“The pension reform will suffer a storm”, notes François Lenglet

The pension reform, a major unfinished project of Emmanuel Macron’s first five-year term, will suffer a storm. The consultation must begin no later than the end of the summer, in principle, as the winds pick up.

First of all, the winds are economic, with the unmistakable drop in purchasing power this year, under the effect of inflation, and this, despite the tariff shield on energy, the reduction in fuel taxes and others checks or inflation allowances. It will bite, especially if the rise in prices accelerates, as one might fear seeing thecurrent runaway food products.

At the same time, the growth slows down, after the vigorous post covid rebound that we have known. The average for the euro zone is just above zero, and Bruno Le Maire warned on Thursday: “the hardest part is ahead of us”.

Political reform

Politically, Emmanuel Macron does not have a very clear plan. Before the first round, he announced the raising the legal age to 65. The next day, he crossed his skis while evoking at the same time 64 years, a review clause and possible referendum ? It’s not the same.

Then, the caravanserai of the opposition will be united on this subject: Jean-Luc Mélenchon and his new associates as well as Marine Le Pen all want the return to 60 years. Even if they don’t have the majority, they’ll bang on pots, and it will make noise.

Opponents of the reform argue that basically, there is no urgency, according to expert reports. Except that these reports are very practical, because they follow and contradict each other. One can therefore choose the one that suits his thesis. Whatever is said about pensions, there is always a report from the COR (Retirement Orientation Council) that approves.

The latest in fact explains to us that all other things being equal, there is no fire. It is obviously the “elsewhere” that is important in this sentence. And a recent article in the magazine Comments sheds light on the real state of the finances of our pension system. We are very far from equilibrium.

Huge sums paid

The latest COR figures, which show a deficit of 13 billion for 2020, do not show balancing subsidies paid by the state, considered as usual receipts. While a private employer contributes 16% of salary under retirement, the state employer thus contributes 74% for civil servants, 126% for the military, and some 30% for hospital staff. To put it another way, for 100 euros of net salary paid to a civil servant, the state pays 77 euros of pension in charge.

Partly the demographic imbalance explains these differences in payment. At the SNCF, for example, there is fewer active agents than retired ones. To say nothing of Mines, which has more new affiliatesin complete extinction since 2010.

Then the replacement rate, that is to say the relative level of pensions in relation to salary, is better in the public sector than in the private sector. If all of these subsidies are taken into account, the pension deficit in 2020 is not 13, but 43 billion over one year. Figure confirmed by the excellent François Ecalle, from Fipeco. The pension deficit of 2019, thus rectified if one can say so, quite simply accounted for almost half of the French public deficits.

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