French utilities’ funded pensions – more details
FRANCE – More details have emerged about the structure of the funded pension arrangements of the French utilities Gaz de France and Electricité de France following their planned partial privatisation.
The two chambers of parliament could approve a bill to partly privatise the state-owned gas and electricity companies GDF and EDF by the end of the month, which would end their current pay-as-you-go pension systems.
Members of the Senate, which approved the draft bill last week, are set to meet the national assembly, which voted in favour of the bill at the beginning of the month, to discuss the move.
If the chambers agree, the controversial bill could become law by the end of the July, a senate official told IPE.
The current pay-as-you-go pension system of the two companies, IEG Pensions, would then be turned into an independent fund to be called Caisse nationale des industries électriques et gazières, CNIE.
The fund is be placed under joint guardianship of the ministry of social security, part of the ministry of health and social protection as well as ministries of energy and budget, both part of the finance ministry, headed by Nicolas Sarkozy.
CNIE will also have its own board of directors, which will also include union and employer representatives.
The nine articles dealing with pension provisions state that workers will automatically join the new fund from next year and the state is called to provide guarantees for the “specific” pension obligations contracted by the end of December 2004.
The French retirement system, which until a few years ago has been based on the PAYG go and intergenerational solidarity principles, has undergone a series of adjustments in the last few years.
The first attempt to tackle the issue of pension sustainability over the long term was the setting up of the French Reserve Fund, the FRR, in 1999. The FRR’s mission is to set aside adequate financial resources for pensions.
The 16 billion-euro fund allocated its final 1.8 billion euros in assets last week, five years after its constitution and a year after the definition of its portfolio.