state, and guaranteed by the Constitution and the whole legal order. “Value” in this sense establishes criteria for action on the part of the state.[8]

Labour pension is a monthly cash payment aimed to compensate wage and other earnings lost by the insured person due to disability caused by age or invalidity. This pension also compensates wage and other benefits of breadwinner to disabled members of his family, lost due to his death.

There are three kinds of labour pensions:

• old age labour pension;
• disability labour pension;
• survivor's labour pension.

Old age labour pension is provided to all those reaching pensionable age with a minimum contribution record of 5 years. One important characteristic of the Russian pension system is its relatively early statutory pensionable age. Men, who worked in normal working conditions, can claim a full old-age labor pension at the age of 60 and women at the age of 55. Those persons, who worked in the hard and dangerous working conditions or in the regions of the Far North, are entitled to pension even earlier.

Prior to 2010, labour pension had three components: a basic pension, an insurance benefit based on a notional defined contribution account, and a funded defined contribution scheme (available only to individuals born after 1967). After 2010, the basic pillar has been folded into the pay-as-you-go (PAYG) portion of pensions.

The labor insurance component is a notional defined contribution pension. This is a pay-as-you-go scheme that includes old-age, disability, and survivor’s benefits. Contributions to individual accounts are not invested in financial assets. Instead, these contributions are recorded in a notional individual account by the PFR. These accounts earn a “notional” return set by law. Between annual indexations on April 1, pensions can be indexed to inflation (if it exceeds 6 percent) to avoid a sharp drop in purchasing power during the year. When the individual retires, the amount in the account is divided by 228 (19 years of benefits) to get the monthly pension.

The third component is a funded defined contribution system, where individuals contribute to pension fund accounts which are invested by public or private asset managers. Under the default option, individuals keep the account in the RPF to be managed by a state financial institution. However, individuals can opt-out by choosing a private asset manager or by transferring the account to a private pension fund.

These funds are invested in investment instruments, defined by laws of the Russian Federation in order to earn additional income. Until late 2009, the default investment option was restricted to government securities. This was recently expanded to allow investment in a wider range of domestic securities (including corporate bonds, mortgage bonds, etc.).

The PFR cooperates with 57 management companies, including state management company Vnesheconombank, specialized depositary and 129 private pension funds which are participants of the investment process.

At present more than 8 million people have an accumulative portion of labour pensions. Upon retirement, they will receive both the contributions and the investment returns earned on those contributions in the form of a lifetime annuity.

It is worthy to mention that old-age labour pension is paid in full irrespective of retirement.

Disability labor pension: Disabled persons (invalids of I, II or III group) are entitled to this pension. Three degrees (groups) of disability (invalidity) are determined. The amount of disability labor pension also can consist of three components: basic flat-rate component, insurance component and funded component (to individuals born after 1967).

Disability labor pension is paid for the period of disability. On reaching retirement age, the old age labour pension is paid.

Survivor labor pension is paid irrespective of the deceased's length-of-service period and coverage periods. Eligible survivors are:

• widows older than age 55 (widower(s);
• parents older than age 60 (men), 55 (women);
• family members who don’t work because of caring for a child younger than age 14 or disabled;
• children up to age 18 (age 23 if a student, no limit if disabled before age 18);
• brothers and sisters up to age 18;
• grandfathers aged 60 or older and grandmothers aged 55 or older or disabled.

Pension is calculated as the sum of a basic flat-rate component according to the category of beneficiary and a component based on the notional account. Funded component, if there is any, is split equally among all eligible survivors.

Survivor’s pension does not cease on the remarriage.

Since the 1 of January 2015 labour pension will be replaced by insurance pension (Federal Law of 28.12.2013 N 400-FZ “On Insurance pensions”).[9] Conditions of pension entitlement will also change. Thus, a minimum contributions record will be raised gradually from 5 years to 15 years from 2015 to 2025. For each year of insurance points will be accumulated. The amount of pension will depend on the number of accumulated points. The price of one point will be adopted each year.

One very important Determination of the Constitutional Court should be mentioned in connection with the amounts of labour pensions. In her complaint to the Constitutional Court the plaintiff stated that the amount of her labour pension calculated in accordance with the federal Law “On Labour Pensions in the Russian Federation” of 17.12.2001 N 173-FZ was below the subsistence minimum level. Insofar that this Law admits such situations it should be deemed incompatible with the Constitution.

