Tallinn Administrative Court judge
On 1 July 2013, amendments to the Courts Act came into force, transforming the system of social security for judges. The main change is the loss of judges’ occupational pensions for new appointees (in the interests of brevity, I will refer to them hereinafter as the “new system judges”). 1 July of this year will mark 10 years since this event, which significantly impacted the judiciary. As of 1 February 2023, there are 250 judges in the Estonian court system, of whom 106 were appointed after 1 July 2013. There will be a point in the coming years where the percentage of new system judges exceeds 50% of all judges. It’s worth looking at how the situation emerged from the perspective of the new-system judges, and analyse the related problems and consider the future. In recent years, the judges who lack an occupational pension have grown more aware of the key shortcomings in the system of social security for judges in connection with the lack of pension. The Estonian Association of Judges has also been engaged actively with these problems, launching discussions within the judiciary and raising the topic in talks with Ministry of Justice and the parties in parliament.
Description of the 2013 reform
On 1 July 2013, the social security arrangements for judges changed significantly. The package of amendments to three acts – the Temporary Provision for Payment of Salaries Tied to the Average Wage in Estonia Act, the Salaries of Higher State Servants Act and the Courts Act – affected all categories of official pensions for judges – retirement pension, the pension for years earned, pension for incapacity for work and the family member’s pension for loss of breadwinner.
As a result of the amendment, judges in office on 1 July 2013 retained the right to the judge’s old-age pension and pension for years earned. That means that judges who had earned the relevant pension continued to receive it. Nothing changed for those not yet eligible for pension but already in office before 1 July 2013 – they can earn the judge’s old age pension and pension for years earned on the same conditions as before. As a result of the reform, payment of the judge’s pension for incapacity for work and the family member’s pension for loss of breadwinner was ended for both old and new system judges. The removal of the loss of breadwinner pension for judges serving before 2 July 2013 was deemed unconstitutional by the Supreme Court. For judges who were appointed after 1 July 2013, no judge’s pension in any of its forms was granted. They have the right to a pension on the basis of the National Pension Insurance Act, which takes into account the entire employment period for individuals. If new system judges suffer an accident at work, they are entitled to a pension for incapacity for work and their dependents have the right to a pension for loss of breadwinner on the basis of the National Pension Insurance Act.
Thus, for judges appointed after 1 July 2013, the old procedure for paying occupational pensions to judges ceased to be in force and the a three-pillar pension system applies to them, as it does to most other people. Whereas the amount of the judge’s old-age and earned years pension is 75% of the official judge’s salary in the corresponding tier of the judicial system (gross salary for a first-tier judge as of early 2023 is 4746.99 euros, i.e. the old-age pension is 3560 euros), the average Estonian pension in 2022 was 595 euros. This April, factoring in an extraordinary pension hike and a basic exemption on the average old-age pension, the average pension will rise to 704 euros.
At the time of writing, the difference between the first-tier judge’s old-age pension and Estonia’s average pension (first pillar) was about sixfold – a very big discrepancy. Since in addition to the old-age and earned years pension, old-system judges also can continue in the second pillar of the pension system, the difference between pension provided by or contributed to by the state is noteworthy between the two groups of judges – the state guarantees 79% of their occupational salary (75+4) of the old system judges while the new system judges only are guaranteed 4% of their salary in addition to the first pillar of the pension system – and even this is only for those who have joined the second pillar of the pension system.
Considering that salaries, official restrictions and other conditions (such as the ceiling on service age) remained the same for both groups of judges, this raises the question of whether making a distinction between the two groups of judges was what the legislators intended and if so, what the rationale for it was.
66th session of the court administration advisory board
In talking to the professional community about the topic of social security for judges, I have heard explanations from older colleagues that the reform was something the judges themselves approved and was done for the sake of a salary raise.
To check this claim, I used the written sources at hand. Colleagues who have served in the profession longer than I referred me to the minutes of the 66th session of the Council for Administration of Courts. The Council for Administration of Courts’ two-day session in question was held on 20-21 September 2012 at Maria Farm in Pärnu County. The topic of collateral for judges was not on the agenda as originally announced; it was inserted as additional agenda item 7.1 The chairman of the session, then Supreme Court chief justice Märt Rask, provided the following reasoning for adding to the agenda at the start of the session: “The Cabinet has again started discussing budgetary matters and in this connection it would be a wise idea to shape the advisory board’s position in regard to judges’ salaries.“ The corresponding agenda item was given the title: “Judges’ salaries – on the basis of clause 41 (3) 4)”.
Rask’s introduction to agenda item 71 reveals that on 13 August 2012 he received Minister of Finance Jürgen Ligi’s proposal not to postpone the implementation of Salaries of Higher State Servants Act (the law was supposed to come into force in spring 2011 but due to the great recession, it was repeatedly postponed), “however, the implementation of the act is linked to indexing judges’ pensions and abolishing occupational pensions for judges entering the judicial system starting 1 January 2013.“ Based on the positions of those who spoke at the session, this appeared to be a new and unexpected airing of the topic.
