The government is preparing to unveil, Tuesday, January 10, its explosive pension reform against which the unions are already planning to demonstrate, ulcerated by the probable postponement of the retirement age to 64 and despite accompanying measures on the employment of seniors or hardship.
During a press conference, the Prime Minister, Elisabeth Borne, could, according to several of her interlocutors, propose a postponement of the legal age of departure to 64 years, instead of 62 currently, after having considered 65 years.
This postponement would be associated with an acceleration of the extension of the contribution period, which would increase to 43 years before the 2035 horizon set by the Touraine reform.
The point of view of the economist Nicolas Marques, director general of the Molinari Economic Institute.
France 24: Reform Balladur in 1993, Fillon in 2003, Woerth in 2010, Touraine in 2014... France has experienced several major pension reforms over the past 30 years intended to save our pay-as-you-go system. Why initiate a new reform in 2022
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Nicolas Marques:
The problem with the pay-as-you-go system, where retirement pensions are financed in real time by contributions from active workers, is that it is based on the birth rate.
However, with 1.8 children per woman, it is no longer possible to offer attractive pensions and since there is no structural reform, parametric reforms are being multiplied.
Since the end of the baby boom period in the mid-1970s, France has had fewer and fewer workers.
Today, there are only 1.7 contributors for 1 retiree, compared to 4 in the 1950s. It is therefore difficult to balance the accounts of the National Old Age Insurance Fund (CNAV).
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In the public, the problem is different: the pensions of civil servants are financed by the state budget.
There is therefore neither distribution nor an adjustment mechanism.
In National Education, the financing of pensions monopolizes 28% of the resources of the ministry.
It is important to emphasize that most of the pension deficits come from civil servants.
We do not realize it because the Pensions Guidance Council (COR) does not include it in its calculations.
Balance sheet, the pension deficit in France is on average undervalued by 33 billion per year for 20 years.
Is working longer the only lever to rebalance the accounts?
Working longer appears to be the least painful lever to facilitate the financing of the CNAV, because France has already increased contributions considerably.
They represent 28% of the gross salary of a private sector employee.
For the State, which has been systematically in deficit since the counter-shock of the baby boom, this will also facilitate the financial equation by having civil servants who will work one more year, for a cost barely higher than the retirement which would have been paid.
Instead of paying retired former civil servants, the state will pay these staff a little more in return for their work.
The reform will therefore give it leeway to either improve the quality of public services if the pace of hiring does not change, or reduce personnel costs and save money.
This is a key reform for the state, which has been unable to balance its accounts for over 40 years.
Does this new reform seem to you sufficient to sustain the system?
This reform will improve the situation in the short term, but it does not address the structural problems.
In the private sector, there is first of all a subject around the fall in replacement rates, that is to say the percentage of the last earned income that you keep when you retire.
It is estimated that the purchasing power of retirees could fall by around 20% by 2070 compared to assets.
To compensate for this, it would be necessary to introduce a dose of collective capitalization to support a pay-as-you-go system.
This already exists in the public service with the Additional Public Service Plan (RAFP).
It is a pension fund co-managed with the social partners which has yielded an average of 5.6% per year since its creation.
In the long term, by pooling the good years and the bad years of stock market investments, the performance is much better than a pay-as-you-go system.
Common sense would be to create an equivalent for all private sector employees.
Pharmacists have done this (CAVP) and it allows for a more robust plan with better value for money for the contributor.
The second problem is that the system for civil servants will remain unbalanced.
It is therefore necessary to start provisioning the pensions of civil servants by investing in the financial markets.
This proven method has enabled the Banque de France or the Senate to save public money for decades.
If the state does this gradually, in 40 years it will be able to pay the pensions of the agents we are hiring today.
This will make it possible to use the gains linked to the investment to lighten the bill for the taxpayer and reduce public deficits, one third of which is due to the absence of provisions for the pensions of civil servants.
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