In its Determination of 15.02.2005 N 17-O[10] the Constitutional Court stated that the minimum level of the old age labour pension should be of such amount that it won’t put to doubt the mere possibility of decent life and human dignity of a beneficiary. The minimum level of the old age labour pension combined with the other measures of social protection and indexation shouldn’t fall below the regional subsistence minimum level.

This Determination had direct influence on the legislation. From the 1^st January 2010 the Russian Federation introduced social additional payments to labour pension in order to supplement total pensioner's income to the level of subsistence minimum of pensioners in the region of residence. Only pensioner, who ceased working, receives such payments. It is one of the key RF Government measures aimed to eradicate poverty of the older people. Federal social additional payments are set up and paid by the territorial PFR offices in case if the pensioner's subsistence minimum in the RF subject is lower than in the Russian Federation as a whole. Regional social additional payment is set up and paid by the an authorized executive body of the RF subject for pensioners in case if the pensioner's subsistence minimum in the RF subject is higher than in the Russian Federation as a whole.

Social pension is provided under the system of state social security to those citizens, who for some reasons are not entitled to labour pension:

- I, II and III group disabled, including disabled from birth, disabled children;

- men of 65 and women of 60, who don’t have enough length of insurance period for labour pension entitlement, etc.

The state service pensions are also provided to compensate citizens “lost salary” due to cessation of their state federal military, civil or other service when they reach long service term; or to undo the harm to health caused during military service due to radiation or technogenic disasters in case of disability or loss of breadwinner and in a number of other cases.

The state social security is funded by the Federal budget of the Russian Federation. PFR pays state social security pensions to more than 3 million people.

Pensions for people residing abroad. The total number of citizens residing outside the Russian Federation and receiving pensions from Russia exeeds 170000. They reside in 102 countries. The distribution of labour pensions, set up according to the Russian Federation legislation, is independent of the beneficiary country and citizenship. Cooperation with particular countries in the field of pension security is carried out in accordance with special contracts (agreements). In 2010 the PFR was executing 14 international pension security agreements of the Russian Federation with 18 countries.

The agreements with Commonwealth of Independent States (CIS) - Lithuania, Georgia and Estonia, and also Slovakia, Romania, Hungary and Mongolia, - are based on territorial principle, according to which the pension security of citizens is carried out according to the legislation and at the expense of the beneficiary’s country. Mutual accounts are not settled.

The international agreements between the Russian Federation and the Republic of Bulgaria, Spain, Byelorussia and Ukraine are based on proportional principle, under which each side sets up and pays pension according to those pension rights (insurance time of service length) acquired on the side's territory.

In the Decision of 15.06.1998 N 18-P[11] the Constitutional Court stated that the constitutional right to pension was violated by the following provision of the former legislation. According with it payment of pension was ceased if pensioner left Russia for permanent residence in other country before 01.07.1993.

Federal laws that were adopted afterwards don’t contain such provisions.

 

Benefits

The right to protection against unemployment is guaranteed by the Constitution (art.37).

a) Unemployment benefit

Unemployment benefits are financed from federal and local government budgets. Regional and local governments may establish and finance supplementary benefits for unemployed persons and their dependents out of their own budgets. Unemployment benefits are paid by local employment services.

Citizens aged 16 to 59 (men) or aged 16 to 54 (women) are eligible for unemployment benefits.

In order to qualify for benefit unemployed persons must be registered at an employment office, have 26 weeks of full-time employment in the last 12 months (or the 26-week equivalent for part-time employment), and be willing and able to work.

Benefits may be reduced, postponed, suspended, or terminated if the worker is dismissed because of misconduct, leaving employment without good cause, violating conditions for job placement or vocational training, or filing a fraudulent claim.

Unemployment benefit is calculated as a percentage of previous average wages and is paid for up to 12 months. The benefit decreases over time: 75% of the previous average monthly wage is paid for the first three months, 60% for the next four months, and 45% for the last five months. The amount of unemployment benefit can’t be less than minimum amount and exceed maximum amount prescribed by law. But even the maximum amount of unemployment benefit is below the federal subsistence minimum level. On this ground European Committee of Social Rights concluded that the situation in Russian Federation is not in conformity with article 12(1) of the European Social Charter (revised) 1996 which was ratified by Russia.[12].

