French civil service scheme swaps PAYG for funding
FRANCE – The French civil service complementary pension scheme, the €5bn Complément Retraite de la Fonction Publique (CREF), part of the Mutuelle Retraite de la Fonction Publique (MRFP), is to convert from a traditional caisse de retraite pay-as-you-go system to a fully funded pension scheme, managed by three public mutual institutions.
CREF, which provides complementary retirement provision to over 450,000 public sector workers, is already offering a defined contribution type pension plan alongside its caisse de retraite, which accounts for 60% of its pension provision.
The move to convert is apparently the result of compliance with a European directive passed last May to establish guidelines for mutual companies. The directive stipulates that the pensions liabilities of mutual companies must be fully funded as a capitalisation product.
The three mutual companies that will take over the management of the fund’s assets are Mutuelle Générale de l’Education Nationale, Mutuelle de la Fonction Publique and the Mutuelle Générale.