New alert on the balance of the pension system

Posted Sep 22, 2022, 5:53 PM

The analysis gives food for thought to the government which advocates a new pension reform. The deficits of the early retirement system over twenty-five years “become substantial regardless of the calculation convention used”, notes the Pension Monitoring Committee (CSR) in an opinion issued on Thursday.

The group of five experts responsible for monitoring the finances and equity of the pension system points to “significant residual imbalance risks in the short and medium term”, noting that the forecasts have deteriorated since its previous opinion. The situation “forces us to re-examine the question of ways of balancing the system”.

Because not only could the economic conditions deteriorate compared to the government's projections for this summer, but France is much more indebted than before 2020 and the Covid crisis, he argues.

Financial efficiency

This advice comes after the Pensions Orientation Council (COR) warned last week that the pension system would become permanently in deficit after an upturn in 2021 and 2022. Enough to comfort the government which is showing itself today ready to accelerate on its reform project . This one always leaves hovering the idea of ​​launching the project through the next Social Security budget despite divisions within its majority and union opposition .

However, the committee is careful not to decide on the path to follow to rebalance the system, between an increase in resources, a reduction in pensions and an increase in the retirement age. It nevertheless points out the limits of an increase in contributions (the ceiling for the overall contribution rate of a non-executive employee in the private sector, set at 28%, would be exceeded) and of a de-indexation of pensions, knowing that this latter tool has already been used previously. The report considers that the increase in the retirement age could be “presented as the price to pay for the stability of the contributions and the fact of not reducing the relative standard of living of pensioners beyond the already expected declines”, or “be justified by the need to redeploy budgetary resources to finance other economic and social needs. »

By what lever? The committee notes that raising the minimum retirement age has “faster financial efficiency” than extending the period of contributions necessary to leave with a full pension. “It is of course possible to combine these two instruments,” he notes.

Compensatory measures

He stresses that raising the legal age “largely spares the wealthier retirees who leave spontaneously beyond the minimum age”. If the choice had to be made to push back this cursor, it would be important in the eyes of the committee to compensate for the negative effects "on the populations with the lowest pension who are also, in general, those whose life expectancy is the shortest and whose the working conditions are the least conducive to maintaining the activity”.

The committee also insists that the strengthening of vocational training, the fight against age-related discrimination and greater consideration of hardship be “placed at the center of reflections”. And this, in order to mitigate the effects of a reform on “the most exposed categories”. These accompanying measures must be “as concomitant as possible”.

The committee "recommends finding ways to rebalance the system", soberly noted Matignon in the wake of the publication of the CSR's opinion.

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