L’Express: Young workers tend to think that the current pay-as-you-go system will have disappeared when they reach retirement age. Is this possible?
Bruno Chrétien: Thirty years ago, we already heard these fears, but they are unfounded. However, the golden age of pay-as-you-go retirement is behind us. In France, the standard of living of retirees today exceeds that of workers. The level of pensions is too high compared to that of contributions! For example, in January 2024, pensions were increased by 5.3% for the basic plan and by 4.9% for Agirc-Arrco, while the salaries of active workers only increased by 3.8%. %. Funding of schemes is largely asset-based and is becoming difficult to maintain, which has led to the postponement of the retirement age.
Why haven’t previous reforms solved the problem?
The break came in 1982, when François Mitterrand lowered the retirement age from 65 to 60. Solidarity contracts also made it possible to leave from the age of 56 with 90% of the net salary. The French massively seized this opportunity. Since then, reforms have only tried to make up for the blow. The root of the problem lies in the balance between contributors and retirees. We must reduce active contributions and reduce pensions if we want the solution to be tenable for active people.
What points of the latest reform could be improved?
The Prime Minister assured that he would not reverse the reform, which is good news for public finances. Some adjustments are nevertheless possible on themes such as arduousness, women and senior employment, but an ambitious overhaul is unlikely given the political situation. The long career mechanism must also be reviewed, as some people benefit from it without valid reason. It should be reserved for truly arduous jobs (exposure to the cold, carrying heavy loads, night work, etc.). This system could also apply to professions with a labor shortage. Women’s retirement represents another issue, especially with the decline in marriages and the resulting gradual disappearance of survivor’s pensions.
What role can retirement savings play in this context?
Retirement savings will limit the impact of the reduction in pensions, while guaranteeing a better standard of living. It will not replace the compulsory schemes, but will complement them. It is a defensive solution for the younger generations: they will have to pay more to obtain services similar to those of today.
A recent report suggests imposing a collective retirement savings plan in companies with more than 11 employees. Is this a good idea?
Not necessarily. If companies do not have the means, they will not contribute to this system. It is better to encourage payments when certain results are achieved, such as participation and profit-sharing.
Could we move to a funded pension plan, like the Anglo-Saxons?
Not overnight, because that would compromise the financing of current pensions. However, capitalization can constitute a useful complement, provided it is managed by the social partners, as is the case for the supplementary schemes for civil servants and pharmacists.
.