French pensions reserve fund, the Fonds de Réserve pour les Retraites, expects a cash injection of more than E3bn next year as it takes on assets from France’s energy utility firms.
The move could see the fund, worth around E17bn at the end of June this year, grow to around E23.1bn by the end of 2005, an official said.
Legislation to allow the payment has been passed by the National Assembly but not yet finalised. However, this is expected before the end of the year, according to Raoul Briet, president of the FRR supervisory board.
The sum, which will total E3.1bn, is part of the E7.7bn to be paid as
a compensatory adjustment by France’s electricity and gas enterprises, EDF and GDF, on the integration of their pension obligations into the state old-age fund, the Caisse Nationale d’Assurance Vieillesse (CNAV). Previously the energy sector’s pensions were handled by Industries Electriques et Gazières (IEG) which is being closed.
Following the CNAV’s negotiation of the compensatory sum it was agreed that 40% of the total would be paid to the FRR which will retain the sum until 2020, when it is required to begin contributing to the state pension system. From 2020 the E3.1bn and the investment return it has earned on the market will be paid to the CNAV which in turn will use it to pay the pensions of EDF and GDF retirees.
“This sum will be totally incorporated into the management of our assets,” he added. “Money will be split between existing mandates and upcoming calls for SRI and private equity tenders.”
The FRR projects it will grow to E18.8bn by the end of 2004 through CNAV surplus and the 2% social tax. Further money will come in the first half of next year from regular income as set out by law.
In July the FRR said that it would announce private equity and SRI mandates by the end of the year or the beginning of next.
A civil servant said that parliament’s decision to shift the responsibility to pay pensions from EDF and GDF to CNAV has been controversial.
The pension arrangements the firms’ employees feature “some privileges” and in July the senate appeared reluctant to vote on the changes of pension arrangements that would follow privatisation.
“The problem was creating a structure to pay civil these special servants’ pensions,” he said. “But now instead these higher pensions are partly paid by contributions and partly by taxpayers’ money.”

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