Pension reform: the article to read to disentangle the true from the false

Strike and demonstrations against pension reform what is planned for

For this first day of mobilization against the pension reform, the unions are hoping for a tidal wave in the streets. Will they be right? In any case, they do not spare their efforts. For several weeks, an oratorical contest has been taking place between opponents of the reform who want to mobilize the French, and supporters of postponing the age, who are trying to convince them of the need to work longer. Arguments abound… and very often distort reality. Decryption.

  • “The pension reform is imposed by Brussels”

To hear France Insoumise (LFI) and the National Rally (RN), the decline in the retirement age would be yet another diktat imposed by Brussels on France. An argument that is actually… a very big shortcut. The European Commission has indeed recommended that France “progressively unify the rules of the various pension schemes, in order to strengthen the fairness of the pension system while supporting its viability” within the framework of the European Semester. And the government has also mentioned this commitment in the national recovery and resilience plan submitted to the European Commission. But if the executive does not implement this reform, it risks nothing. “The results of the reform will be analyzed in the context of the European Semester and, insofar as France falls under neither the corrective arm of the Stability and Growth Pact nor the procedure concerning excessive imbalances of the procedure concerning macroeconomic imbalances , no sanction is currently possible”, replies the European Commission. And the credits of the recovery plan will still be released, because the pension reform is not part of the objectives to be achieved for this.

  • “The reform is fair and balanced”

The government hammers it, its reform would be “fair” and “balanced”. The government has indeed provided a series of shock absorbers to pass the pill. About a third of the savings generated by the reform should be reinvested in order to improve the long career system and the use of the early departure system for incapacity, increase the minimum pension, etc., in short, to make postponing the age less painful starting point for a certain number of workers. This does not prevent efforts from being concentrated on working people, in particular those born between September 1, 1961 and 1973. “Companies and retirees have meanwhile been spared, the government having chosen not to use the levers for increasing contributions or reducing pensions”, notes Nathalie Chusseau, professor of economics at the University of Lille. Contrary to what one might think intuitively, it is not the most modest who should be the big losers, but rather the middle classes. In any case, this is the hypothesis put forward by the Institute of Public Policy (IPP), which estimates that at this stage, that “it is more the intermediate categories on the income scale, including those who are in the upper half of this scale, who are likely to be most affected by the coming reform”.

  • “The pension reform is violent”

The opposition denounces the “brutality” of the government’s measures. According to Laurent Berger, this reform would even be “the most violent for 30 years”. If there is reason to debate politically on the “violence” of the use of the lever of postponing the retirement age, it is all the same possible to compare what is envisaged today with what could have been done in the past. The unions are right on one point. The rapid implementation of the reform (it should apply from September) could be difficult for people who were preparing to retire… But on certain points, the reform to come is much less harsh than that of Nicolas Sarkozy, who had for example pushed back the age of cancellation of the discount from 65 to 67 years. The rate of increase in age is also slower than that decided in 2010 (3 months against 4).

  • “There is no funding problem” versus “The system is bankrupt”

On this point, the opponents and supporters of pension reform can turn to exaggeration. According to forecasts by the Pensions Guidance Council (COR), the financial situation of the plan should actually deteriorate this year after surpluses in 2021 and 2022. And the organization does not envisage any improvement in the short term. “From 2022 to 2032, the situation of the pension system would deteriorate with a deficit ranging from -0.5 point of GDP to -0.8 point of GDP depending on the agreement and the scenario adopted”, estimates the COR. The return to equilibrium is not expected before the mid-2030s, in the best of cases. “The system is therefore not on the verge of bankruptcy, but the deficits produce debt, which can be worrying, because interest rates are rather on an upward slope”, analyzes Nathalie Chusseau.

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