Then-Supreme Court justice Lea Kivi asked: “Is the supreme body of the Estonian judiciary in such a state that the chairman of the Council for Administration of Courts is orally reporting on conservations in which it is learned that three ministers have proposed a package to the cabinet pertaining to the sustainability of the entire judiciary or development possibilities; with one of them being the minister responsible for the judicial branch? I would like to ask what prevented the justice minister from notifying the advisory board that such a proposal is being made to the cabinet and explain exactly what the proposal contains? Why couldn’t the proposal be discussed beforehand with all judges, not only with individual elected representatives who in practically 15 minutes have to make a decision in respect to not just themselves but all of their future colleagues?” Rask responded: “In my opinion, we have got so far thanks to the difference between legal and political decision-making processes. You take the matter as it should be. Political decision-making is different by its very nature and for several years now, it does not include negotiating with officials. Additional applications we have submitted in negotiations on the state budget, such as adding an analyst position to the Supreme Court, which we consider necessary for the development of the judicial system, is considered inessential. In reality, the finance minister is the one who says what the judicial system needs. There is a difference between ideal and reality. There is the choice of whether we remain true to our ideals and stand up straight or just accept reality and try to influence decision makers, who perhaps understand what decisions reality requires be taken.“
As the minutes of the rest of the session show, the advisory board decided to “accept reality” and a vote was held as to whether the board considered it necessary for the Salaries of Higher State Servants Act to come into force on 1 January 2013 such that the occupational pension in its existing form does not extend to the judges being appointed in future and the occupational pensions of the judges in office are indexed. All of the members with voting rights who participated in the discussion (8) were against and there were no neutral votes. Thus, all of the participants in the session were in favour of abolishing the judge’s pensions for the judges to be appointed in future.
One reason, as the minutes show, was the salary hike which was used as a sweetener for the judges. By that time, the judges’ salaries had been frozen for six years. Understandably, the situation caused disgruntlement among the judges and meant the unpleasant prospect that the salary rise would be postponed.
The situation was summed up by chairman of the parliamentary justice committee, Marko Pomerants: “The likeliest scenario is that the status quo will be retained, salaries will not be raised and the pension system will not be changed. The cabinet was certainly not in favour of judges’ salaries being raised, but nothing was done against it. At the end of the day, there was no difference in spending whether special pensions would be retained or paid directly to the pension system, because if the salary is higher, then it is possible for one to make a larger pay-in to the pension fund. It is the same expense for taxpayers.” Then Supreme Court justice Henn Jõks said: “This decision cannot make our future worse. Special pensions will be abolished one way or another; the proposed option is the most painless one. The question is, whether and when salaries will recover.“
At the proposal of then Tallinn Administrative Court judge Tiina Pappel, the phrase “in the current form” was added to the wording of the decision, since, as the minutes indicate, Pappel was spoken to on the way to the advisory board on this topic by undersecretary of the Ministry of Justice Marko Aavik, who said that if the occupational pension was abolished, the state would probably start making contributions to the pension fund in order to guarantee judges’ pensions. Pappel opined that whether or not it happened, the advisory board should, in making its decision, give up this possibility. The other participants agreed to this change to the formulation.
Thus, quite unexpectedly, the topic of judges’ salary became a topic of social security and in the course of discussing one agenda item inserted into the agenda under in extraordinary fashion led to consensus in the board that judges’ occupational pensions for future judges should be sacrificed “in the interests of sustainable development of the judicial system”. Reading the minutes, one might well ask why the judge members of the board (of whom two were alternate members) upon the information they heard prepared to adopt such a fundamental decision without the topic have been discussed more widely among judges. That Board decision was later treated in parliamentary proceedings on the relevant bill as the position of the judge corps. Pomerants did note at the board’s session that “if the board adopts the position regarding the package of amendments today, it cannot supersede the positions of other judges” and Rask added that “the position of the Association of Judges will probably come once official notices have been published concerning the decision”, but written sources do not confirm that the association was included in the Parliament discussions or that the association had, at its own initiative, submitted its opinion to the Parliament or to, say the President of the Republic. There is no information on whether there was an attempt to influence decision-makers to abandon the pension reform or make corrections to the cabinet’s plan, and Rask referred to this as well.
From temporary arrangements to permanent regulation
The Temporary Provision for Payment of Salaries Tied to the Average Wage in Estonia Act arose for the purpose of freezing salary hikes for higher officials whose salary was linked to the average wage (including judges) during the recession. The term of validity of the act, which came into force on 1 January 2009 and was supposed to unset on 28 February 2010 was extended repeatedly. Accordingly, the entry into force of the Salaries of Higher State Servants Act was postponed as well. It was originally supposed to come into force on the day the 12th Riigikogu was sworn in, 27 March 2011. The goal of the act was to reorganise the salary system for senior officials and establish a correlation between the salaries for different positions.
