France’s constitutional council has validated the new pensions bill, marking the final stage of the lengthy pensions reform process.
The council has been reviewing the pensions bill adopted on July 24, and looking into complaints made by the socialist members of the parliament and senate.
The most controversial and debated part of the bill called for a harmonisation of the public and private sector pensions systems. In order to claim a full pension, both public and private sectors workers must contribute for 40 years as of 2008. This will increase to 41 years in 2012, increasing to 42 years in 2020, depending on demographic, economic and social changes.
The council has validated the bill and rejected the grievances of those opposed, saying “the extension of contribution periods is aimed at safeguarding the pay-as-you-go system.”
Complaints that the bill did not provide equal pension rights for men and women were also rejected.
The all-clear by the constitutional council brings to an end the seven-month pensions bill debate, and will be welcome relief for the French government. Since the proposals were announced in January, France has been plagued by public strikes and demonstrations, and there were fears that the government may have to back down as in 1997.
Labour minister Francois Fillon and prime minister Jean-Pierre Raffarin, however, stood their ground, re-iterating the urgency for pensions reform given the demographic issues facing the country, using television, radio and even personal letters.
The French parliament reopens this month when discussions on supplementary pensions will commence.
Helen Avery

International consultants Mercer Human Resource Consulting has estimated that, taking everything into account, the total combined pension fund deficits of UK companies could be up to £300bn (E423bn).
The consulting firm says that it estimates that the aggregate pension deficit under the FRS17 accounting standard for companies in the FTSE350 index is about 90 billion pounds. It says this figure includes up to £15bn pounds of overseas liabilities.
But it estimates that the figures can be extrapolated for all UK firms to give an FRS17 deficit of around £150bn for UK schemes as a whole.
“This becomes £300bn if consideration is given to the cost of winding up schemes by securing insurance policies, or converting to insurance companies in the case of the largest schemes,” Mercer says.
“We wait to hear, with interest, which of these numbers will be adopted by the government to determine levies for the forthcoming Pension Protection Fund,” says Mercer’s European partner Tim Keogh.
Mercer used data for all the 147 companies in the FTSE350 index with December 31 year-ends and extrapolated the figures from there.
Mercer says that four in 10 of the UK’s largest companies retain final salary schemes that are open to new members – down from nearly two-thirds a year ago. Mercer studied the most recent annual reports of FTSE 350 companies with end-2002 year-ends.
It said that many companies now offer a combination of both final salary and money purchase pensions and added that only 25% have not yet opened some form of money purchase scheme, compared to 45% last year.
“Undeniably, there has been a huge shift in the nature of pension provision in recent years,” said Keogh. “But it would be an oversimplification to say that final salary schemes are dying out.”
He adds”A striking development in recent months is the number of employers re-committing to final salary schemes, but rebalancing the costs. Many companies are changing the cost structure of their schemes, such as increasing employee contributions or adjusting the rate at which benefits can be built up.”
“Significant numbers of employers have sought to cut costs by closing their final salary schemes to new entrants. Such measures will help reduce the cost of future liabilities but will have little effect on current deficits,” says Keogh. The median funding level has fallen from 91% to 74%, under FRS17.