FRANCE - France's collective retirement saving plan PERCO is attracting more workers due to its flexibility, but only around 10% of companies have adopted this system since its introduction in 2003 and several barriers remain.
According to Laure Delahousse, director in charge of pension saving vehicles at the French Asset Management Association (AFG), the PERCO continues to grow, but there is still a long way to go.
"Traditionally, in France, public pension benefits are relatively high," she said. "As a result, French people use saving vehicles, but not necessarily for their pension.
"It is a cultural problem, and the French need a clear message from the state to understand their pension benefit will decrease over time due to the growing deficit."
PERCO plans - which were launched by the 'Fillon law' in 2003 to encourage French workers and companies to use a capitalisation system to complement the traditional system of pension distributions - receive payments based on the employee's desire to save.
Employees have the option of paying sums from profit sharing and incentive schemes and can make voluntary payments.
Usually, the amount paid is then completed by the employer, which also saves a certain sum on behalf of the employee.
However, according to Delahousse, only a small percentage of the population understands the attraction of such a plan.
"The average age of people investing in a PERCO is 47 years - this is too old," she said. "The average age should be brought to 40 years. French workers should start to save earlier for their pension."
PERCO funds are invested in three asset classes: equities, bonds and the money market.
Delahousse said: "We have launched an automatic asset allocation (gestion pilotée, or lifecycle) to help people to invest in the right asset class according to their age.
"Clearly, young workers can afford to take more risk, and we then orientate their investments in equities and bonds, while for older employees, we recommend investments in non-risky assets as guaranted or monetary funds."
The current French pension system comprises a compulsory public pillar and a compulsory private pillar, which is split into 37 schemes according to the professional category to which each worker belongs.
While the government manages the public system directly, the social partners manage most of the private schemes.
The pensions are also based on a pay-as-you-go system that prioritises "inter-generation solidarity".
This system is currently facing an important deficit that the government is trying to tackle by introducing new reforms.
A new series of measures was launched in November last year to extend contributions and to push back the legal retirement age from 60 to 62 years.
A systemic reform has also been proposed, and an amendment has been filed to organise a national discussion on the possible introduction of systemic pensions reform.