
French pension reform gathers pace
But the road is getting rockier.
Dr. S-W – 02/2020
The French Government has presented to its Parliament the reform project
drafted by High Commissioner Jean-Paul Delevoye essentially unchanged, but with
much longer transition periods than originally planned. Most importantly,
however, it is intended to protect already acquired entitlements.
Although Prime Minister Edouard Philippe wanted to take the
opportunity to raise the legal retirement age from 62 to 64, he has dropped
this again in the face of widespread protests. It should be noted that this is
the age at which a person can retire without deductions after having completed a ‘complete career’ (‘âge d'équilibre’).
However, there is still the question of whether this age
should be automatically adjusted in the future to reflect changes in life expectancy using the
formula ‘2/3 in work,
1/3 in retirement’.
It also aims to cushion the impact of the reform on certain
professions. People in these
professions should be given the opportunity to retire earlier without
any restrictions. Nurses, among others, will benefit from these provisions, as
is currently the case in Belgium, at least in public hospitals.
The plans for pension reform have been especially criticised
by the trade unions, but they have received praise from international
organisations. Monika Queisser (OECD) believes
that harmonising the various systems is a good idea, as the multitude of
systems currently in place is very confusing for all concerned. In addition,
French pensions are comparatively high at an average of €1,600, and the period of entitlement is
above average, especially for women. This is all very fine, but at a contribution rate of 28% it is also very
expensive.
According to the government, the reform is expected to be
adopted by the end of 2020. In order to keep to the ambitious timetable, the
draft was hobbled together
rather hastily. It appears to contain numerous gaps and technical
inaccuracies, including a lack of reliable projections of the financial consequences.
For this reason, the Council of State (Conseil d'État),
which has to examine, among other things, the legality of the bill, strongly
criticised the government’s
approach. The government also attracted 22,000 change requests from the opposition, which expressed criticism of fundamental issues, but mainly wanted to gain time
for a debate.
Meanwhile, High Commissioner Delevoye, had to resign from his post. He had failed to declare
various secondary occupations, including those in the insurance and banking
sectors, which might well have an interest in the outcome of the pension
reform.
The main texts of the government bill can be downloaded
here. However, they are only available in French: