Two or three things to know about pensions

Dominique Seux

Posted Sep 28, 2022, 7:59 PM

It is not certain that the whole of France awaits this decision with feverishness, but the political, economic and trade union microcosm does! A dinner of the majority, located at the Elysée, must decide this Wednesday evening the delicate question of the method to be adopted on the pension reform: an ultra-rapid amendment to the Social Security Budget, an ad hoc text at the start of 2023 or a 3rd way? It is this, as we know, that holds the rope.

The newsrooms of Paris and Navarre were buzzing even this afternoon with an announcement at the start of the evening… 2022-early 2023. Advantage: Article 49.3 is legal, the debates are limited in duration in Parliament and this makes it possible to consult for a few weeks.

However, the government should not communicate on the merits, precisely to show that it is listening – even if it has no illusions. The main scenario on the table is that of a legal age raised from 62 to 63 by the end of the five-year term, the 64-year limit being postponed, at best, to a later date. Exit therefore that of 65 years. But the rise of the extension of the contribution period would be accelerated.

Atypical situation

The objective of the public authorities is to bring 8 billion euros into the coffers, said Gabriel Attal, the Minister of Public Accounts, on several occasions. But beware, this envelope is understood to be gross, before the financing, for example, of the increase in the minimum pension. How much will be left at the end? We will have to compare the figure to the 345 billion euros represented by pension expenditure today….

The challenge of the reform is to correct the atypical situation in France. “France is the second country (after Italy) where the share of pension expenditure (public and private) in GDP is the highest”, writes the Pensions Orientation Council in its latest report. He adds that in “between 2002 and 2021, pension expenditure increased by 2% on average per year in real terms, that is to say in addition to the evolution of prices”.

An earlier start than in …1980

The result is that our country devotes 13.8% of its gross domestic product to pensions and that this ratio will increase until 2032, before stabilizing or decreasing (if, codicil always passed over in silence, that the standard of living of pensioners decline). As for the financial balance, the COR indicates that after “having recorded surpluses in 2021 and 20 22, the pension system would be in deficit on average over the next 25 years”.

The average retirement age is 62.9 years in the private sector, and 62.3 years taking into account all the mandatory schemes of the pension system (including schemes for self-employed and special diets). This last figure should be compared to 60.5 years in 2010. And above all, it is still slightly lower than it was at the start of the 1980s, when life expectancy has increased significantly.

25,000 centenarians!

The logical result of this set of elements is that the duration spent in retirement is 27.1 years for women, while the average observed in OECD countries is 23.8 years – and 23.5 years for men (OECD average: 19.5 years). On December 31, the general private regime (CNAV) listed 25,400 centenarians (including 3,800 men), including 70 retirees over 110 years old!

The paradox is that one of the subjects which has occupied the most public debate for years, arduous work, is one of those which has for the moment the least concrete effect. The number of people who have used “difficulty points” is only 3,925 – but this will increase. Last year, 126,000 early departures for long careers were recorded, however, or about a fifth of total departures.

Bankruptcy ?

There is no doubt that Emmanuel Macron’s desire to reform pensions with an application from July 1, 2023 will appear to a certain number of French people as an obsession since he has been talking about it since 2017 without having succeeded (and changing project). However, they should remember that all the reforms without exception have been fought step by step for 30 years (except by the CFDT).

But where would pensions be if we had stayed at 37.5 years of contributions (before 1993) and at the retirement age blocked at 60 (before 2010)? They would be bankrupt, knowing also that the level of compulsory levies is high in France. This singularly relativizes the arguments of the opponents.

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