Whether it is the subject of a negotiation or a compromise with Brussels, or whether it intends to “guarantee the balance of our system”, as Emmanuel Macron stated last December during his votes, the main objective of the pension reform was effectively to act on the balance of the common pension system- and, by extension, of public finances, given the implication of the State in its maintenance, through the chronic financing of the deficits of the civil servants’ regime. Objective deployed in the short term, to recover the 12 billion that are missing by 2027 in the regime.
An amount precisely recoverable thanks to the reform: in his initial presentation by the government, Bruno Le Maire had a fund of 17.7 billion euros until 2030 – amputated from the forecast deficit (13.5 billion), which then consisted in 3.5 billion redistributed in the financing of pensions for the disabled (3.1 billion) and in hardship, long careers and the revaluation of small pensions. Result of the impact study carried out by the executive.
On the arduous side, the final text provides that the professional prevention account will be able to finance conversion permits, generating additional costs, while other criteria (shocks, transporting loads) will be taken into account in a new “prevention investment fund”. . In long races, early departure will be extended, without being generalized (because the age limit remains fixed).
very expensive concessions
This last point is a request from the right, with which the Government has tried to find an uncertain majority in the Assembly. The so-called “social support” measures mentioned above are increased to 7 billion euros: an additional 700 million euros should allow the aforementioned measures on long careers. Add 300 million for the premium for women who reach the full rate one year before the legal age of departure, under the effect of quarterly maternity and child education. And 800 million for the new type of assisted contract for older unemployed, whose joint commission has confirmed the experiment until 2028.
If this last measure would be self-financing (making older people work and therefore contribute), the others endorse the budgetary inanity of the reform, which will not generate many margins, neither for the State nor for the pension system. To finance the additional costs, the senators came up with the idea of a new anti-fraud measure, raising from 6 to 9 months the duration of the annual presence in France to collect the minimum age of old age, foreseen at 200 million euros. Companies will be asked for new taxes for conventional infractions: 300 million euros.
Above all, the executive will delve into the large surpluses of another branch of Social Security: the branch of accidents at work and occupational diseases, which will help close the deal. Waiting for a possible leak in the field of unemployment insurance: by delaying the retirement age, the executive risks keeping people unemployed for longer. At present, according to figures from the Drees (Directorate of Research, Studies, Evaluation and Statistics, attached to the Ministry of Health), a third of the people who liquidate their retirement are unemployed.
Persistent but questionable deficit
With these efforts, will the deficit of the pension system disappear definitively from the forecasts of the Pension Guidance Council? Not really. If the regime generates surpluses until 2024 (4.4 billion euros and approximately 0.2% of GDP in 2022, 3.6 billion and 0.1% of GDP in 2023 forecasts), then it goes into deficit, despite the reform.
Therefore, come what may, a major effort is needed in terms of growth for the regime, in theory, to be sustainable as it currently operates. A growth of 1.3% would bring the deficit to 0.2% of GDP in 2070, a stable level for the next forty years; lower growth, of 1%, would take the deficit to 0.5% in 2035 and then to 0.8% in 2070. Finally, weak growth (0.7%, the level projected by the Bank of France in 2023, in this case) will cause the balance to deteriorate to -1.6% of GDP in 2070.
Therefore, the situation does not fundamentally change in the trajectory, even if when calculating spending as a percentage of GDP, the effect is present: the reform stabilizes pensions at an estimated level of 13.5% of GDP, against 13, 7% without it. However, the CDR asks that hasty interpretations be avoided: the effects on resources (contributions) are unknown; Other macroeconomic and demographic variables affect the evolution of the figures.
The judgment on the sustainability of the system always depends ultimately on two elements. On the one hand, it is about deciding whether a deficit of 5,900 million euros a year, in a regime that spends a total of 400,000 million, is unsustainable. On the other hand, it is necessary to examine the calculation methods of the COR: the scenarios presented so far are based on the hardest calculation convention, baptized EPR (permanent regime equilibrium), which postulates a sufficient State effort to balance the diet every year.
Another method of calculation, the EEC convention (constant state effort), postulates that the State will bail out constantly in the future, as its effort does not vary in relation to GDP. In the first case, its contribution gradually decreases; in the second, it does not increase your effort but it does not decrease it either. And in the latter case, the CDR did not foresee any deficit for the pension system last year, neither now nor later. And this, without the reform, which does not change the general problem: if the regime runs the risk of finding itself in a structural deficit, short-term adjustments can continue to be decided by the State.
redistributive effects
What remains, to measure the effect of Emmanuel Macron’s reform, are the consequences in terms of redistribution. Pensions are expected to fall structurally, taking the level of retirees from 101.5% of the total current population (both retirees alive and working in 2022) to between 87% and 75%, depending on the outlook of growth.
The reform reduces the length of retirement, according to the COR, but allows higher pensions on average. For this reason, the DREES has recently reached a measured conclusion in this regard: the increase in the pension “cannot be interpreted as an indicator of well-being, which would mean taking into account the diversity of preferences that vary according to the situation of the insured and, Especially your state of health.
It will be the weakest pensions that will be affected: the COR reports, for pensions in the last quartile (the weakest 25%), an increase from 4 to 12% allowed by the reform. On the other hand, pensions in the first quartile, the highest, fell between 1 and 2%. Work longer to earn more, unless you are already well off.
The contributory minimum (which sets the minimum old age threshold) is raised with the reform by around one hundred euros, from 747 to 848 euros gross per month. It is necessary to touch it to have contributed at least 120 quarters. Therefore, contrary to what the government could have explained this winter, it is not about granting a gross retirement pension of 85% of the net minimum wage, that is to say 1,200 euros: to receive this sum, it will be necessary to declare a race complete professional. the minimum wage, that is, 168 if you leave now, or 173 if you leave after 2027. And not just 120.
Source: BFM TV
