the retirement age will he be down ? The contribution period extended ? Seven keys to understanding the controversy around the reforms to the pension and dependency.
It is not mentioned anywhere in the report on the dependence presented last Thursday to the government. However, the thorny question of retirement age is on everyone’s lips the past few weeks. It is the minister in charge of the dossier within the government, Agnès Buzyn, who launched the controversy by declaring not to be “hostile” to a postponement of the minimum age beyond 62 years. A statement which has caused the disorder, Emmanuel Macron has promised during the campaign not to touch this parameter in its pension reform. Jean-Paul Delevoye, the task of preparing the big bang, not him-not even hiding his anger.
The minister of Health has been ensured that no”change of age of retirement” was considered, but the Prime Minister has reopened the fire by stating that the “question of whether there is a need to work longer” was “perfectly valid” in terms of the challenges of “funding dependency”. The government would think about it now to put in place more quickly the lengthening of the duration of insurance is required for retirement at the full rate.
While each day brings its share of confusion, here are seven keys for a better understanding of the controversy.
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1. The balance of the system is not provided
it is no surprise that the age has crept into the debate. If the candidate Macron explained that the pension reform was not intended to achieve cost savings, the Board of direction des retraites (COR) had cooled down the atmosphere after the election with financial projections which are less favourable than expected.
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How would the system in 20 years without reform ? In its latest report, the COR book four economic scenarios and the accounts are in the green than in the more optimistic of them. In the other three, the deficit may go up to 1 % of GDP. The fault, in part, to demographics : in a plan of distribution, the assets funding the pensions of today. However, the ratio of contributors/pensioners is brought to deteriorate due to, inter alia, of the arrival at retirement age of the baby-boom generations and the lengthening of life expectancy. There are 1.3 contributing per retiree by 2070 compared to 1.7 today.
2. The starting age is a tool to achieve the balance
How to ensure a balance of accounts ? Three levers are traditionally operated : the level of income (thus, especially, of contributions), the level of pensions (spending) and the age average starting.
The government seems to exclude the increase in pension expenditure. As regards the level of pensions, it has already been whittled away by the previous reforms. If the net pension average of pensioners now represents almost 65 % of the income activity average, this rate needs to fall to around 45 % in 50 years.
hence, the interest for the lever “age”. As the life expectancy is still progressing. According to the NRC, the life expectancy at 60 years was, in 2018 to about 27 and a half years for women and a little over 23 years for the men ; this would be respectively 30 and 27 years of age in 2040.
3. There is not an age, but ages of retirement
The effective age is that at which the seniors liquidate their real retirement. In constant increase these past years, it does not correspond nor to the legal age set at 62 years of age, or the age of full rate (reached either by validating the number of quarters required for its generation, either automatically between 65 and 67 years, depending on the generation).
The general scheme, the age average was already in 2017 62.5 years, and 63,3 years outside departures. All plans combined, the average age of departure expected to reach 64 years from the end of the 2030s, according to the NRC. The increase of the length of time required for the full rate, programmed by the reform of Touraine 2014, and the extension of the studies are that even without a new reform, the number of seniors that will be looking to the future to pick up the full rate will have to wait several years after the minimum age.
4. There are several ways to act on the starting age
To influence the effective age, the previous governments have used two methods : move the age from 60 to 62 years in 2010) and extend the minimum insurance period required for the full rate (41.5 years for the generation 1955 to 43 years for the 1973). The decline of the legal age penalizes more those who have started early in their career, the lengthening of the duration of insurance those who started later.
These two types of actions must be accompanied by measures for employment of older workers, in order to avoid that the savings side of retirement only adds weight to expenses of the unemployment insurance. 60 years ago today, only four seniors out of ten are in employment.
roll back the actual age to start could also go through policies of substantive non-coercive little developed so far – to fight against the strenuous working conditions, develop the’attractiveness of the purposes of career, etc, The goal is to avoid multiplication of sickness absence prior to retirement, but also ensure that fewer seniors will be forced out of the active life, for reasons physical and psychological.
5. The reform requires them to ask otherwise the problem
The question of the effective retirement age will, however, be more quite in the same terms with the reform. In a point system, the concept of the full rate disappears. The risk is that pensions are taken in the future earlier than expected if the minimum age was in the minds the reference age, while today the notion of the full rate is strongly anchored and that many expect to have their quarters for from. Hence the idea of introducing surges : the pensions awarded after age 62 would be increased, for example from 3% to 5% for each additional year.
Another issue, the duration of insurance moved up here more or less, with life expectancy over generations. If it disappears, another mechanism must be devised to keep the accounts in balance. Among the reflections : apply a penalty in calculating the pension to take account of demographic changes.
6. Two laws collide in 2019
If until march, there had not been question to push precisely the minimum age of departure, the subject of retirement ages, therefore, was already present in the debate, with a view to balancing accounts. However, it has taken another twist with the introduction of a further objective : to fund the addiction.
The calendar 2019 was conducive to the mix of genres, with one hand, the culmination of the pension reform in preparation for the end of 2017 and the other, a law on “old age and autonomy” expected by the council of ministers in the fall and whose financing remains to be found. The stakes are heavy : the report Libault reported 10 billion in additional spending for the dependency to 2030, recognising the demographic changes and the proposed measures to improve its management.
7. The intentions of the executive remain unclear
The idea of a return on the campaign promise by reversing the minimum age of departure in the pension reform that has caused an outcry, an amendment to the law on dependency has surfaced. Without more success. “Addiction has nothing to do with pensions, it is a health problem that can strike at any time so that the pension is a reflection of the career”, says the team of Jean-Paul Delevoye.
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another track would be all the same to study, and this time, the high commissioner did not protest : lengthen the duration of insurance at a faster pace than expected in 2014, to arrive quickly, for generations close to retirement, at 43 years old. To identify savings, it should be done quickly because the reform should abolish the concept of term insurance. However, an entry into force as soon as 2025, which was, until now at least, announced.