It’s been business ‘comme d’habitude’ in France over the last 12 months – very little in tangible changes in the creaking French retirement system and protests in the street at the slightest mention of tinkering with the status quo.
At the beginning of the year, French employer associations led by the powerful MEDEF attempted a bold strategy of threatened withdrawal from the system in a bid to push the French government towards increasing to 45 years the duration of private sector contributions before a pension could be realised.
Resistance from the country’s unions and the habitual sight of the French taking to the streets, however, meant the brinksmanship brought about little substantial change.
The compromise between the two sides produced draft proposals for the amalgamation of AGIRC and ARRCO, France’s complimentary pensions organisations.
Furthermore, pension payouts by the two bodies will be frozen until December 2002 and re-evaluated in April of each year.
The social partners also agreed to open up discussion on France’s retirement system and instigated a working party to look into the viability of France’s pensions regimes over a 20-year perspective.
The reality of the situation, it seemed, was not lost on the French people. A survey in March this year by respected academics in Germany and Italy revealed that more than 80% of French people believe that in 10-15 years their pensions systems will not be able to pay full benefits in the light of the impending demographic imbalance.
Significantly, 75% said they thought that within 10 years there would be significant reform in their public pension arrangements.Paradoxically, however, 65% of France says it wanted to either maintain the size of the public pensions system or increase taxes!
The French government has also delayed plans to detail the structure of its reserve fund (Fonds de Reserve) – its response to the future demographic budget hole, which is projected to reach Ffr1trn (E150bn) by 2020.Decisions on investment policy and the all important management of the assets were due to be included in this year’s financial projections for French social security, but were withdrawn at the last minute for technical reasons.
At the end of 2000, the French senate passed new legislation on the country’s ‘epargne salariale’ 401k type employee savings schemes, which effectively universalised the system and extended the possible savings period for employees to 10 years – a move that some criticised in France as pension funding by the back door.
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