ANDREJEVA v. LATVIA JUDGMENT 7 II. RELEVANT DOMESTIC LAW AND PRACTICE A. Provisions on the calculation of State pensions 1. Soviet law (before 1991) 25. Before 1991, persons resident in Latvian territory were covered by the same social security scheme as the rest of the population of the USSR. In particular, the pension system at the time was based not on the contribution principle but on the solidarity principle. All pensions were paid from Treasury funds, a portion of the State’s revenue being set aside for pensions. More specifically, employees themselves were not subject to social tax, which was paid by their employers. The social-insurance contributions paid by the various employers were transferred via trade unions to the USSR Treasury, managed by the USSR State Bank. Those funds were then redistributed among the SSRs for very different purposes, including the payment of retirement pensions, and the amount of a pension did not depend directly on the amount of tax previously paid to the tax authorities. There was also a personal income tax, part of which was paid to the USSR central tax authorities and the rest to the local tax authorities of the relevant SSR. However, personal income-tax revenues were practically never used for pension payments. 26. The Government provided the following description of the Soviet social security system, taken from an encyclopaedic dictionary published in 1970: “Contributions by enterprises, institutions and organisations for the purposes of social insurance are calculated on the basis of a set percentage of the wage fund and distributed among the various trade unions according to the nature and importance of work in the sector concerned. These contributions form the social-insurance budget, which is part of the USSR State budget. The State social-insurance budget is approved by [the All-Union Central Council of Trade Unions] and is managed by trade unions. ... Retirement pensions for pensioners who continue to work are likewise paid from the social-insurance budget (those who no longer work receive their pensions from the State social-insurance budget constituted through funds allocated by the State and kolkhozes). ...” 27. The rules governing social security mainly fell within the general sphere of labour law. The main legislative instrument in this area was the Act of 15 July 1970, which established the basis for labour legislation in the USSR and the SSRs (Основы законодательства Союза ССР и союзных республик о труде). The Act was incorporated into the SSRs’ labour codes almost in its entirety, with the exception of the special provisions devolving powers to local legislatures.