The draft amendments to the Temporary Provision for Payment of Salaries Tied to the Average Wage in Estonia Act and Salaries of Higher State Servants Act (279 SE) initiated by the Cabinet on 27 September 2012 was to postpone the salary rise or senior state officials covered by the Salaries of Higher State Servants Act for another year and to extend the validity of the temporary provision for salaries tied to the average wage by a year, until the end of 2013. In the second reading of draft 279 SE, it was supplemented at the proposal of the Constitutional Committee with regulation pertaining to restructuring of judges’ guarantees in the manner we now know – a reform of special and preferential pensions was undertaken.
From the second reading of draft legislation 279 SE, we can see that the addition of section 3 (amendment to the Courts Act) is related to the Cabinet’s operational programme for 2011-2015, and clause 4a envisioned a reform of special and preferential pensions. The explanatory memorandum to draft legislation 279 SE explained that the proposal presented by the Constitutional Committee set forth an exception pertaining to judges, as a result of which salaries of judges are raised starting 1 July 2013 and their special pensions system is changed. The explanatory memorandum makes a reference to the session held on 20-21 September and the unanimous decision of the Council for Administration of Courts adopted regarding agenda item 71 is quoted. Page 2 of the memorandum notes that “since judges’ salaries will rise substantially as a result of the draft act, the judges’ special pension will be restructured similarly to the position of the Council for Administration of Courts.” Readers not up to date with the matter would conclude from the explanatory memorandum to 279 SE that judges have decided themselves through the Council for Administration of Courts to switch special pensions for a (significant) salary rise for judges, as it were. Such an explanation is also widespread among the judges. It sounds like a fair deal. But was it?
Leaving aside the justified questions of to what extent the Council for Administration of Courts could express the opinion of the entire judiciary on this matter and to what extent making the decision to scrap the occupational pensions for judges was in the advisory board’s remit in the first place (social security for judges is not merely a matter of court administration or budget), it should be emphasised that what was treated as a significant salary raise was actually the end of an austerity regime used during the great recession. Judges’ salaries had been frozen for six years, and they had previously been lowered. For other senior state officials, the austerity regime ended on 1 January 2014, the recession simply ended six months earlier for judges. This was portrayed as a salary raise in lieu of special pensions. It was not a fair deal but a bait and switch. Pomerants’s threat at the Council for Administration of Courts meeting should not have been taken all that seriously. Is it plausible that unlike other senior state officials, judges’ salaries would have remained frozen for years to come?
The claim regarding a major salary raise is actually a distortion. The salary of first-tier judges did indeed rise by about 21% on 1 July 2013, but if we take into account the rise in the CPI from the point that the salary was anchored for several subsequent years (2007) and compare it to the time that the salary was raised (July 2013), the change in the consumer prices outstrips the raise. Thus the purchasing power of judges’ salaries did not increase compared to the pre-recession era, but actually fell. The argument in the explanatory memorandum to bill 279 SE – that judges can use the higher salary to shore up their retirement – is unfounded.
Secondly, talk of a salary hike in exchange for abolishing special pensions is also fallacious because the salary raise affected all judges across the board, but the groups of judges created under 279 SE were affected differently. For the new system judges, the salary raise did not mean that their income grew, but the opposite – the raise (and more) would have to be invested to ensure a comfortable retirement. The judges who were serving before 1 July 2013 – who retained the right to special pension and the right to take part in the second pillar of the pension system with a related contribution from the state, faced a different situation compared to new appointees following 1 July 2013, who lacked a judge’s occupational pension and who, considering the significant restrictions on activity, essentially had the sole option for securing their retirement of participating in the second and third pillar pension schemes, which are based on personal savings. In the case of the second pillar, the state does pay in 4% of the social tax but the pension paid from the first pillar is decreased if the second pillar is active. This as well is different compared to the old system judges, whose special pension was not reduced.
As an example, here is a rough calculation using the pension calculator on the Social Insurance Board’s website. Considering date of birth (3 June 1978) and the current salary of first-tier judges (gross salary 4746.99 euros), we can calculate the approximate future pension. Assuming that a participant joined the second pillar as early as it became possible (2006), payments were not halted and taking the average value of the third pillar Pension for those aged 18-60 as of late 2022 (3721 euros), we see that 1845 euros (i.e. half of first-tier judges’ current net salary) would have to be paid in into the third pillar monthly to obtain the current first-tier judges’ occupational pension of (75% of 4746.99 is 3560.2425 euros).
Although the calculations are given in today’s values and the nuances are more tricky, it does give some idea of the ballpark and the actual impacts of the abolition of special pensions on the judges who were stripped of their occupational pensions. A rather easily predicted consequence of the special pension reform is that the standard of living for new system judges in their retirement worsened. The relevant aim and impact was not acknowledged or assessed in the materials attached to bill 279 SE. The impact of abolishing the security should be assessed in conjunction with other factors affecting the judges’ service, such as the guarantees of independence protected in the Constitution, extensive occupational restrictions, the age limit for judges, and so on. The explanatory memorandum to draft 279 SE discusses the occupational pensions through the prism of saving on state budget spending and the need to abolish special pensions, but this is just half of the equation.
