The forecasts are less good than expected. Like every year, the Retirement Orientation Council (COR) must publish this Thursday, June 13, its report on the economic health of the French retirement system. Attached to the Prime Minister’s office, this independent body should provide a revised diagnosis in form and with updated economic forecasts according to the annual context.
According to a copy of the report consulted by AFP, Monday June 10, these projections would be slightly degraded: the COR now forecasts a deficit of -0.4% of GDP for the retirement system in 2030. Last year, in its first forecasts after the controversial pension reform, the COR was more optimisticcounting on -0.2% of GDP by 2030. Bad news for the government, particularly linked to the recent lowering of public deficit forecasts.
Rising pension costs
The next COR report could therefore confirm the upward trend in the deficit of the French pension system. After a surplus of +0.1% of GDP last year, the balance of resources and expenditure of this system for 2024 is this time estimated at -0.2% of GDP, says AFP. This is 0.1 point higher than last year’s estimate.
In its upcoming 2024 report, the Pensions Guidance Council highlights three possible explanations. First of all, the COR mentions according to AFP the recent deterioration of the government’s macroeconomic forecasts. In March, after several weeks of uncertainty, the Ministry of the Economy finally confirmed that France’s budget deficit in 2023 amounts to -5.5% of GDP. A level much higher than the -4.9% previously forecast, forcing the government to also revise upwards its projection for 2024: from -4.4% to -5.1% of GDP.
Another cause cited by the report: the revaluation of Agirc-Arrco supplementary pensions in November 2023, a little higher than expected, would also contribute to this deterioration, according to the COR. Finally, pension spending also increases slightly in its projections for the years to come: to 13.7% of GDP in 2030 (13.5% in last year’s report), and 13.2% of GDP in 2070 (13% in last year’s report).
COR methods are evolving
The 2024 report of the Pension Orientation Council is also changing in its form, says AFP. The 2024 edition of the COR report now uses slightly less optimistic labor productivity growth assumptions than the previous ones. Thus, the 2024 edition evokes four long-term growth scenarios between +0.4% and +1.3%, against four hypotheses from +0.7% to +1.6% previously.
The COR also clearly chooses a reference scenario (+1%) and only considers the other hypotheses within the framework of less detailed “sensitivity studies”, reports the press agency. This new version of the report was carried out under the leadership of the new president of the Pensions Orientation Council, Gilbert Cet. He succeeds Pierre-Louis Bras, dismissed by the government after nearly nine years at the head of the institution.
The government had criticized the COR for having put the scale of future deficits into perspective and then, after the pension reform, for having exaggerated future deficits. For the unions, which participate in the work of this independent body, this departure is a sign of the government taking control of the Orientation Council.