The AGIRC pension fund which covers French managers could be forced to merge with the ARRCO employees' fund early in the next century according to Tim Reay, an associate with Bacon & Woodrow in Paris.
Assessing the funds, which are complementary pension schemes affiliated to the ARRCO and AGIRC employee federations, Reay said, speaking recently in London: Financially there are fewer and fewer reasons for the schemes to be separate. There are vested in-terests, not least AGIRC and ARRCO themselves, but I am not sure that this will be enough to keep them apart."
Reay listed several trends undermining AGIRC, which he described as "peculiarly vulnerable". Talking to IPE, he explained that the in-come of PAYG schemes, particularly that of AGIRC was sensitive to external influences.
AGIRC has suffered from a re-duction in contributions as the state, in a bid to raise contributions overall, has raised the salary ceiling for contributions to ARRCO.
Reay said: "The ceiling has been increasing faster than aggregate managers' salaries so the contribution base is being squeezed and this may well continue."
There are other difficulties over the contributions base. Company employees who earn above FF164,400 ($29,000) may not be described as executives thus avoiding paying a 20% contribution on their earnings over FF164,640 in-stead remaining with ARRCO and paying 7.5% on the whole of their salary.
There are plans to change this with plans to harmonise contributions in the next decade with ARRCO members also paying 20% on earnings above FF164,640. But Reay observed that this removes a difference between the two schemes making merger more likely.
In a further erosion of the contributions base, Reay pointed out that owner-directors of small firms, who have often deemed themselves as cadres and have paid to AGIRC may change to self em-ployed status."