The other half of the calculation was omitted. The question not answered was how such major differentiation between two equal groups could justified – in the case of one group of judges, the state can have a pension of up to 100% of the salary, but for the other group it is around 30-40%, depending largely on how well each judge saves their money and financial awareness. If a new system judge has not joined the second pillar, the income gap may be even greater in old age.
A Gender Equality Act precedent
In February 2009, a case related to the Gender Equality Law received media coverage. At the initiative of the Constitutional Committee, Parliament had hitched amendment to the Local Government Election Act pertaining to the electoral system at local elections in Tallinn to a draft amendments to the Gender Equality Act, Equal Treatment Act and the Employment Contracts Act (317 SE). The corresponding amendment proposal was formulated by the Constitutional Committee in the second reading. The second reading of the draft legislation in the Parliament’s plenary session was ended without an opportunity to submit further amendments and the draft legislation went on to the third reading where it was passed in the same form. The President of the Republic vetoed the act with decision no. 440 of 3 March 2009 and sent it back to the Parliament for discussion.
The President recalled to the Parliament that democratic decision-making procedure had to be followed by Parliament as well, and the rules in the Riigikogu Rules of Procedure and Internal Rules Act have more than just a formal meaning. The president emphasised that the parliamentary decisions are legitimatised by the fact that they are passed in proceedings in which all political forces who have received considerable support from the people participate. The head of state considered it a significant distortion of the parliamentary decision making process when as a consequence of violation of the Riigikogu Rules of Procedure and Internal Rules Act, one contingent of parliamentarians was stripped of the possibility of taking part in crafting laws.
A situation where the stewing committee supplemented the draft law with a topic that did not tie in with the one in proceedings and which did not have the least to do with the purpose of the draft law introduced to Parliament, had in the opinion of the President, to be seen as initiation of a new piece of draft legislation and conduct proceedings on it pursuant to the Parliamentary rules of procedure, i.e. with the prerogative of MPs to submit amendment proposals in the third reading, discuss them and put them to a vote in the steering committee and plenary session. The President also stressed that following democratic decision-making procedures in Parliament is especially important for such legislation where Article 104 (2) of the Constitution requires a majority vote in Parliament for passage and amendment. The Courts Act is one such act.
The decision mentioned by the President resonated widely in society. A few years later, the speaker and deputy speakers of the Riigikogu approved, with a decision of 9 February 2012, a document called the “Instructions for Shaping Good Practices in Conducting proceedings on Draft Legislation”. Clause 9 of the instructions, which were inspired by the aforementioned decision of the President, reads: “If the steering committee decides, in consideration of amendment proposals, to significantly modify a piece of draft legislation, above all adding to new regulations with a fundamental importance, they shall make a proposal in the plenary session to halt the second reading in order to enable MPs to submit amendment proposals in regard to the parts changed.”
Draft legislation 279 SE was initiated on 27 September 2012. Its goal was to postpone the salary rise for senior state officials and extend the temporary concurrent provision for paying salaries tied to the average wage in Estonia by a year. The first reading was held in Parliament on 7 November 2012, after which 6pm on 8 November 2012 was set as the deadline for amendment proposals for the bill. None were submitted. However, in cooperation with the Ministry of Justice, Ministry of Social Affairs and Ministry of Finance, the Constitutional Committee formulated, during the second reading, as the explanatory memorandum shows, an amendment proposal pertaining to salaries and pensions of judges. The topic of special pensions of judges did not come up in plenary session on the second reading. The second reading was ended on 30 November 2012 without interrupting the discussion and without setting a new term for amendment proposals. The third reading and passage of the bill was held on 12 December 2012. The factions did not deliver remarks in the negotiations. The elimination of these social guarantees for judges took place in silence.
Why did the removal of the social guarantees have to be decided with such urgency and without following the Parliament’s own good practices for proceedings on legislation? This is not known. Nor is there any indication of representatives of the judiciary being included via the Association of Judges in the discussions on bill 279 SE in the Constitutional Committee. This was mentioned by both Pomerants and Rask at the meeting of the advisory board. Public sources give no indication that the Association of Judges expressed a protest against the reform or the manner in which it was accomplished – after all, it would be hard for the President of the republic to deviate from his previous practice. It leaves the impression that the outcome was accepted. Perhaps a reference was made to judges or the judges themselves concluded that no changes or compromise could have come at the expense of the old system judges’ benefits? It is also worth mentioning that during the deliberation of 279 SE, the chairman of the Constitutional Committee was the former chief justice.
The situation as it now stands and why it is problematic
The changes to the Courts Act created two groups of judges, of whom one, the judges appointed before 1 July 2013, enjoy generous social guarantees – an occupational pension, second-pillar pension, plus their official salary, which is not low considering the average income in Estonia. The judges appointed after 1 July 2013 have the first and second pillar pension and their salary. It is possible to voluntarily join the third pillar of the pension system, and the new system judges are personally responsible for providing for their retirement. The difference in the social guarantees for the two groups, otherwise similar, is vast.
