Constitutional Court Upholds Pension Cuts for Cohabiting Divorced Spouses

The Constitutional Court has ruled that regulations allowing the termination of pension payments for divorced spouses living together are consistent with the Constitution, rejecting the request for annulment.

Tightening the Fiscal Grip on Social Security Leakages

This ruling is interpreted as part of a broader strategy to enhance efficiency in social security expenditures and enforce stricter eligibility criteria. The Court determined that de facto cohabitation following a divorce nullifies the status of "need" or "entitlement" as defined in social security legislation.

The "De Facto" Cohabitation Doctrine and Financial Recovery

With the validation of this regulation, financial obligations will now be determined not only by official marital status but by the actual living conditions. The primary sanctions resulting from this decision include:

■The immediate termination of income and pensions for spouses and children found to be cohabiting.

■The recovery of all previous payments made under false pretenses, including applicable interest.

■The expansion of the Social Security Institution's (SGK) audit powers to prioritize the detection of de facto living arrangements.

From a public finance perspective, this decision should be viewed as an "optimization of social transfers." The state is implementing fiscal discipline aimed at minimizing social security leakages and ensuring that resources are channeled to genuinely eligible groups. While this may result in individual income losses in the short term, the macro-objective is to alleviate the actuarial burden on the social security system.