 

b) Sickness benefit

Employers pay temporary sickness benefits using funds from the State Social Insurance Fund and their own funds. The law provides for employers’ obligation to pay for the first 3 days of sickness and from the 4th day onwards, such payment is made on account of the Social Insurance Fund.

Sickness benefits are paid in the following cases enumerated by law:

• illness or injury;
• care given to a sick family member;
• quarantine of an insured person, as well as quarantine of a child under 7 years of age attending a pre-school educational institution;
• prosthetics done for medical reasons in a specialized institution;
• prescribed aftercare in sanatorium and spa resorts in Russia, immediately after hospitalization.

The amount of benefit varies according to the length of the insurance coverage period:

• less than five years of coverage - 60% of earnings;
• with five to eight years of coverage - 80% of;
• more than eight years of coverage - 100% with of earnings.

Sickness benefits are calculated on the basis of the average daily earnings. The daily earnings are defined as the ratio of the accrued employee’s earnings for two preceding calendar years within the threshold divided by 730.

The period of payment of sickness benefit depends on the grounds for the entitlement. The minimum benefit is 100% of the legal minimum wage for employees with less than 6 month period of insurance coverage. This amount is also below the federal subsistence minimum level.

 

c) Maternity benefits

According to article 38 of the Constitution maternity, childhood and the family shall be protected by the State.

Maternity leave is given under the Labour Code of the Russian Federation (art.). The duration of it is 140 days – 70 days before the birth and 70 days after. Duration of maternity leave can be increased to 194 days in the event of multiple pregnancies or complications – 84 days before the birth and 110 days after it for multiple births (such as twins or triplets) or 86 days after the birth if there are any complications.

Maternity benefit is calculated at a rate of 100% of the insured mother’s average earnings for two preceding calendar years within the threshold divided by 730.

          After maternity leave working parents (or other caretaker of a child) are eligible to child care leave until the child reaches the age of 1.5 years. The rights to childcare leave and allowance are not limited to the mother of the child. Other family members (such as the father, grand-parents and even other close relatives), who actually care for the child and contribute to compulsory social insurance, are also entitled to these rights. Childcare allowance is granted to one person only, so if another family member receives this allowance, then the mother will not be eligible for it.

Childcare allowance is calculated at a rate of 40% of the insured caretaker of a child average earnings for two preceding calendar years within the threshold divided by 730.

Non-working caretaker of a child is eligible to flat-rate childcare allowance.

Lump sum childbirth benefit is paid under federal and regional law.

Maternity capital

Maternity (family) capital is the Government support of the families, which after 1^st January 2007 gave birth or adopted the second child or the third, fourth or subsequent children, if the right to maternity capital was not registered before birth (adoption) of previous children.

The maternity capital can be used to:

- housing improvement: to buy housing, to pay off mortgage loans, or to build a house;

- any of the family children's education: in kindergarten, institutions of high education, postgraduate course;

- to augment the mother's future accumulative pension.

Maternity (family) capital can’t be used to these three aims until the child has reached three years of age. Exception: maternity capital can be used to pay off mortgage loans before the child's three years, independent of the date of mortgage.

Eligible person can apply for maternity capital use to the local Pension Fund Office. The PFR has issued more than 4 million of certificates for maternity capital.

More than 2 million Russian families have already used the maternity capital, about 300 thousand families improved their housing conditions. The time of the capital's transfer does not exceed 2 months from the date of application to the PFR.

In 2014 amount of maternity capital is 468000 rubles (about 10000euros).

 

Conclusion. Even brief description of the Russian social security system shows that it is complicated, not stable, not adequate for decent life. Some legal provisions and their implementation are not in conformity with the “letter and spirit” of the Constitution. For this reason the role of the Constitutional Court of the Russian Federation in revealing the inner content of constitutional provisions in the field of social security is difficult to overestimate.

The Constitutional Court formulated several principles that should characterize social security legislation in order to guarantee the Constitutional right to social security: legal certainty, stability, adequacy, proportionality.