The question is whether legislators are indeed free to set up such an unequal system merely based on legitimate expectations. Does a legitimate expectation also cover combining various pension schemes and can it last 30 years (this is the length of service required for the earned years pension)? What becomes of the new system judges’ legitimate expectation to equal treatment? Did the MPs, due to the deficient evaluation of the impacts and the fact that the impacts are not covered in the materials connected to the draft legislation, even realise that such an unequal situation was being created? After all, it was not the only alternative to abolish the judges’ occupational pensions effective immediately. It would have been conceivable to introduce a solution where the state pays in to the third pillar pension system for the new system judges. Such a solution was devised for prison officials, for example.
The reform of special pensions was not carried out simultaneously for all groups of officials. Active-duty service people, police officials and prosecutors lost their occupational pensions for those who started service on or after 1 January 2020. Thus, there was not such a hurry with proceedings on the topic.
The system creates a different situation and problems in other aspects as well. If legislators have indicated that the judge’s profession is the same as any other and judges are responsible for securing their own retirement, then the extensive official restrictions to which judges are subject should be considered. Judges are not comparable to rank-and-file citizens since judges have limited possibilities to earn additional income besides their official salary. In accordance with subsection 49 (1) of the Courts Act, a judge may not be employed outside the judiciary in other capacity besides teaching or research. Their duties of employment outside the judiciary may also not harm the judge’s performance of official duties or their independence in adjudicating cases.
The restriction in clause 49 (2) 3) of the Courts Act – judges may not be a founder of a company, a shareholder or partner in an executive capacity, a member of a management board or supervisory board – also intensively restricts judges’ possibility to provide for their retirement. This restricts judges’ possibilities to provide for their future through a company, which in the case of a number of investment possibilities is more tax-effective than pursuing them as a natural person. For example, due to taxation reasons, it is more expedient to organise real estate investment and property management of rental property in the form of a company.
There are other fields as well where investment through a company makes better business sense or is less complicated. While Estonia does offer an investment account system for individuals, it has not kept up with developments in the financial world. For instance, the crowdfunding field, which enables microinvesting, is currently not included in the investment account. The selection of shares offered by Estonian banks is also limited and transaction fees are high for investing small sums. Foreign investment platforms, such as the use of Interactive Brokers, allows greater choice of shares and lower trading fees. Due to the fact that foreign investment platforms are not included in the investment account system, it is a hassle for natural persons to declare their gains, since each transaction must be recognised and declared separately.
One possibility for earning additional income is private enterprise. There are various ways to do so without compromising the judge’s main work or creating a conflict of interest. For example, a judge can publish books in the legal field, administer training etc..
Under clause 49 (2) 3) of the Courts Act, and in light of opinions from the judicial ethics council, judges are still effectively barred from being involved in private enterprise. The Ethics Council has ruled that judges may be shareholders in a company engaged in renting out real estate but besides the formal restrictions arising from legislation there is also a prohibition on being involved in legal advisory or holding any position in a company. Thus, a judge may be a silent partner in a company and is not allowed to play an active role, even in a family business – or at the least it is frowned on. A judge may take part in the management of a non-profit provided that they do not receive remuneration for their activity. As to whether a judge adjudicating a criminal case can prepare, for a fee or for free, a legal analysis for the Tax and Customs Board in a matter pertaining to criminal proceedings, the ethics council responded that judges should refrain from such activity and acknowledged that if opinions were published in the context of teaching or research, this would be permissible under subsection 49 (1) of the Courts Act. Thus, judges have limited opportunities to earn income to supplement their occupational salary.
When acting as an investor, judges must make sure that their activities meet the standards of proper conduct and honest business activity and not cast aspersions on the judge’s profession. This raises the question of whether a judge may hold shares in fields of activity that are considered vices (tobacco and alcohol producers, casinos etc.) or issue consumer loans through a crowdfunding platform or whether they are obliged to refrain from such activities.
Another problem that was starkly revealed by the loss of judge’s pension was dismissal from the profession on the grounds of passing the age limit. Under subsection 991 (1) of the Courts Act, judges must retire upon turning 68. The age limit may be raised with the consent of the Supreme Court en banc’s advisory board and the individual judge if there is an o overriding public interest from the standpoint of functioning of the justice system. The problems a judge might face in making ends meet in their retirement presumably are not such an interest. From 2027 on, the general retirement age is liked to changes in the expected life expectancy of 65-year-olds (subsection 71 (1) of the State Pension Insurance act). It is in no way impossible that for today’s judges in their 40s, the retirement age and the age limit on service will coincide, i.e. they will have to retire as a judge upon becoming eligible for pension.
The doctrine of sufficiency
The “big salary hike” that judges received in July 2013 did not last long, since peculiarities of the Salaries of Higher State Servants Act index led to a lowering of judges’ salary effective 1 April 2016 compared to the year before. The judges of Tartu County Court appealed this to Tartu Administrative Court Tartu (administrative matter 3-16-1709). Tartu Circuit Court declared subsection 2 (2) of the Salaries of Higher State Servants Act unconstitutional and ruled it was not applicable to the extent that it allowed county and administrative court judges’ occupational salary to be lowered in respect to the previous year.
