Pensions: why the postponement of the retirement age is favored by Emmanuel Macron

Posted Sep 30, 2022, 6:30 AMUpdated on Sep 30, 2022 at 8:24 am

Retirement age is coming back to the fore. If he dropped ballast on the timetable for the reform on Thursday, the government was firm on the objective of raising the retirement age. And this, in the name of economic and budgetary efficiency.

Now supposed to be the subject of a law “before the end of winter” to apply to the summer of 2023, the reform desired by the executive provides for a “gradual postponement of the retirement age by 4 months per year, culminating in 65 years in 2031,” Prime Minister Elisabeth Borne told AFP, resuming the course set by Emmanuel Macron on Wednesday during a dinner at the Elysée.

“Highest budget efficiency”

These firm statements, which contrast with the vagueness maintained in recent months by the government on the content of the reform but reconnect with Emmanuel Macron’s campaign promises, are explained first of all by financial reasons.

Moving the retirement age is the measure that has “the strongest budgetary efficiency”, defended the Minister of Labor, Olivier Dussopt on LCI Thursday, without quantifying the expected gain. He contented himself with indicating that the “absolute red line” is the balance of the pension system. Knowing that the latter could show a deficit of some 12.5 billion euros in 2027 (and around 20 billion in 2032), according to the Pensions Orientation Council.

In Bercy, it is estimated that raising the retirement age by 4 months per year, to reach almost 64 years in 2027 (63 years and 8 months) would make it possible to gain 0.9 point of GDP, create 240,000 jobs and thus generate 15 billion euros in additional revenue. Because who says more assets, also says more contributions.

15 billion additional revenue

Postponing the retirement age would also reduce spending by 9 billion by 2027 (and nearly 20 billion in 2032), taking into account unpaid benefits. The amount of savings made should however be much lower in fine – around 5 billion euros at the end of the five-year term.

Because the executive has promised to raise the minimum pension to 1,100 euros for people who have completed a full career. Postponement of the retirement age also generates other costs. In particular that of invalidity pensions, compensating the loss of wages of invalids after an accident or illness.

The extension of the contribution period ruled out

During the presidential campaign, candidate Macron’s teams informed the Institut Montaigne that the net savings generated by the pension reform would be “around 9 billion euros” in 2027. They took into account the effects on expenditure and revenue but also a cocktail of compensatory measures.

The Montaigne Institute, for its part, was counting on a saving of between 6 and 10 billion per year in 2027 for the entire reform. For the only postponement of the retirement age, the think tank was counting on a gross gain of 27 billion in 2032 (increase in revenue of around 7 billion and lower expenditure of nearly 20 billion).

In any case, the option of a simple extension of the contribution period to obtain a full-rate pension now seems to have been ruled out by the government. “That is not enough to balance”, insisted Olivier Dussopt, Thursday about a possible acceleration of the timetable for the Touraine reform, and even an extension beyond 43 annuities. For the record, this plans to increase the contribution period by one quarter every three years to reach 43 years (172 quarters) for people born in 1973 or later.

Leave a Reply

Your email address will not be published. Required fields are marked *