While the thorny question of public deficits and ways to fill them occupies everyone’s minds, the subject of pensions seems buried. As if the postponement of the age from 62 to 64 decided last year had closed the debate. The Pension Orientation Council (COR), which is already working on its report next June, will very probably tell us, as it has done for a long time, that pensions were almost balanced or even in surplus in 2023. This message will be like usually inaccurate. He will once again mislead Parliament and public opinion. In reality, pensions were at the origin of 54% of the public deficit in 2022 and still contributed almost half to that of 2023. Continuing to deny this poses a serious democratic problem.
The COR once again in turmoil
The COR will therefore not take into account the opinion of an increasing number of experts who maintain that pensions are at the origin of a very large part of French deficits. Nor the presentation made by François Bayrou, on September 21, 2023, in front of the entire COR, pointing out a contribution from our pension system of 68 billion euros to a total 2022 public deficit of 126 billion and, above all, the simple proposal made on this occasion to present a real pension balance, “before” the subsidies that pension funds receive from other administrations to pay benefits.
Certainly, these subsidies, including the additional contributions paid by the State on the salaries of civil servants at the rate of 98% and by local authorities and hospitals at the rate of 43% (compared to 28% maximum for all other French employees), rate already very high in Europe, count well in the overall public deficit. But the COR continues to cling to a “convention” which consists of considering all the sums paid by the State to balance the pension scheme of its civil servants (40 billion euros), those intended to balance the special schemes ( 8 billion) but also the sums paid by local authorities and public hospitals (8 billion) to the scheme of their civil servants, as well as the sums paid by other social funds (Family, Unemployment and Sickness to the tune of 14 billion) to the scheme general pensions, as if they were contributions or assigned taxes. And the unavoidable accounting fact that pensions are indirectly financed by public debt will, once again, disappear.
Insincere public accounts
Even with a new president, a renowned economist, the COR therefore continues to favor political consensus over economic and financial realities. In this regard, if the rules in force for the communication of companies making public offerings applied to the public sector, the State, its directors or their auditor, the Court of Auditors would be sanctioned by the regulators and in particular the Financial Markets Authority for insincere public accounts, in which the parent company moves the results between its different divisions at will through transfer artifices.
How can we explain that out of 1,600 billion euros of public spending in 2023, social systems (800 billion in spending, almost half in the form of retirement benefits) and local authorities (300 billion) are presented to the Parliament in balance while the State (500 billion euros, only 31% of expenditure) concentrates all of the deficits (- 150 billion)? The general accounting of the State is fair but its analytical accounting is misleading and excessively postpones the adjustment of public finances where future spending is located (education, research, climate transition and economic competitiveness).
Political leaders are starting to see this. After François Bayrou, Edouard Philippe, who presented in 2019 a complete reform, since abandoned, which ensured much greater transparency of pension accounts and a settlement of their real financial situation over a long period, recently said this in Besançon in front of the Horizons executives. “Part of our collective abandonment comes from the fact that Parliament votes each year on non-consolidated accounts, which do not present a faithful image of the contribution of each institution to the overall deficit. This is particularly true for Social Security. Our way to present and debate the budget of public administrations must evolve to better reflect the real state of our finances”, he declared, emphasizing that the warning from François Bayrou, High Commissioner for Planning, in December 2022 , on the real pension figures was based. Other personalities will be sure to follow.
Transparency and democracy
Transparency is easy to establish. This involves clearly identifying in the public accounts, on the one hand, the compulsory deductions (contributions and taxes) which naturally and healthily finance our significant pension expenditure, but incompletely, and, on the other hand, the subsidies, whatever their form and reason, unexplained additional contributions or official subsidies, which supplement this natural financing. The COR refuses to do so. The Social Security financing laws do not do this either. However, there is no need for any law to do this before Parliament, informally at first.
This essential transparency of accounts, which does not yet exist in our so-called advanced democracy, is certainly difficult to explain to public opinion. We will have to tell those of our inactive fellow citizens who have the right to solidarity from others that this cannot, however, be paid by future generations in the form of public debt, and that social benefits, especially pensions, must be deindexed over time at least for the most advantaged. Straightening French public finances in the medium term and at the same time facing the challenges of significant future public spending will indeed make a gradual and measured reduction in pension spending essential.
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