The Supreme Court’s Constitutional Review Chamber emphasised in its decision on the matter that one constitutional guarantee for judges is a sufficient salary, which is supposed to ensure their independence, impartiality and competence and compensate for the restrictions owing to the judge’s status, such as the limited opportunity to perform other work aside from service as a judge. As to whether a salary is sufficient for the purposes of the Constitution must be determined in each specific case in light of the other guarantees provided for the judge, the restrictions on activity level of responsibility and other factors.
It should be noted that establishing a sufficient salary for judges is, among other things, a parliamentary budgetary policy decision, in which legislators have a certain amount of leeway as provided for by the Constitution. If the debate about whether a specific salary level is at the constitutionally required level has gone to court, courts are justified in deciding on judges’ salaries to respond to cases of clear and apparent insufficiency or attempts to use salary to influence the judiciary (point 44 of the decision).
The Supreme Court also noted that the combined effect of Articles 15, 146 and 147 (4) of the Constitution protects judges only from salary reductions that result in situations where their independence, impartiality and competence are not protected to the minimum necessary degree, i.e. the salary is not sufficient to safeguard these constitutional values (point 47 of the decision) The Supreme Court declined to grant the petition, since the Circuit Court had not declared the act unconstitutional or raised the question of unconstitutionality before the Supreme Court in the sense that the judge’s salary established on the basis of the act would have been insufficient for ensuring the independence, impartiality and competence of the judge. The Supreme Court noted that the Circuit Court had explicitly ruled that the salary level was at the limits of what is permitted by the Constitution (point 48 of the decision).
Thus, it is up to subsequent case law to determine the substance of the doctrine of sufficiency. It will be fascinating to observe the pricing of the guarantees for judges’ independence and various occupational restrictions, which this approach inevitably presupposes. It will be easier in the case of the prohibition on enterprise (such as comparing investment into real estate as a private investor or other monetarily appraisable activities (such as giving up a dream role as an amateur actor, if it is paid work). As to whether and to what extent, personal sacrifices such as not attending a child’s birthday party are worth compensation, it should be an intellectually interesting discussion.
The abovementioned Supreme Court decision may however be criticised from the aspect that it overlooks the reality as of 1 July 2013, which meant that the judge’s salary remains their (only) pension guarantee following the elimination of the occupational pension. For the “new system judges”, 1 July 2013 meant a de facto significant drop in income and any reduction in a judge’s official salary (or a pay raise that fails to keep up with the increase in the CPI) means for them potentially a more meagre retirement. We can no longer treat judges as a uniform group in the sense of social guarantees. I believe the Supreme Court should have devoted attention to this question.
Conclusions, questions and observations
- The advisory board’s session of 20-21 September 2012 is a sad milestone in the history of the Estonian courts. A small circle of individuals made a decision with a profound effect on the future of the court system – without there being an understandable need for it. The participants may not necessarily have foreseen that their opinion might be used against the courts system’s interests later, but even in the ethical sense alone, it is questionable to sign off on a “sacrifice” that does not affect the decision-makers themselves but only their future colleagues who had no opportunity to protect their interests.
- The standards of good legislative drafting were violated in the proceedings on removing the social guarantees for judges. For one thing, the rules of conducting proceedings on a bill as stipulated in the Riigikogu Rules of Procedure and Internal Rules Act were not followed. Secondly, the judges’ advocacy organisation was not consulted. Thirdly, the impacts of the draft legislation were not identified or recognised. It could even be argued that MPs were left with an false impression that judges had themselves voluntarily given up occupational pensions, in exchange for an offer of a pay raise. The explanatory notes to 279 SE do not include information that the guarantees of the independence of judges or social guarantees in general were unnecessary or excessive, i.e. that the purpose would have been to downsize them.
- Since proceedings did not take place in line with the requirements and the influences were not properly assessed, there is not full certainty whether the intent was to estabstablish regulations that create great inequality between groups of judges and where the intensive occupational restrictions do not allow new system judges to do much to supplement their own retirement income. If we affirm such an intention on the part of the legislators, there is reason to ask whether the legislators were free to establish a system that creates such extensive inequality between similar groups. Why were the alteratives not discussed or analysed – for example whether the state the make contributions to the third pillar of the pension system for the new system judges?
- In its judicial practice, the Supreme Court has considered the judge’s occupational pension to be a guarantee of the independence of judges, noting that due to the restriction on working in other positions, judges have few possibilities to earn additional income. Thus, the judges’ occupational pension is also a surety of their independence and serves to compensate the restrictions. Can the abolition of a guarantee of independence in the absence of offering anything to replace it be considered constitutional? Without simultaneously changing the age ceiling or occupational restrictions and other conditions? Court disputes to be held in future will give an answer.
