On 25/08/2013, the Supreme Court, sitting as the High Court of Justice, rejected a petition by 685 IDF veterans against the legality of Amendment 27 of the Permanent Service Law – Israel Defense (Pensions) Law [Consolidated Version] 1985 (the “Amendment“), in the matter of changing the method of linkage for IDF pensioners (HCJ 5998/12 Guy Ronen and 684 Others v. Knesset and Others).

In their petition, the veterans argued that the purpose of the Amendment was solely to create budgetary savings. However, they argue, that it erodes the rights of employees pension benefit that was paid over years of service by disconnecting IDF pensioners from their active military career. On a legal level, the petitioners argued that the legislative amendment is unconstitutional since changing the linkage to the Consumer Price Index mechanism (in place of the current system of linkage to active servicemen’s wage index) violates the right to property and honor, since it discriminates against the IDF pensioners by retroactively harming their vested rights that were formulated at the time of their retirement. Finally, the petitioners argued that the process of enacting the amendment was flawed since the veterans were not given the right to be heard on the issue.

The petitioners requested the Court to amend the law to allow for IDF pensioners who retired prior to the date of the implementation of the Amendment to be given the option to choose, within a limited time, whether to subscribe to the new linkage method (Consumer Price Index) or the previous linkage method (linkage to active servicemen’s wage indexation).

In its ruling, the Supreme Court stated that the conditions of a career soldier in the IDF, including retirement conditions and rights after retirement, are linked with the conditions of their counterparts in the civil service, and that this connection is also evident when it comes to the pension linkage mechanism.

The Court further ruled that it does not accept the argument of the petitioners that they were not given the right to be heard and that this constituted a violation of the rules of natural justice. This is because the Knesset is not required to give the petitioners a right to be heard, and that in practice the petitioners did voice their position to army officials and the Knesset.

The Supreme Court ruled that there was no need to decide the petition regarding the normative status of the right to a benefit, and whether it is included in the constitutional right to property. The Court also held that even if they were satisfied that changing the method of linkage of the pension damaged their right to property, the petitioners nevertheless failed to show any damage of their rights, as there was no proof that changing to the Consumer Price Indexation mechanism harmed the situation of the pensioners. The fact that the petitioners sought a choice between the mechanisms of linkage rather than a cancellation of the Amendment shows that they do not believe that the proposed change creates any harm to the rights of property, and definitely not that any damage is a certainty.

Furthermore, the Court noted that weight should be given to the position of the organization “Tzevet” (the Israel Defense Forces Veteran Association) that states that the Amendment provides for pensioners in a balanced and appropriate manner; though if one accepts the claim that the change in the indexation mechanism brings a certain amount of erosion to the pensioners’ benefits, we must examine the alleged harm with the additional benefits provided to IDF pensioners as part of the Amendment. Accordingly, the Court held that the petitioners did not meet the existing burden of proof requirements to establish that there was a violation of their legal right to property.

The Supreme Court rejected the petitioners’ claims of damage in relation to being treated unequally to other sectors, since changing the indexation method is the result of negotiations in relation to the economy which may lead to different outcomes in different sectors. The State intends to apply the mechanism of linking pensions to the Consumer Price Index for other members of the security service, however in their case the change has yet to have been implemented. As for the argument that the petitioners are discriminated against in relation to current army career officers it was determined that since active career soldiers had yet to retire their pension benefits were not a relevant comparison.

The Court also rejected the argument that the law was flawed due to its retroactive application. Despite the fact that the law applied to pensioners who retired before the Amendment took effect it not apply to the amounts of monies paid in the past but will only apply to the calculation of the amount of benefits to be paid in the future.

In relation to the remedy requested by the petitioners, the Court held that in principle it is not the duty of the Court to order the Knesset to pass legislation and that the arrangement proposed by the petitioners undermines the purpose of the Amendment. The proposed arrangement by the petitioners is to create two different options for updating the pension benefits and thus creating uncertainty regarding the economic implications of the arrangement.

Finally, the Court clarified that there is no disputing the importance of career military soldiers to the security of the State and society, derived from recognition of the significant contribution of IDF veterans who have served the country for many years. But, the Court’s position is that the Amendment of the legislation does not represent any disregard to the contribution of army veterans and the importance of maintaining the relationship between the IDF and its veterans.

In view of all the above, the petition was denied and court fees in the amount of 30,000 were imposed on the petitioners.