Brief: French Pension Reform
Brief: French Pension Reform
We’re once again hearing *a lot* about pension reform with people regularly asking what’s happening, why it is happening, what’s so important, and why people are so mad. So time for a brief!
The Brief is your breakdown of the ongoing events and crises happening in Europe, with a slightly more technical spin to satisfy your intellectual demands, curiosities, and interests.
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How do Pensions in France Work?
The Current Pension system in France is divided into three pillars which workers can contribute to:
The State Pension
The Compulsory Supplementary Pension
The Voluntary Private Pension
The State Pension
In part funded by sécurité sociale contributions
To receive the full State Pension, retirees must work for at least 42 years (or 40 years if born before 1952), with the requirement raising to 43 years for those born from 1973 onwards
You can claim a pro-rata pension if you’ve worked or made social security contributions in France for at least 10 years
The state pension entitles retirees to draw a maximum of 50% of their annual average earnings, with retirees born after 1953 having to receive a minimum of 37.5% of their earnings
The Compulsory Supplementary Pension
Administered by industry bodies, employers and employees make contributions to pension schemes on a pay-as-you-go basis
Pension funds calculate your rates based on points accrued during your working career, whilst also calculating the pension amount against the average of your entire working salary
The Voluntary Private Pension
Just like everywhere else, you can take a private pension plan
What’s the Background?
During the 2017 presidential elections, then-candidate Emmanuel Macron had promised to reform the pensions system, under a sytem containing three proposals:
Firstly, the creation of a universal state retirement plan, replacing the 42 individual retirement plans that exist in France
Secondly, the inclusion of a “points system” to give pensions in proportion to contributions paid
Thirdly, “improving the pensions of the most disadvantaged”
This system would increase the retirement age for many jobs in France
The 2019 French pension reform plan followed on from reforms in 1993, 2003, 2010, and 2013, but was seen as far more comprehensive in reforming the sytem, as opposed to previous attempts that merely adjusted the system
Jean-Paul Delevoye, had previously been appointed as high-commissioner for pension reforms, and delevered a report of recommendations in July 2019. Unfortunately, he forgot to disclose 13 volunteer activities, including one remunerated activity for the French federation of Insurances, and was forced to resign in December 2019 when this was disclosed by the press
He was swiftly replaced by Laurent Pietraszewski
What Was The Proposed System?
Workers will “buy” points and the number of points earned by year will depend on their salaries
The amount of money devoted to buying the points will correspond to 28% of their salary, 17% being paid by the employer and 9% by the employee