When our blog about life insurance and the pension system in France was published in March 2020 (you can refresh your memory here), the country was in the midst of strikes against the increase in the retirement age. Discussions and debates were taking place with the trade unions, while the French government was preparing to finalize the pension reform bill during the summer.
Currently, France has one of the lowest retirement ages in the world, at 62 years, and a very complex pension calculation system. The main idea of the pension reform at that time was to standardize the process of determining and calculating pensions for all citizens, regardless of their profession or length of service, as there are 42 special regimes that define the retirement age and the pension amount differently.
For example, under one of these special regimes, a subway driver can retire at the age of 55, while a teacher would have to work until 62.
What has changed in these nearly one and a half years?
As they would say in France - pas beaucoup - not that much has changed... The coronavirus crisis became the reason for the postponement of some parts of the reforms, as more urgent health and financial issues were at stake.
However, now this issue has resurfaced on the agenda, as there is less than a year left until the new presidential elections in France, and President Emmanuel Macron's time has come to finally address the pension reform issue, which was a key part of his electoral campaign in 2017.
On July 14th, the country will celebrate Bastille Day (or, as we call it, the Day of the Storming of the Bastille), and it is expected that on this day, Emmanuel Macron will announce his new vision for the necessary changes in his address to the nation. Last month, he mentioned that, in his opinion, the current form of the pension reform cannot be implemented.
According to experts, by promoting his new pension reform plan, Macron will try to overcome inertia and appease an important part of his right-centrist electorate, including pensioners, as well as weaken a potential opponent from the right-centrist party "Les Républicains," thereby ensuring his re-election.
The implementation of the pension reform would allow Macron to claim that he has fulfilled his promise from 2017 and would also help him outmaneuver his opponents from right-centrist forces.
However, there is one caveat - the reform was politically unpopular even before the pandemic, and it has become even more unpopular now (according to survey data, 60% of voters expressed opposition to the implementation of the reforms before the elections).
So what is the main issue with the French pension reform?
According to financial experts, the pension reform "clashes" different social groups, namely low-paid service workers, public sector employees, and representatives of the private sector, known as "white-collar" workers, as well as retirees.
First and foremost (and this is understandable), the beneficiaries of these special regimes, which the reform is aimed at, oppose the reform itself. These include workers from SNCF (the National Railway Company), gas workers, energy workers, miners, bank employees, drivers, and conductors of public transportation. Naturally, they do not want to give up their privileges and are convinced that the government is encroaching on their rights.
However, according to the Ministry of Social Affairs, out of the 17.2 million French pensioners, only 1.1 million (6%) benefit from these special regimes.
Despite the criticism of the pension reform, 55% of French citizens still understand the necessity and inevitability of updating the pension system.
Negative sentiment and resistance, according to experts, are caused by poor communication with the public, as well as distrust towards the government and political elites.
Another equally important factor is the prevalence of left-wing views on social security in the country. French citizens spend a record 30% of the national GDP on it, which is the highest percentage among countries in the Organisation for Economic Co-operation and Development.
Therefore, it is quite difficult for citizens to voluntarily give up benefits and privileges and agree to an increase in the retirement age...
Will Emmanuel Macron be able to propose reforms that will garner greater public support and untangle this "Gordian knot"? We will see in the near future. In the meantime, we would be happy to hear your thoughts in the comments section of the blog!
By the way, have you already taken care of your own decent pension? ;)
Based on the article "France has one of the lowest retirement ages in the world. And that’s a big headache for Macron" and internet sources.
