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France is not the only country in Europe to have undertaken to reform its pension system. Sustaining the pension system is an issue for many of its neighbors.
The countries of the Old Continent all have one thing in common: an aging population and declining fertility. Added to this is a better life expectancy, which means more time spent in retirement, and a later entry into working life. Result: fewer and fewer people of working age, and therefore to finance the retirement of more and more seniors.
Despite large disparities, the countries of Southern and Eastern Europe being, for example, much more affected by the decline in fertility than those of central or northern Europe, everywhere, the number of retirees relative to the number of people of working age increases.
According to data from the latest report from the OECD (Organization for Economic Co-operation and Development) , published at the end of November, while in the 1950s, Europe had on average almost seven people of working age (between 20 and 64 years) for a retiree, this ratio will be three in 2020. And less than two workers for a retiree by 2050.
" We have known since the mid-1970s that this demographic question was going to arise for all developed countries," explains Hervé Boulhol, head of pensions and demographic aging at the OECD's employment and social affairs directorate. The strategy adopted at first was rather the policy of the ostrich. And when in 1990 things got a little more concrete, there was a wave of pension system reforms. We then witnessed a new wave following the 2008 economic crisis. ”
This demographic trend has accelerated since the 2010s, specifies the specialist. And we should stay on this fast pace until about 2050, when the papy-boom will be over.
So how can we continue to guarantee the payment of a decent pension without jeopardizing the whole system? This is the puzzle faced by states. " The question arose everywhere ", assured on the antenna of RFI a few days ago Nathalie Loiseau, MEP and ex-minister in charge of European Affairs. How are other countries doing?
• Sweden, a model student?
The Swedish regime, reformed in the 1990s and often cited as an example in the current debate, was " born in a social and political context very distant " from that of France today, says Le Figaro . This Scandinavian country was in the grip of a deep crisis which led it to an equally deep reform towards a point system, after ten years of consultations. Until 2001, pensions were indexed to the best fifteen years and you had to have contributed thirty years for a full pension. From now on, contributions are fixed and at the end, the amount of pensions depends on several factors: the age of departure, life expectancy and the country's economic performance.
Life expectancy at the time of retirement is very important in the calculation. Basically, explains the France TV info site , “ when an employee stops working, the amount of contributions he has paid is divided by the number of years he has left to live, according to life expectancy average, and we get the annual amount that will be paid to him each month. One way to encourage people to retire later. Today set at 65, this kind of "pivotal age" should gradually increase to 67 in 2026.
The balance sheet is mixed. In fact, with this system, no risk of deficit since the amount of the pension is automatically adjusted according to the economic state of the country or even the evolution of life expectancy. However, as the value of the point is not fixed, pensions may fall during periods of crisis. This was the case for example in 2010, 2011 and 2014. And according to the OECD, the amount of pensions for Swedes today represents 53.4% of the end-of-career salary, against a replacement rate of 60% there at twenty. In addition, the poverty rate among Swedes over 65 (less than 60% of the median income of the population) is very high: 15.8% in 2018 against 7.3% for the French, who hold the rates the lowest in Europe, according to Eurostat .
• The difficult equation of German retirement
Since the 1990s, Germany has reformed its pension system several times . The country has continuously extended the contribution period and lowered the retirement age. Pension contributions amount to 18.6% (half employee, half employer). They will gradually increase to 20% in 2025. And today, to reach a full pension, you have to work until 65 to 67 years old (if you were born after 1964) and have contributed 45 years. " But, for many experts, this will not be enough to deal with the aging of the population and the inexorable decline in the number of working people ," reports Le Monde . " Last October, explained our special envoy to Berlin, Pascal Thibaut, the German Central Bank proposed to raise the retirement age to 69, even 70 years. The grand coalition wants to stabilize until 2025 the ratio between average retirement and average salary at 48% - which is already low - and not touch the level of contributions. "
According to Eurostat, German pensioners have one of the highest poverty rates in the European Union: 18.7%. " In Germany, the level of social safety net is insufficient to protect the most vulnerable elderly, and in particular women over 75 who have a relatively weak labor market history ," comments economist Hervé Boulhol. Especially since it is “ one of the countries where the differences between the pension rates for men and women are the highest in the OECD, in particular because female employment has been low for a very long time . "
• In Spain, a (too) generous system
The Spanish pension scheme, which is essentially based on a public pay-as-you-go system, may seem very generous. Indeed, on average, retirees keep 82% of their salary . Among the highest in Europe, this figure should not obscure the fact that Spanish wages are also lower on average than those of the northern neighbors. Today, Spanish seniors can stop working from the age of 65 and 8 months, provided they have contributed at least 36 years and 6 months. Due to the low fertility rate, a reform voted in 2011 provides for an increase in the legal age to 67 with 38 years and 6 months of contribution by 2027. A number of years of contribution always lower than in France for example, but linked to the high unemployment rate.
Problem: this system is very expensive for the State and the funds are in the red. Spending on pensions is increasing every year - Spain already spends 11% of its GDP on pensions - and the Social Security deficit is widening. And if the pension system is the subject of a public debate organized regularly as part of the "Pact of Toledo", no major reform is taking shape.
• In Italy, one step forward, two steps back?
The Italian pension plan has also long been able to afford to be very generous. But in 1995, a major reform came to put an end to the special regimes and to question the PAYG system. To be accepted by the population, it was planned that its implementation would be very gradual. Consequence: the transition period must still last until the 2060s.
Except that in the meantime, the 2008 financial crisis has put Italy on the verge of bankruptcy. In 2011, Rome therefore painfully adopted the Fornero reform - named after the then Minister of Labor - providing for drastic changes: from now on and without delay, women must contribute 41 years and men 42 years. While the legal retirement age is raised to 66 years and seven months for everyone from 2018. And must be gradually increased, according to the increase in life expectancy.
Anger of the populists, who see in it a measure " dictated by Brussels ". In early 2019, to break this reform, Matteo Salvini, the head of the far-right League, therefore established the "quota 100", for 62 + 38. In other words, the possibility of retiring from the age of 62 and after 38 years of contributions. " We can, if we have the margin, change a little trajectory to mitigate the effects of the Fornero reform, but to encourage retirement from 62 years old is to go against the sense of history, especially in Italy where the employment rate of seniors is low, ”says Hervé Boulhol.
In the UK, you don't count on the state
The British system is undoubtedly one of the least generous in the EU. " In the United Kingdom, part of the pension system is public, but it is a lump sum, " decrypts Hervé Boulhol. The State pays everyone a pension which represents around 200 euros per week. " Still, to receive it at full rate, have contributed long enough to the pension system ", namely 35 years. And if, until this year, we could hang up to 65 years, the legal age must pass to 66 years in 2020, 67 years in 2028 and 68 years in 2037. Proposals exist to go beyond. The replacement rate is very low: 28%. And the scheme is not expensive: in 2017, the United Kingdom spent only 6.2% of its GDP on it, compared to 13.9% in France.
But this is only part of the pension system across the Channel. “ In addition, there is a stage which is a funded scheme, but which is not compulsory. So we see that people with low income have trouble or make the choice - if we can put it that way - not to use this voluntary system , ”points out the OECD economist. Hence a high relative poverty rate of 21.6% for those over 65, according to Eurostat. Not to mention that this part of the pension is dependent on fluctuations in the financial markets, for better and for worse.