Annex 5, Annex 3
Letter from Mr R J O'Neill, Government
of Gibraltar, to Mr C J H Keith, South European Department, Foreign
and Commonwealth Office, 25 November 1979
SPANISH WORKERS
IN GIBRALTAR:
PENSIONS AND
SOCIAL SECURITY
ENTITLEMENTS
1. I am most grateful to the expert Government
Departments in Whitehall for agreeing to see Charles Gareze and
myself on 3 and 4 December to discuss the question of the pension
entitlements of former Spanish contributors to the Gibraltar Social
Insurance Fund, in the context both of a general settlement with
Spain as a result of reopening the border and of Spain's probable
entry into the EEC.
2. We face two problems. The first is what
to do about unclaimed benefits "due" to Spanish nationals
since 1969. You will remember from past dealings between the British
and Spanish Governments and most recently from the last meeting
of the Joint Working Party with Spanish officials on the Gibraltar
question generally, that the Spanish Government maintain that
Gibraltar remains liable for uncollected benefits under the Gibraltar
Social Insurance Scheme since 1969. The strict answer to this
is that under Gibraltar law all benefits must be claimed within
one year (within six months, prior to 1972) and they are foregone
if not claimed within that time. It is not the Gibraltar Government's
fault that pensioners and others have not come to Gibraltar to
collect their benefits. There is nevertheless a possible case
for accepting some moral liability, in the context of a reopening
of land and sea communications under conditions favourable to
Gibraltar; and a much stronger case for accepting some such liability
if we could at the same time dispose of the much larger and much
more serious problem of Gibraltar's obligations towards former
Spanish contributors to the Social Insurance Fund (SIF) who have
not yet reached retiring age.
3. Here, the problem is the sum of a number
of factors: the preponderant number (66 percent) of Spanish contributors
to the Fund before 1969, when as I understand it contributions
were compulsory for Spanish workers but not for all Gibraltarians;
the fact that there are now fewer contributors to the Fund than
in 1969, because of the changed nature of the workforce since
the border closed; the absence of any continuing contributions
from the former Spanish contributors since 1969, and currently;
the very steep increase in both contributions and benefits between
1969 and 1979; the fact that, on one view reasonably enough, contributions
have in recent year's been allowed to decline in real terms, to
cover only the Fund's current commitments; and the fact that once
Spain is in the Community(or at the latest, I suppose, at the
end of some kind of transitional period) there must be no discrimination
between resident Gibraltar and non-resident Spanish beneficiaries.
In 1978 we estimated that this would increase the annual rate
of payments from the SIF from £1.5 million at present to
about £4.3 million.
4. Gareze and I would like to discuss in
London the steps which would be necessary if we have to prepare
ourselves to accept those obligations; and we should also like
to discuss possible ways of coming to a settlement with the Spanish
Government under which they would take over the accrued pension
entitlement of former Spanish workers in Gibraltar who are now
contributors to the Spanish social security scheme.
5. A settlement with Spain in the form of
a single capital payment could be highly advantageous to Gibraltar
and also of interest to Spain. (It goes without saying that it
would only be of interest to Gibraltar if it was less costly than
making in due course all the payments ourselves). Frank Brown
did some work in the early 1970s on the level of total contributions
to the SIF up to 1972 in respect of Spaniards and the benefits
paid to them up to that date. That gave a credit balance in their
favour of £538,230. I sent you with my letter of 3 November
1978 a table showing how this sum stood on 30 June 1978. The excess
of contributions over benefits paid was then £414,566. I
enclose a further copy of that table.
One basis of settlement with Spain might be
to pay over that sum, but I would not expect it to be acceptable.
A further basis might be to pay interest on the contributions
in respect of Spaniards; in November 1978 we estimated that that
could produce a figure of about £1,500. A third approach
would be to attribute to Spanish participants in the Fund a share
in the overall growth of the Fund proportionate to their numbers.
I attach as Annex A,[60]
to this letter a note by Gareze showing what the effect of that
would be. Disregarding payments we have already made to Spanish
beneficiaries, it gives a figure of some £2,300,000. This
should be seen against the Fund's 1979 balance of over £6,000,000.
Yet another approach is one which the Spanish Government themselves
put forward in 1971 and which I think deserves further exploration.
It was that the Gibraltar Government should pay over the actuarial
sum necessary to cover all pensions payable by the date of the
settlement (presumably because no further contributions could
be expected) together with the total of employer's and employee's
contributions for all persons who had not yet reached retiring
age plus accrued interest on them. I do not know whether the Spanish
Government would still accept such an approach but it appears
to me to make good sense as well as being relatively simple to
work out.
6. I hope that we can discuss all these
approaches to the problem whilst we are in London, together with
any others which you have been able to devise. We should also
like to talk further about the difficulty we identified in 1978,
that the obligations of the SIF are towards individual contributors
and that it might be difficult to transfer their interest in the
Fund to the Spanish Government or a statutory Spanish social security
scheme.
Government Secretariat
Gibraltar
23 November 1979
60 Ev 50-51 Back
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