In a keenly anticipated speech about the government’s pension reform the French prime minister today defended the move to a universal points-based system but outlined some measures and commitments intended to address concerns about the contentious project.
The speech comes after several days of strikes and demonstrations about the reform. Initial reactions from trade unions suggest the government will continue to face vocal opposition.
Addressing concerns about pension levels not being maintained under the proposed new system, Edouard Philippe said the law would provide guarantees about the value of a pension point, and that the social partners – trade unions and employers – would be responsible for fixing its value and evolution, under the control of parliament.
The switch to a universal system where each day worked generates pension entitlement points was one of president Emmanuel Macron’s main campaign pledges two years ago. Today there are 42 different retirement regimes for different sectors or professional groups, with varying rules for contributions and benefits.
In his speech the prime minister also said the social partners would also be given responsibility for deciding, at the latest by January 2021, measures to return the French pension system to financial equilibrium.
Last month Conseil d’Orientation des Retraites, which monitors the French retirement system and makes public policy recommendations, forecast a deficit in the system of between €7.9bn and €17.2bn in 2025, equivalent to between 0.3% and 0.6% of GDP.
Nous avons pris le temps de concerter. Il faut désormais avancer. Je n’exclus pas que ceux qui nous accusaient hier d’aller trop lentement nous disent demain que nous allons trop vite désormais. #retraitespic.twitter.com/vDB4LTV0OV— Edouard Philippe (@EPhilippePM) December 11, 2019
On the sensitive point of the retirement age, prime minister Philippe said the legal retirement age would stay at 62, but that longer working lives were the only solution to a shrinking old age support ratio and that an “equilibrium age” needed to be set at 64, with a “bonus malus” system.
This would mean that a full pension would only become payable from the age of 64, with reductions for earlier departures and top-ups for later retirement.
One of France’s largest trade union groups, CFDT, has been supportive of the move to a universal points-based system to replace the current 42 different schemes, but today said by pursuing the introduction of this equilibrium age the government was crossing “a red line”.
CGT, a hardline trade union, called for more industrial action in the wake of the speech, which it said showed the government remained “deaf” to demands from various constituencies.
Philippe dedicated a portion of his speech to concerns and calls emanating from certain professions, including the so-called “liberal” professions, which have fears about the fate of the financial reserves built up in their retirement schemes.
The prime minister sought to assuage these fears, saying the reserves would stay with the schemes; there would be no “siphoning to close this or that deficit”.
In terms of the timing of the application of the reform, Philippe unveiled that a pensions reform bill would be submitted to the cabinet on 22 January 2020 and discussed in parliament at the end of February. He pledged a gradual adoption of the new system.
It would start operating in 2022 for those entering the labour market from that year, while the generation born in 1975 and before would switch to the new system from 2025. Workers less than 17 years from retirement and current pensioners would be unaffected by the introduction of the new system.