France: Macron’s reforms look secure

After the snap general election in July, called by President Emmanuel Macron following the poor results of his Ensemble alliance in the EU elections, the government of France is in limbo.

In terms of National Assembly seats, Macron’s centrist coalition Ensemble was pushed into second place by the left-wing New Popular Front Alliance, with the right-wing National Rally (RN) coming third. 

Presented with a newly configured – but still hung – parliament less than three weeks before the start of the Paris Olympics, Macron declared a political “truce” to last until after the Games ended in mid-August.

It is therefore unclear how far Macron’s unpopular first-pillar pension reforms, enacted controversially last April by executive decree, will be affected by the new makeup of the National Assembly.

Already in force

However, the most important parts of the reforms, coming into force on 1 September 2023, have been implemented.

The retirement age of 62 started to increase in September 2023, by three months per year, to reach 64 by 2030. The increase in length of service required for a full pension – from 42 to 43 years – has been brought forward to 2027, while most special schemes for employees of companies are now closed to new entrants. 

In addition, a series of compensation measures, such as an increase in the minimum pension for low-income workers, are also in force.

Meanwhile, another aspect of the reforms has taken shape.

The Investment Fund for the Prevention of Professional Wear (FIPU) aims to preserve the health of employees most exposed to occupational risk factors. Endowed with €1bn over five years, it will finance prevention and awareness-raising initiatives at company head office and branch levels.

But could any of these measures be rescinded or watered down?

There is some support, from both left and right, for rolling them back. However, as a majority of parliamentary deputies support the reforms, it seems likely that the most important elements will remain intact. 

Within the second pillar, the plan d’epargne pour la retraite (PER), a defined contribution model introduced by the 2019 Loi PACTE to make pension saving more flexible, simple and standardised, is well-entrenched, with assets totalling €103bn at end-2023.

On 5 July 2024, a significant clarification to the law was published, affecting the asset allocation for PERs. It was made in conjunction with France’s green industry law, which came into force last October, aimed at creating jobs and financing the transition to a sustainable economy. 

The green industry law requires PERs to hold a minimum allocation of assets in certain types of unlisted investments. July’s edict specifies the percentages to be complied with.

This is part of a wider strategy to encourage sustainable investing among pension savers.

Since 1 January 2022, insurers must offer life insurance and PER clients at least one option linked to a fund with the ISR socially responsible investing label, at least one linked to a fund with the Greenfin label (awarded to products supporting the energy transition), and at least one linked to a fund with the Finansol social impact investing label.