FRANCE - IPE talks to Raphaël Hadas-Lebel, president of the Conseil d'Orientation des Retraites (COR) - which monitors the French retirement system and puts forward recommendations for public policy concerning retirement - regarding the new measures the ministry of labour will put in place to extend the length of contributions for people born in 1955.
IPE: The announcement made by the COR concerning the extension of the length for contributions comes less than a week after new measures - adopted under the 2010 reform, which aimed to increase the legal retirement age for people born after 1951 - were implemented. How do you justify this?
RHL: The reason why we decided to hold our meeting on Wednesday to discuss this point is not linked to the implementation of the 2010 reform. The reason is to be found elsewhere. The meeting came after our discussion with the national fund for retirement provisions (CNAV) and the publication of new data on life expectancy for people aged 60 years. Once we had all the necessary details to make our calculations, we decided to give our view of the situation to enable people born in 1955 - especially those who are apt to take an anticipated pension after a long career - to know in advance how many trimesters they will have to contribute for their pension.
IPE: The COR believes people born in 1955 will have to contribute to the pension system over 166 trimesters, instead of 165 for people born in 1953 and 1954. What will happen for generations born in 1956, 1957 and 1958 and for whom the length of contributions has not yet been defined?
RHL: The idea of extending the length of contributions is the result of the calculation rules introduced with the 2003 law, which take into account both the legal retirement age and the period over which the French will have to pay before getting their pension.
In addition, the 2010 law includes a new measure. From now on, the length of contributions for people turning 56 has to be defined every year, as the National Institute of Statistics and Economic Studies (INSEE) publishes new data on life expectancy. Thus, following the 2003 law, the COR will have to reach a decision concerning the generation born in 1956 before the end of 2012 - when that generation will reach the age of 56.
Nonetheless, taking into account the fact data on life expectancy have already been published - and even though the COR has not made any calculations yet - this generation is likely to pay contributions for the same period of time as people born in 1955, which means 166 trimesters. As a result, the COR might not wait until the end of 2012 and could reach a decision in the second half of this year.
IPE: What are the real issues of such a reform? And do you think the government must act now to implement new measures?
RHL: The main objective for the French pension system is to return to financial stability by 2018, as previously stated by the government. This balance depends on several factors, including the employment rate. This is the reason why the 2003 law has introduced the Comité de Pilotage des Régimes de Retraite (COPILOR), which is in charge of analysing the financial situation of the pension system every year.
IPE: Many pension experts and social partners in France claim the legal retirement age, which is progressively increasing from 60 to 62 years, added to the extension of the length of contributions is not a fair measure. What is your point of view on that particular issue? Do you think France should adopt one criterion only based on the contribution period, like it has already been decided in other European countries such as Sweden?
RHL: We cannot make quick comparisons when it comes to the pension system, as each country faces different issues and, therefore, has to implement different measures. Whereas the legal retirement age added to the extension of the length of contributions is seen as unfair, France is not the only country in Europe to have adopted those two parameters. We have to adopt a global approach to the pension system to better judge its effects.
The question of the introduction of a system as they have in Sweden (with notional defined contribution accounts) refers to a systemic reform, for which a national debate will be launched in the first half of 2013. The COR published a report related to this question in January 2010. One of the conclusions was that, putting aside the technique used - annuities, point system or notional defined contributions - the return to financial stability will depend on three parameters: the level of financial resources, the level of pensions and the average retirement age.