Ildefonso, an 80-year-old retiree, will have to return 11,939.13 euros to the Community of Madrid after collecting a non-contributory retirement pension of 347.60 euros per month for ten years. The reason, according to the Supreme Court ruling, is that in 2021 he changed his address and went to live with his sister, whose income caused the cohabitation unit to exceed the income limit that the law requires to maintain this type of benefit.
As the ruling of the High Court (available in the Judiciary) explains, the Community of Madrid approved the non-contributory pension at the age of 65, since he did not have the requirements to access the contributory pension and, furthermore, his income was zero. In this way he began to charge an amount of 347.60 euros per month.
Social Security may withdraw the non-contributory pension ex officio and claim the extra amount collected without going to court.
The Supreme Court establishes that subsidy contributions for those over 52 years of age do not count as income for the non-contributory pension
Ten years later, now at the age of 75, he moved to his sister’s house, who declared annual income of 14,397.72 euros in her 2021 tax return. Given that non-contributory pensions compute the income of the entire cohabitation unit, the joint calculation exceeded the 9,586.64 euros that the law set as a limit for that year.
In December 2022, the Department of Family, Youth and Social Policy of the Community of Madrid reviewed the file and, seeing the income, decided to extinguish the pension with retroactive effects to January 2021, and demand the return of the 11,939.13 euros collected during the two years in which they were no longer entitled.
Ildefonso appealed through the courts and the Social Court number 44 of Madrid agreed with him in July 2024 and even the Superior Court of Justice of Madrid, but the Community of Madrid decided to take the matter to the Supreme Court.
For the Supreme Court, it is not a review, but rather an act of management
The question that the High Court had to resolve was whether the Community of Madrid could extinguish the pension and claim the money itself or whether, on the contrary, it should file a lawsuit before the court to do so. The general rule regarding Social Security prevents administrations from reviewing by themselves a right already recognized to the detriment of the beneficiary and requires it to first go through the judge, but the Supreme Court understands that this case falls outside that rule.
The key to the reasoning is the difference between reviewing and managing. When the Administration reviews it means that it reconsiders something that already existed when the pension was granted, for example an error in the initial calculation or a data that was incorrectly valued originally. When the Administration manages, on the other hand, it is simply adapting the pension to a change that has appeared later, in this case an increase in the income of the family unit ten years later. This difference is what allows you to act directly, without first going through court.
Based on this premise, the Supreme Court determines that the termination of the pension and the claim for the money already collected cannot be separated. Doing so, he says, would generate two parallel lawsuits over the same issue. That is why the Administration can agree on both things in the same resolution and demand both the cessation of payment and the reimbursement of what was paid during the months in which the limit was already exceeded. The ruling is aligned with the doctrine that the Chamber itself has been applying since 2009 and that it has reiterated in recent rulings.
This means that any beneficiary of a non-contributory pension who sees his or her economic situation modified, either by moving with a family member, receiving an inheritance or moving to live with his or her partner, can see the benefit terminated directly, without the Administration having to sue him or her first. And, along with the termination, also comes the obligation to return what was collected during the months in which the legal income limit was already exceeded.