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A wind of reform is blowing on pensions around the world

This is the week of truth for pension reform in France. The government of Édouard Philippe should finally unveil this week the outlines of the project of universal retirement points. A project that worries the French many have gone on strike since last Thursday, fearing to see their rights reduced. This system, they hold especially since it is globally one of the most favorable among the OECD countries.

It is the OECD, the Organization for Economic Co-operation and Development itself which says it in a ranking unveiled last week the panorama of pensions 2019.

In France, without taking into account internal disparities, workers retire earlier, retain much of their income from work and are less exposed to poverty. Which does not mean that the system does not need reform. The OECD advocates better accompanying the aging of the population.

If there is one thing that the debate on pension reform in France teaches us, it is that no model is perfect in itself.

To take the example of Europe, there are as many models as there are countries. All the States have opted for a mandatory pay-as-you-go system where assets finance pensions, supplementing them with a funded system where everyone contributes himself.

Then, for the calculation of pensions, three options are generally chosen. The first corresponds to a pension plan in which the reference salary, the contribution period and the age of departure are considered.

Second option: the point system where retirement depends on the value of points accumulated throughout the career. This is what we have in Sweden and this is what is envisaged for the reform in France. But as we have seen, the perverse effects are visible in the poverty rate among people over 65 who is alarming in Sweden.

Third option finally: the notional accounts. This amounts to accumulating a capital - virtual - throughout his career, which is converted at retirement.

But the puzzle is the same for all states: keeping the most people at work while guaranteeing a minimum pension.

In view of the general aging of the population, the retirement age is almost everywhere raised in order to ensure the financing of the system in the future. In France, unions and government are tearing themselves apart on the desirability of establishing a pivotal age of 64 years below which one would see the amount of his retirement fall.

Elsewhere, legislation is passed to push back the effective retirement age. 18 EU states have decided to do so in the coming years. In Belgium, the legal age will rise to 66 in 2025. Same as in the United Kingdom next year. In the Netherlands, whose pension system is regularly described as the best in the world, the age of departure changes according to life expectancy. In short, everyone is encouraged to work and contribute more.

And this is the case elsewhere in the world. Brazil has recently completed a complicated pension reform.

The giant in Latin America has taken two decades to do it. The populist government of Jair Bolsonaro introduced for the first time in the country's history a minimum retirement age at age 65. A reform that has not gone without resistance and which should help to fill its huge public deficit.

Chile, which has given its name to a model touted by the World Bank, is hungry for reform. Part of the compulsory basic plan's contributions are funded and managed by private companies. He is now being questioned for not being good enough and President Piñera has promised to reform it.

In Japan, the challenge is immense. Life expectancy is the highest in the world and birth and immigration rates are very low. There, the reforms are done very gradually to encourage people to work and to contribute more. For African states, many have inherited the old settlements pension system, which has not prospered as hoped because it implies that the majority of the population is working and contributing.

As we know, in many African countries, not only the informal dominates the economy, but trust in institutions is not always the rendezvous. As a result, 10 to 20 per cent of the population of sub-Saharan Africa would be contributing or receiving a pension.

Some states such as Morocco and Côte d'Ivoire have completely revised their system to clean up and adapt to the realities of the world of work. Others like Mauritius have implemented the World Bank's recommendations by introducing a minimum allocation scheme for the poorest pensioners.

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