Behind the BlackRock controversy, the shadow of funded retirement

The news of the rise to the rank of officer of the Legion of Honor from Jean-François Cirelli, Wednesday, January 1, was not long in spreading like wildfire on social networks. For opponents of the pension reform, it was enough to confirm their fears: reward this former senior official, ex-boss of Gaz de France and Engie, now head of the French branch of the American asset management company BlackRock, can only bear witness, in their eyes, to the government's desire to favor funded retirement products in France.

This reading of the presence of Jean-François Cirelli, former economic advisor to Jacques Chirac (1995-2002) and former deputy director of the Prime Minister's office Jean-Pierre Raffarin (2002-2004), on the list of recipients of the Legion d The honor of the start of the year 2020 has been made by many politicians opposed to the pension reform, who estimate that BlackRock, an American investment fund managing nearly 7 trillion dollars in assets worldwide, will become the l 'one of the main beneficiaries of the pension reform thanks to the development of funded pensions.

>> Read: "Pension reform: Emmanuel Macron's strategy with concessions"

Where do these suspicions come from? First of all, an article from the Duck in chains dating from the fall of 2017 which has resurfaced in recent weeks. This detailed how the Elysee Palace had welcomed a delegation of BlackRock with honors to present "the vision of transformation [of France] of President Macron".

How the Elysée rolled out the red carpet to the king of #WallStreet

Dans Le Canard Enchaîné #BlackRock #Finance #GestionDesRetraites #Retraites pic.twitter.com/OLr7iX8LQr

Then, in early December, the daily newspaper L'Humanité published an internal document of around fifteen pages attributed to BlackRock detailing the interest of developing retirement savings by capitalization in France. Finally, extracts from an interview with Jean-François Cirelli, on the Franceinfo channel on June 25, confirming this interest caused a stir among opponents of the reform.

Macron's policy is BlackRock who says it best.

Interview with JF Cirelli, boss of #BlackRock France, about the Pacte law and the #retraites reform, which will allow the development of funded retirement ... the specialty of BlackRock. pic.twitter.com/RO7jLzOJW5

However, a component of the pension reform project to be presented to the Council of Ministers on January 22 effectively opens the door to capitalization, especially for high earners. In the current system, employees pay compulsory social security contributions up to 27,000 euros gross per month, eight times the social security ceiling. Above this amount, employees no longer contribute and wages are not taken into account in calculating retirement.

>> To read: "Emmanuel Macron's wishes: 'The pension reform will be completed'"

The reform envisaged by the government proposes to reduce this threshold to three times the social security ceiling, or a salary of 10,000 euros gross per month. Beyond that, employee contributions will only be 2.8%, but will not open additional rights.

"A 'good exit' from the collective social security system"

"Consequently, it is a safe bet that companies will instead offer replacement solutions, such as tax-exempt retirement savings plans, to these senior executives who also care about their retirement," notes economist Michael Zemmour, teacher-researcher at the University Paris 1, specialist in the political economy of the social state, contacted by France 24. "With this system, executives with very high wages get their 'exit voucher' from the collective security system social, "he wrote on December 3 on his blog.

>> To read: "The reasons for the mobilization against the pension reform"

This major change therefore offers new perspectives for all companies offering retirement savings plans - hitherto underdeveloped in France - or those who manage them, such as BlackRock. However, it turns out that the Pacte law passed last spring simplified the legislation on funded pensions. In a note from BlackRock in June 2019, revealed by Mediapart on December 9, the American company is also delighted with the prospects offered by this law which has just been promulgated: "It allows the saver: to benefit from tax relief for contributions paid by reducing its taxable income base, to access its capital before retirement in certain predefined cases […], to transfer its assets to a more competitive entity without transfer fees after five years. "

The total contributions which will no longer be paid by employees earning between 10,000 and 27,000 euros gross per month is estimated between 4 billion euros in 2025 and 5 billion euros in 2040, or 72 billion over fifteen years, by Agirc-Arrco, an organization which manages the complementary retirement of private sector employees. A significant financial windfall, which probably represents a little more than a "box of Smarties" for BlackRock, as qualified by the Secretary of State to the Minister of Economy and Finance, Agnès Pannier-Runacher, the market French funded retirement.

Pensions: "If your reform comes to an end, the business of #BlackRock will therefore take off tremendously in France", deplores @oliviermarleix, who accuses the government of "offering three billion euros to pension funds". # DirectAN #QAG pic.twitter.com/cn8UJHt8Ok

"This sum is also a shortfall for the general pension system which is likely to pose a huge financing problem during the transition, underlines economist Michael Zemmour. During this period, the high pensions of former senior executives will have to be paid while depriving themselves of contributions on high wages, which will create an imbalance between income and benefits in the system. "

The government will then have to find a way to solve this equation. As an increase in contribution rates is ruled out by the executive, opponents of the pension reform believe that the latter will have no choice but to reduce pensions. This future difficulty was notably noted by the deputy Les Républicains Olivier Marleix, during questions to the government on December 10 (see video above), who noted that with this reform, "the most modest will pay for the richest".

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