UNAT Held or UNDT Pronouncements
The UNAT held that the Fund reasonably chose a 30-year timeframe for its statistical analysis to determine whether there were “aberrant results” in terms of pensions received by beneficiaries who had chosen Slovakia as their country of residence. Similarly, the UNAT held that the conclusions drawn by the Fund from the analysis were properly reached, highlighting that the graph showed a wide disparity between resident beneficiaries who separated from 1993 to 2007 and those who separated afterwards, a disparity solely due to differences in separation dates.
The UNAT found that the suspension decision was not retroactive as it only applied for the future. It held that the former staff member did not have an acquired right to an adjusted pension under the local-track system, as the suspension mechanism had been part of the legal framework even prior to his separation from service.
However, the UNAT found that the suspension decision violated the former staff member’s right to legal certainty because he was given only three months’ notice before the suspension decision took effect. It noted that this delay was unfair and disproportionate, especially as it resulted in him losing half of his pension and did not provide a reasonable period to rearrange his finances. It concluded that a notice of six months would have been more reasonable to respect his legitimate expectations.
Finally, the UNAT rejected the former staff member’s request for compensation for harm, interest, and costs.
The UNAT granted the appeal in part and modified the Decision of the Standing Committee of the UNJSPF to the extent that the former staff member was granted the difference in pension between the US dollar track and the local track for the period from 1 January to 30 March 2024.
Decision Contested or Judgment/Order Appealed
UNJSPB Decision: A former staff member contested the decision of the UNJSPF Chief Executive of the Pension Administration (CEPA) to suspend the application of the local track in Slovakia (local track or two track system) pursuant to paragraph 26(a) of the Pension Adjustment System (PAS), which resulted in the reversion of his benefit to the United States dollar track (US dollar track) (suspension decision).
In its Decision, the Standing Committee of the UNJSPB upheld the suspension decision.
Former staff member appealed.
Legal Principle(s)
The two-track system allows a beneficiary’s pension to be calculated and maintained in both USD (US dollar track) and in their currency of residence (local track or two track system). The local track is adjusted by the country’s official cost of living index. Each quarter, the UNJSPF compares both tracks and the member is paid the higher amount, subject to a specified maximum and minimum limits.
The Chief Executive of the Pension Administration may suspend a particular country from the two-track system where the application of the local track would lead to aberrant results, causing wide fluctuations depending on the precise commencement date of the underlying benefit entitlement. To make a finding of aberrant results, the CEPA is required to undertake economic and statistical analyses and is given wide discretion. If his decision bears a rational relationship with the purpose of the two-track system and is based on reasonable data, there is no basis for judicial review.
An administrative decision should produce its effects for the present and/or the future. The principle of non-retroactivity means that the Administration is barred from issuing administrative decisions that produce legal effects for the past.
The requirement of transitional measures arises from the need to balance the right of the Administration to exercise its authority in a timely manner with the right of the individuals to a smooth transition towards the new regime, without being exposed to abrupt, violent, or excessive changes. Transitional measures are safeguards to preserve legitimate expectations, leading to legal certainty. If not mandated by the legal framework, the Tribunals may require such provisional measures to be taken, on a case-by-case basis, considering what they determine to be fair and reasonable.