- Can a salary also be a pension guarantee, considering the specifics of the judge’s profession? Or does the benefit offered have to be distinguishable and individualisable to qualify as a social guarantee? Can a salary really be a pension guarantee if the salary is the same for different groups of judges, joining the pension pillars is voluntary and the existence of a social guarantee depends on the ultimate individual’s own financial behaviour, awareness and abilities? It is not only possible to make money through investing; losing money is also possible.
- What to make of it if goods sold in stores were 20% more expensive for you and you alone and purchasing certain groups of goods is prohibited entirely? That is the reality for judges who have enough enterprisingness to earn additional money for their retirement. The prohibition on doing business and taking part in management of companies is an important distinction compared to rank and file citizens, when it comes to everyone’s freedom and responsibility to provide for their future. The basic principle of occupational restrictions on judges and interpretation practice is not “money is free” but rather “money corrupts”.
- The doctrine of sufficiency presumes that a judge’s guarantees of independence and occupational restrictions can be appraised monetarily. It is possible to calculate how many euros of losses they sustained if they had to act in the capacity of a natural person instead of a company in renting out an apartment. It is also possible to put a number on the price of an amateur actor forgoing a paid role. A judge’s position means limitations and restrictions in judges’ private lives as well, and these restrictions are often impossible to measure in monetary terms. Inevitably we can conclude that the status of a judge is special due to the nature of the judge’s professional activity. This status means the need for corresponding guarantees.
- Supreme Court practice has not yet acknowledged that we have two different groups of judges, one of whom has to rely on their salary for their pension. Any sort of salary reduction and wage growth that falls short of purchasing power has a negative impact on the ability of new system judges to cope in their retirement.
With some irony, the article could be summarised by saying that many of the new system judges can look forward to an austere but ethical retirement. The elimination of social guarantees for judges took place as if in passing, as if it did not have a deeper meaning or content. The world around us offers a number of examples of attempts to neutralise or rein in independent adjudication. In the EU, Poland and Hungary stand out, and developments in our large eastern neighbour demonstrate vividly what sort of form a government can take when independent judicial oversight is lacking.
The guarantees of judges’ independence are thus no less salient, rather they are more salient. I believe that the judges’ social guarantees should be deliberated more and the errors must be corrected. Already with a piece of legislation on status of judges, established before the Constitution came into force, it was stipulated that the income of a judge in their retirement, taking into account guarantees of their independence, should be 75% of their salary. The principle, which has been in force for more than 20 years, had never been in doubt. The change in this long-established covenant would have required an honest, transparent proceeding that would have taken into account all aspects of the impacts but this did not happen. I believe that we should stick to the proportion.
It is a question of political choices whether to ensure that judges have an income corresponding to their status through an occupational pension or a three-pillar pension system or by redefining the judge’s occupation and loosening the occupational restrictions, but combining lack of guarantees with intensive occupational restrictions cannot be an acceptable option—the current choice is not sufficient and does not offer judges sufficient guarantees. It is not reasonable to wait for court decisions 10-15 years down the road; action is required immediately. A solution must be found to compensate new system judges the unfavourable impacts that have arisen from the 2013 reform. Going forward, it would be wise to make contributions to the third pillar of the pension system. Reinstating occupational pensions in a situation where they have been or are being abandoned is not necessarily required. Some of the new system judges also lack enough years of service to have earned the right to an occupational pension.
 Source: Supreme Court Human Resources and Communications Department.
 See Supreme Court Constitutional Review Chamber 22.10.2015, 3-4-1-21-15;RKPJKo 16.03.2021, 5-20-7/12.
 The average old-age pension will rise more than 100 euros next year. 23.08.2022, err.ee. – https://www.err.ee/1608692932/keskmine-vanaduspension-kasvab-tuleval-aastal-enam-kui-100-euro-vorra (18.02.2023).
 If judges born in 1982 and earlier who were appointed to the bench after 1 July 2013 had not joined the second pillar of the pension system by that time, they did not have the possibility of joining it either, until the reform of the second pillar, i.e. January 2021; the only option was to start saving for retirement through the third pillar (see Section 66 of the Funded Pensions Act.
 Record of the 66th session of the court administration advisory board. –https://www.kohus.ee/sites/default/files/dokumendid/66._protokoll_20.-21.09.2012.pdf (18.02.2023).
 Draft legislation 279 SE and explanatory memoranda can be found at https://www.riigikogu.ee/tegevus/eelnoud/eelnou/68593dc8-70a9-46fd-ad60-e26eb790b409/Eesti+keskmise+palgaga+seotud+ametipalkade+maksmise+ajutise+korralduse+seaduse%2C+k%C3%B5rgemate+riigiteenijate+ametipalkade+seaduse+ja+kohtute+seaduse+muutmise+seadus (19.02.2023).
 In 2009, due to the worldwide recession, the Temporary Provision for Payment of Salaries Tied to the Average Wage in Estonia Act was established which retained the coefficients for salaries of public servants appointed by the Parliament and the President but instead of the average monthly wage for the previous year, the product of the 2007 average wage and 0.92 was used as the starting value. As a result, the salary of higher state servants governed by the relevant legislation dropped by an average of 8%.
