FRANCE – Construction industry scheme Pro-BTP is in the process of setting up new forms of savings based on the principle of capitalisation.

“We are in the process of establishing for the whole construction industry new forms of savings based on the principle of capitalisation,” said Pierre Ramadier of Pro-BTP in an interview.

“That starts now and will become fully operational by the end of the year.

“It will complement the existing ‘repartition’ system whose funds are invested in very short terms assets. The existing system will continue as before but with an increased level of contributions to allow it to continue to exist. But the additional contributions only serve to rebalance the system, so that the pensions that are going out can be fully paid for.”

Ramadier said the new scheme would be backed by long bonds and index-linked bonds (total two thirds), with a third in equities. Two thirds of the bond portfolio would be government-issued and a third corporate.

He said: “There is no minimum rate of return; we expect to return at least the rate of inflation.”

“We don't know whether the new vehicles that are being proposed will be more attractive; it will depend on the tax breaks.

“The government wants to encourage these complementary savings through tax breaks, but for the moment the level of interest in the new products has been low because the fiscal advantages are not considered to be sufficient.”

He added: “This new scheme is a very important strategic decision. The existing system was a system that was not balanced because of the evolution of demographics, so we therefore needed to find an additional form of retirement provision.”

He said Pro-BTP has an agreement with all the companies in the sector so that when the individual contributes the company contributes as well.

Earlier this year Pro-BTP named Paul Grasset director general, effective from January 1 2005.