Social partner dialogue on pension reform. 

French Prime Minister François Bayrou has convened a pensions conclave with the social partners. The initiative follows the pension reform of April 2023, which triggered nationwide protests, particularly due to the gradual increase in the retirement age. On 20 February, the French Court of Auditors presented its projections for the future deficit of the statutory pension insurance and civil servants' pensions in France. According to the report, if no further reforms are made, the projected deficit will be just under EUR 15 billion in 2035 and rise to around EUR 30 billion by 2045. The Court of Auditors has thus set the framework for the pensions conclave with the social partners convened by Prime Minister Bayrou. The aim is to draw up fairer reform proposals for the pension system within three months.

Dete­ri­o­ra­tion in finan­cial situ­a­tion fore­cast

On 20 January, French Prime Minister François Bayrou commissioned the President of the French Court of Auditors and former EU Commissioner, Pierre Moscovici, to investigate the sustainable financing of the statutory pension insurance and civil servants' pensions.

In its report, the Court of Auditors assumes a significant deterioration in the financial situation of the pension system. While the pension system still had a surplus of EUR 8 billion in 2023, the Court of Auditors expects the deficit to rise steadily to EUR 6.5 billion euros as early as this year. According to these calculations, the deficit will rise to just under EUR 15 billion by 2035 and to around EUR 30 billion by 2045. This deficit is primarily incurred by the general pension insurance scheme (CNAV). Demographic ageing has a direct impact there, as there are no mechanisms for adjusting pensions to compensate for the consequences of demographic ageing, such as the demographic factor in the German pension adjustment formula.

In contrast, the system of liberal professions and supplementary pension schemes are likely to show a positive balance. According to the calculations, the situation of the civil servant pension system will also remain stable. Some of these systems have a better age structure, such as the pension systems of the liberal professions and civil servants, balancing mechanisms such as the supplementary pension systems and reserves such as the liberal professions.

French supple­men­tary pension schemes as a model

The French government's room for manoeuvre is limited. In the third quarter of 2024, public debt stood at just under 114 per cent of GDP (in Germany at just over 62 per cent). The last pension reform of April 2023 was and remains extremely controversial. The government also does not have a majority in the French National Assembly, which makes passing new reforms much more difficult. In this situation, French Prime Minister Bayrou is relying on social dialogue. As part of the pension conclave convened by him, the social partners are to jointly develop proposals for solutions, thus avoiding the social tensions that have characterised previous attempts at pension reform. Jean-Jacques Marette, former Director General of the supplementary pension scheme for employees AGIRC-ARRCO, has been appointed as moderator. This is no coincidence. The supplementary pension schemes for employees, primarily serving to secure pensioners' standard of living, are being managed jointly by the social partners even now. In the past, adjustments and reforms have been agreed by consensus and usually implemented without heated political debates.

Broadly conceived pension reform

On his appointment as moderator, Jean-Jacques Marette emphasises that he does not believe in all-encompassing pension reforms. Adapting pension systems to changing situations is an ongoing process. Accordingly, he interprets the task of the pension conclave as the search for common solutions for various aspects of old-age provision. To this end, he has named six topics for the three-month conclave, each of which will be discussed at two weekly meetings: (1) age limits and contribution periods, (2) occupational stress in connection with long working careers, (3) solidarity elements, gender equality and supplements for family benefits, (4) the financing of pension systems, (5) control mechanisms for the continuous evaluation and adjustment of pension systems and (6) the financing of social security as a whole.

Not all major trade unions on board

Around fifteen minutes after the start of the first meeting of the social partners on Thursday 27 February, the third largest French trade union, Force Ouvrière (FO), left the negotiating table. Referring to François Bayrou's demand laid down the day before to restore the financial balance of the pension system by 2030, the organisation described the pension conclave as a "straitjacket" into which one cannot be squeezed. As things stand, the FO will not return to the negotiating table.