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French social partners to fuse ARRCO and AGIRC

FRANCE - The standoff between the French federation of employers (MEDEF) and the country’s unions, over reform of the state social security system has ended, with the two sides drafting proposals that look set to lead to the amalgamation of AGIRC and ARRCO, France’s complimentary pension organisations.

However, the negotiations between the two sides, which together make up France’s social partnership, failed to get unanimous support from French trade unionists, with the influential CGT (Confédération Générale du Travail) and FO (Force Ouvrière) unions walking out on the talks.

Prior to the discussions, demonstrations called by the unions had brought thousands to the streets to protest against a proposed increase in the basic retirement age from 60-65.

Under the new accord, pension pay-outs by AGIRC and ARRCO – France’s complimentary pensions bodies - will firstly be frozen until December 2002.
Re-evaluation of the pensions level will be made in April each year, meaning that excess pensions contributions for January 2001 will be reimbursed to employees – a figure which experts say could represent F6bn (e915m).
No contributions will be collected for February and March this year while the pension replacement levels are being examined for 2000.

During this time, the proposals suggest that ARRCO and AGIRC be ‘brought together’ to ‘rationalise’ their function and that finally the two will be ‘regrouped’.

Furthermore, the ASF (Association pour la structure financière) – a joint organisation set up by the social partners to fund the cost of early retirement - will be replaced by a new body called the AGFF (Association pour la Gestion du Fonds de Financement de l’AGIRC et de l’ARRCO), which will run until 2002 and looks set to rebalancing the current deficit in AGIRC.

On a wider scale, the document puts forward a number of key points designed to be the principle for reform of the basic state scheme by the French parliament.

Firstly, the social partners propose to define and guarantee a level of pension for the next ten years that prevents any reduction in the points based replacement rate by which French pensions are calculated.
Contribution rates should also be frozen over this period, which the social partners say will preserve the balance between generations and maintain business competitivity.

A perspective of 20 years should be taken to define the evolution of France’s retirement system, it is suggested, with a working committee set up to look into the viability of the different pension regimes in France.

In terms of reform, the agreement notes that changes to the duration of contributions should be the means by which retirement levels are determined; suggesting payments over a longer period to guarantee a full pension.

However, freedom of choice for employees wishing to retire at 60, or before for employees who started careers at a young age or for those in ‘difficult’ industries must be safeguarded, the proposals argue.

Arnaud D’Yvoire of the Paris based Observatoire des Retraites, believes the agreement will be valuable and of some relief to the government.
“ The social partners may apply this without the agreement of the government, but
it will be a huge task – especially as one suggestion is to more or less merge AGIRC and ARRCO.”
“ I don’t know if it was clever manipulation or not, but everyone was convinced last week that MEDEF would withdraw from the social partnership.
“ In fact MEDEF more or less signed something it could have obtained at the beginning, without so much trouble.
“ I think it was an attempt to shock public opinion out of its lethargy and put into people’s minds that in the future people will not be able to retire at 60.
“ In appearance they obtained nothing but in fact they were maybe not so stupid.”


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