 According to the calculator at (https://www.stat.ee/en/find-statistics/statistics-theme/finance/prices/consumer-price-index) the change in the CPI from Q4 2007 to Q2 2013 was 23.2% (18.02.2023).
 See the course of the proceedings on the draft amendments to the Gender Equality Act, Equal Treatment Act and the Employment Contracts Act (317 SE): https://www.riigikogu.ee/tegevus/eelnoud/eelnou/aaf3028b-cc39-c70b-dcb9-cec36a4d0e9c/Soolise+v%C3%B5rd%C3%B5iguslikkuse+seaduse%2C+v%C3%B5rdse+kohtlemise+seaduse%2C+Eesti+Vabariigi+t%C3%B6%C3%B6lepingu+seaduse%2C+kohaliku+omavalitsuse+korralduse+seaduse+ja+kohaliku+omavalitsuse+volikogu+valimise+seaduse+muutmise+seadus (19.02.2023).
 Juhised Riigikogus seaduseelnõu menetlemise hea praktika kujundamiseks. Approved by the Board of the Riigikogu with decision no. 30 of 9 February 2012. – https://www.riigikogu.ee/wpcms/wp-content/uploads/2014/11/Juhised-Riigikogus-seaduseeln-u-menetlemise-hea-praktika-kujundamiseks.pdf (19.02.2023).
 See: Kristi Saare. Eraisikuna investeerimine vs. ettevõtte alt investeerimine. (Investing as an individual vs. investing through a company.) – https://kristiinvesteerib.ee/eraisikuna-investeerimine-vs-ettevotte-alt-investeerimine (18.02.2023).
 Opinion of the judges’ ethics council to questions asked (January 2023see “Kas kohtunik võib olla osanik osaühingus, mis tegelebüürimisega?” (can a judge be a partner in a company engaged in rentals?). – https://www.riigikohus.ee/sites/default/files/elfinder/Eesti%20kohtus%C3%BCsteem%20(ja%20seal%20olevad%20failid)/eetikan%C3%B5ukogu/Eetikan%C3%B5ukogu%20arvamus%202023.pdf (18.02.2023).
 Ibidem: „Kas korteriühistu liikmena võib kohtunik tasu saada?“ (Can a judge receive remuneration as a member of the board of an apartment association?)
 Opinion of the judges’ ethics council to questions asked (2022), see „Kas kriminaalasju lahendab kohtunik võib tasu eest või tasuta koostada Maksu- ja Tolliametile õigusliku analüüsi kriminaalmenetlust puudutavas küsimuses?” (Can a judge adjudicating criminal matters prepare a legal analysis for the Tax and Customs Board, either for a consideration or not, in a matter pertaining to criminal proceedings?) – https://www.riigikohus.ee/sites/default/files/elfinder/dokumendid/Eetikan%C3%B5ukogu/Kohtunike%20eetikan%C3%B5ukogu%20vastused.pdf(18.02.2023).
 V. Saarmets. Courts Act. Annotated edition. Kirjastus Juura, 2018. comment on § 49, para 7, p. 249.
 See Supreme Court Constitutional Review Chamber 08.05.2018, 5-17-43/12
 As to whether a judge can take part in a film shoot if it is remunerated, the judges’ ethics council said yes, while noting that the role being cast should not depict anything unlawful or amoral. – https://www.riigikohus.ee/et/kas-kohtunik-tohib-osa-votta-filmivotetest-mille-eest-makstakse-tasu (18.02.2023).
 The ethics council was asked whether, if the children of a judge, prosecutor and advocate all attend the same kindergarten class, a judge would be within the ethical requirements to take part at such as a birthday party of such children. The ethics council noted that the determining factor is not whether the birthday party takes place at home, in a playroom or elsewhere. The objective impartiality of the judges may be called into question when the advocate or prosecutor has a matter in progress being heard by the same judge. The child may attend the party but a parent who is the judge must skip the event, in the opinion of the judges’ ethics council. –https://www.riigikohus.ee/sites/default/files/elfinder/dokumendid/Eetikan%C3%B5ukogu/Vastus.pdf (18.02.2023).
 The state contributes severalfold greater matching percentage of the salary in the case of old system judges – 4% is added to the occupational pension (75% of the salary) in the context of the second pillar. Moreover, the special pension is not offset by the second-pillar payments. This is done in the case of new system judges, whose first pillar disbursements are reduced if they are enrolled in the second pillar. In the new system, judges have the right to a pension supplement for raising children equally with other so-called standard pensions, but this happens only in the case of judges who meet the established conditions and does not level the major pension gap.
 The Supreme Court has considered the occupational pension of judges to be subject to protection under the fundamental right of equality (see Supreme Court en banc 26.06.2014, 3-4-1-1-14, para 106–109, Supreme Court Constitutional Review Chamber 23.02.2023, 5-22-12/19, para 34).
Supreme Court en banc 26.06.2014, 3-4-1-1-14, paras 96 and 97.