French experts sceptical of systemic pensions reform

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FRANCE - French experts believe the debate over the reform of the pensions system - currently planned for 2013 - is unlikely to go ahead, as several political and economical issues remain.

In October last year, an amendment was filed to organise a national discussion on the possible introduction of systemic pensions reform.

This debate could begin in the first half of 2013, just after the presidential elections scheduled in 2012.

Stéphane Hamayon, director of economic studies at French consultancy Harvest, said: "The idea of systemic reform is probably the best option, as the current pension system does not fit in the economic and demographic environment.

"However, such a reform is unlikely to be launched, and even the idea of simply talking about it could be reviewed, as the French are not ready for it.

"The government that will be elected in 2012 is, therefore, expected to amend in the coming years the parametric reforms introduced in 2003 and 2010."

The parametric reforms, which aim to extend contributions and push back the legal retirement age from 60 to 62 years, are seen as a temporary means of tackling the deficit.

But many pension experts in the country argue that those reforms will be insufficient to absorb the deficit and that systemic reform would cut costs, particularly by gaining a better understanding of demographics.

The current French pension system comprises a compulsory public pillar and a compulsory private pillar, which is itself split into 37 schemes according to the professional category to which each worker belongs.

While the public system is managed by the government directly, most of the private schemes are managed by the social partners.

The pensions are also based on a pay as you go system that prioritises "inter-generation solidarity".

Like many other European countries, the French pension system is facing a sizeable deficit due mainly to an ageing population and a low birth rate.