The pension system tested by budgetary savings

Creating a "fairer system" is the aim of the pension reform, displayed by the Prime Minister, Edouard Philippe, during his presentation speech on December 11. A vision supported by the ministers, for whom the new system would not only be more equitable but also transparent, in particular for women and the most vulnerable.

According to them, this reform is essential to fill a deficit which can only widen further. Spending on the pension system is among the highest in the world. Reaching more than 14% of GDP in 2016, they have however stabilized, or even decreased, to represent 13.7% of GDP in 2018, according to the latest report from the Pension Orientation Council (COR), an organization independent responsible for studying the pension system.

COR forecasts are also optimistic for the coming years. By 2030, this spending is unlikely to exceed 14% of GDP, the report said. The COR also forecasts a deficit estimated at 0.2% of GDP in 2023, or 5 billion euros: less than a third of the amount spent to appease the anger of the yellow vests.

Fewer government grants

For Hervé Le Bras, demographer and historian, the main concern around this reform relates more to the reduction of expenses than to the supposed instability of the system. In fact, in the current system, 80% of expenditure on pensions is paid by French contributions and the rest is paid for by the State, thanks to several systems. The government wants to reduce resources.

>> Read: Pensions: "This reform is fair and welcome"

The COR report thus underlines that "the deficit is not linked to the development of pension expenditure, the share of which in GDP remains constant" but rather to "the reduction in the resources of the pension system". However, this would be due "essentially" to "a decrease, as a percentage of GDP, in the contribution of various local public entities (State, local public administrations, CNAF, Unédic)".

In other words, "the forecast deficit is explained by the withdrawal of the State and not by economic or demographic reasons", writes Hervé Le Bras, in a column published in the newspaper Le Monde, on December 19. According to him, "the pivotal age is therefore intended to compensate for the withdrawal of the State".

Hervé Le Bras is also looking at the growth in life expectancy to "argue against the urgency" of a pension reform. According to him, the COR's demographic forecasts are "optimistic" because the organization expects, after 65 years on "1 month of annual growth [of life expectancy, editor's note] for women between 2018 and 2030 and on 1.7 months for men". Because of this slowdown, the bill may therefore be less salty to bear the cost of pensions.

The demographer is not alone in suspecting the government of wanting to reduce the cost of pensions at all costs. According to a study by the Odoxa polling institute, published on December 19, 66% of French people continue to support the strike and 57 % of them hold the government responsible for the blockage.

Reform not clear enough

If the French are not all convinced, this is also the case for certain specialists, including those who once defended the reform. In another column published in Le Monde earlier this month, a group of recognized economists close to Emmanuel Macron called for more "clarity" regarding pension reform. They point to "budgetary considerations" which would make the objectives of the reform less legible.

To read: Caisse, kitty ... strikers organize to fight against pension reform

These economists, who approve the pension system by points, urge the government to abandon the creation of a "pivotal age". They write that there is "no reason to lead to the deterioration of the situation of civil servants", in particular for teachers.

The fate of teachers also raises fears in economist Daniel Cohen, former supporter of the reformist path chosen by Emmanuel Macron. In the program "C l'hebdo", broadcast on France 5, he opposed, Sunday, November 30, the position of the government for whom "this reform, because it was universal, was fair". Predicting a "very large number of losers", he refers in particular to teachers, who, according to him, will be "the main losers from this reform".

Pension reform: “There will be a very large number of losers. For Daniel Cohen, it is not because a rule is universal that it is fair. The economist points to a problem of method on the part of the government. #Clhebdo pic.twitter.com/VP6DBcuAUH

Deploring "a huge mess", Daniel Cohen also explained, Wednesday, December 18, at the microphone of France Culture, that the government had achieved the complete opposite of what the reform originally planned. "The only real motivation for this reform was to create something that was not a source of anxiety for an overwhelming majority of French people," said Daniel Cohen, who believes "that resources are not lacking".

"Instead of embarking on a path, which consists, brick by brick, of correcting the system to make it more reassuring, the government has succeeded in this feat of making it more anxiety-provoking," he continues. "It is a bit of a shame to empty the retirement pensions and then say that there is a deficit."

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