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Pension reform in France: background summary - An overview of pension reforms since the 1990s (updated July 2019).

Characteristics of the French pension system

The French pension system is essentially based on two systems operated by means of a pay-as-you-go arrangement whereby the pensions of the existing retired population are paid by the workers currently contributing to the system. There is, first of all, a basic regime, the ‘general regime’, which covers virtually all employed workers (with a separate regime covering civil servants) and is managed by the State; this arrangement co-exists with two, compulsory, complementary regimes that are managed by the social partners. Funded regimes or retirement savings schemes play a relatively marginal role. The awareness that France will be faced with a problem in ensuring the future of its pensions system dates back to the White Paper on the future of pensions that was submitted to the government in 1991.

Chronology of pension reform

This text of 1991 opened up the way to the first pension reform of 1993, adopted by a conservative government, a reform that dealt principally with the ‘general regime’ covering all private sector employees. The reform was based, in the main, on the following three changes:

  • The contribution period required to obtain a full pension was gradually raised from 37.5 to 40 years.
  • The average reference wage for the purpose of calculating the retirement pension was gradually to be calculated over the 25 best years and no longer the 10 best years.
  • The annual adjustment of pensions was based on the consumer price index and no longer on general wage developments.

In 2003, the conservative government initiated another reform of all retirement pensions with the exception of the special regimes, i.e. those covering employees in certain public services. On this occasion the principal measures were as follows:

  • Gradual alignment of civil servants’ contribution periods on those of private sector employees (from 37.5 to 40 years).
  • Gradual lengthening of the contribution period for all so as to reach 41 years by 2012.
  • The creation of a forfeit mechanism entailing a drop in the pension entitlement of persons retiring without having contributed for the requisite number of years.
  • The introduction of a bonus mechanism entailing an increase in the pension entitlement of persons continuing to work longer than the requisite number of years.
  • The creation of an early departure arrangement entitling persons who began to work between the ages of 14 and 16 and have contributed for the requisite number of years (for their generation) to retire before the age of 60.
  • Indexation of civil servants’ pensions in line with prices and no longer with the civil service ‘point’ used to calculate civil servants’ salaries.
  • The creation of incentives to join retirement savings schemes.

This reform, which was also intended to save the system, was followed in 2008, still under a conservative government, by the reform of the special regimes, i.e. those covering employees in specific public service establishments. These regimes, which were considered to have fallen into excessive deficit, became subject to the abovementioned measures of raising the contribution period of 40 years, forfeit and bonus mechanisms, and indexation in line with price developments.

In 2010, the conservative government launched another retirement reform. This time it entailed a direct attack on a social gain dating back to 1981 (when the first Socialist President of the Fifth Republic had come to power), namely, retirement at 60. The reform of 2010 provided for a raising of the statutory retirement age to 62 by 2018, a measure applicable to all employed workers whether employed in the public sector, the private sector, or under the special regimes. While the age of entitlement to a full pension was now raised from 65 to 67 years, the text also contained provisions to take account of long or particularly wearing working lives; the reform allowed also for inclusion, for purposes of calculating contribution periods, of, for young persons, spells of unemployment without entitlement to benefit, and, for women, of allowances received during maternity leave.

The ink of the law of 2010 was barely dry when the government announced, in December 2011, that the pace of the earlier pension reform was to be speeded up: the statutory retirement age and the age of automatic entitlement to a full pension were to be raised to 62 and 67, respectively, as from 2017, instead of 2018.

The coming to power of a Socialist government brought little change and a new reform was adopted in 2013. Contrary to the previous reforms, this one targeted workers’ and employers’ contributions which were to rise by 0.15 points in 2014 and by 0.05 points in 2015, 2016 and 2017, making a total increase of 0.3 points. Though the government did refuse to raise the retirement age, the period of contribution for entitlement to a full pension was to increase by one quarter every three years so as to reach 43 years by 2035. The reform put in place a ‘personal unpleasant work prevention account’ funded by companies; this allows account to be taken of employees’ exposure to factors of unpleasantness to enable them to bring forward their retirement or finance training so as to change jobs or reduce their working time.

At the end of 2015, the social partners adapted the complementary retirement regimes – i.e. pay-as-you-go regimes managed by the social partners – in line with the 2013 retirement reform. In this context a system of incentives designed to encourage workers to extend their working lives was adopted for the first time.

In the autumn of 2018, the government started an online consultation about future reform of the pension system. In parallel, a consultation process with the social partners started. According to the High Commissioner charged by the government to initiate the consultations, the pension system will remain organised on a collective basis. In the frame of the public consultation, citizens were also invited to participate in a series of regional workshops that will assess the impact of the decisions to be made in 2019. The results are to be reported to the public and the political decision-makers. Citizen’s opinions on the pension system was already the subject of a survey published in December 2017, which indicated that most remain attached to a public pension system. An overwhelming majority (90%) of the respondents was in favour of a pay-as-you-go public pension system, and one in two wanted to keep the pay-as-you-go system while reforming it. A majority of the 3000 persons that participated was in favour of a single pension plan or a common base supplemented by some specificities related to professional status. The survey showed most remain favour of early retirement schemes, especially for workers entering the labour market at a young age.