The pension reform should not achieve its main objective. In its latest report published this Thursday, the Pension Guidance Council (COR) estimates that the accounts of the different schemes as a whole will continue to be in deficit by 2030, despite the raising of the legal age from 62 to 64 years. A forecast that contradicts the promises of the government.
Beyond the economic forecasts, the independent body chaired by Pierre-Louis Bras publishes new projections on the evolution of the retirement age and the level of pensions to take into account the impact of the reform.
“On average, the reform leads to changing the retirement age” to 64.6 years in 2070 compared to the 64 years expected before the reform, stresses the COR. The change in the legal retirement age and the increase in the contribution period also reduce “the pension collection period” compared to the scenario without the reform, but “they also have the effect of increasing pensions” with a pension/remuneration ratio that is it would maintain 40% in 2070 compared to 37.5% without the reform.
Further postponement of retirement for the generation of ’66
This is just an average that hides significant disparities. For this reason, the COR initially carried out a simulation on the generation of 1966 that “suffered in part from the increase in the age of opening of rights”, this being progressive, “but more strongly the increase in the insurance period required for the rate complete”. Next, the body evaluates the effect of the reform on the generation of 1984 which, already affected by the Touraine reform, sees its mandatory insurance period unchanged but which is totally affected by the displacement of two years of the legal age of retirement.
From this work it can be deduced that “the increase in the average retirement age would vary according to the insured and would decrease over the generations”. For the generation of 1966, retirement would be postponed by 6.9 months on average under the effect of the reform. Plus precisely, 2% des assurés de cette génération pourraient partir au moins trois mois plus tôt notamment grâce aux nouvelles dispositions du dispositif carrières longues, 41% “ne décaleraient quasiment pas leurâge de départ” et “56% le reporteraient d’au moins 3 months”.
For their part, the insured of the generation of 1984 who would reach the new legal age in 2048 should postpone their retirement by an average of 6 months. “These generations were already retiring late, given the increase in the duration of insurance provided for at full rate and their subsequent incorporation into working life,” recalls the COR. Thus, more than half of them (59%) would leave at almost the same age at which they would have left without the reform, while 2% would leave at least three months earlier and 38% at least three months later.
A more advantageous reform for the generation of 84
If the insured will receive pensions “on average higher” with the reform “in exchange for a later retirement age in general”, the impact could again be very different from one generation to another, say experts from the Guidance Council of Pensions. With respect to the 1966 cohort, the liquidation pension should increase by an average of 1.2%. In detail, a large majority of the insured (79%) would receive an identical pension at plus or minus 5% compared to the scenario without the reform, 18% would have a gain of at least 5% but 3% would lose at least 5% pension.
According to the COR, the profit would then “increase over the generations, mainly due to the increase in the indexation burden on the Smic of the minimum contributory liquidation and no longer on prices.” As a result, the average pension gain in liquidation would be 2.5% for the generation of 1984, of which a third of the insured (36%) would benefit from a pension that was at least 5% higher, while 3% would lose.
The reform that reduces the duration of retirement compared to the scenario without reform due to the increase in the retirement age would be less advantageous for the generation of 66 if we look at the accumulated pension, that is, the pension received throughout retirement , which would decrease by approximately 1%. If 21% of the insured of this generation saw their accumulated pension increase by at least 1%, 58% would still suffer a loss of their total pension amount of at least 1%.
On the contrary, “the increases in pensions more than compensate for the reduction in the length of retirement” for the generation of 1984, stresses the COR. Thus, the insured of this generation would see their accumulated pension increase by 0.9% on average with the reform, with more winners (35%) and fewer losers (26%) than for the generation of 1966.
Increase in pensions for the most modest, decrease in pensions for the richest
Regarding the evolution of the pension, the most modest will be the main winners of the pension reform, regardless of the generation that is taken into account. “This observation is particularly accentuated for the insured in the first quartile who would experience gains significantly higher than those of the other quartiles, and the gap would widen over the generations,” says the Pension Guidance Council.
For example, for the 1966 cohort, the poorest 25% of the insured would see their accumulated pension increase by 4.7% on average, with more than one in two insured in this first quartile winning. The increase would be even more marked for those of the generation of 1984 (+12%), with less than 7% of losers among this category of the population. A “result to be linked to the increase in the contributory minimum and its new modality of indexation,” says the COR.
The richest 25% of retirees will suffer, on the contrary, an average drop in their pension combined with the reform: -1.9% for the generation of 1966 and -1.1% for the generation of 1984. The COR specifies , however, that “in this quartile and for this generation, the accumulated pension would nevertheless be the same before and after the reform for 44% of people”.
Higher pension income for women
Women will be less penalized by the reform than men in terms of pensions. According to the COR, the insured of the generation of 1966 would see their accumulated pension fall by 0.8%, compared to -1.1% for men. “There would also be more winners among women (26%) than among men (17%).”
The same observation for the generation of 1984 with 30% male winners and 41% female winners for an average accumulated pension gain of 0.7% for the former and 1% for the latter. “In general, women would earn on average more than men, regardless of generation (…), in particular thanks to the premium from the age of 63 open to people who benefit from at least a quarter of the increase in the duration of insurance for children. In fact, women with children would benefit more often from a premium,” observes the COR.
Although pensions should increase on average with the reform, the standard of living of pensioners relative to workers will continue to fall due to the indexation of pensions to inflation and no longer to wages that tend to rise faster. Consequently, the COR estimates that “the standard of living of retirees compared to that of the entire population would be between 75.4% and 87.7% in 2070, compared to 101.5% in 2019.”
Source: BFM TV
