Would the budget data skew? By launching in February the debate on the existence of an alleged “hidden deficit” of pensions, former Prime Minister François Bayrou had the merit of raising a specific problem for the pension plan for state officials. Or more specifically an accounting specificity that leads to artificially inflate the expenses of certain ministries, to begin with national education, and in general the general level of public spending in France.
The starting point for this “anomaly” comes from the demographic situation of the regime of officials of public officials that today is clearly degraded compared to that of the entire population. In 2023, there were 1.97 million civil or military civil officials that contributed for 2.06 million paid pensions, a proportion of 0.96 contributing to a pensioner, against around 1.7 in the private sector.
An imbalance that has been accentuated in recent years by political options aimed at containing payroll in public service (decentralization, freezing of the index point, resource to contracted workers, increase the participation of premiums …) and, therefore, to reduce the number of taxpayers and the amount of contributions collected.
Exorbitant contribution of the employer
Current officials are not numerous enough to pay the pensioners of retirees, the State comes to “fill the hole” by applying a disproportionate contribution of the employer of 78.3% on the remuneration of civil officials and 126.07% on that of the military. As a comparison, this employer’s contribution to the general and complementary regime amounts to 16.67% in the private sector.
Since 2006, the law establishes that the special assignment account (case) “pension” (a document attached to the Finance Law draft in which the retirement regime of public officials) can never be in deficit. Therefore, the employer’s contribution is adjusted every year so that it does not fall in red. The fact is that many judge the applied delusional rate. Starting with François Bayrou, for whom the request in the public of the current rate in the private sector would lead to reassess the pension deficit of around 40 billion additional euros.
As a reminder, in 2024, pension system accounts had a deficit of 1.7 billion, or 0.41% of the total pension budget. And in 2025, according to the Pension Guidance Council (COR), this deficit should increase to reach 5 billion euros.
But the Institute of Public Policies (PPI) as the Economic Analysis Council (CAE) that has published a recent note on the dispute of the subject The idea of a “hidden deficit”, in particular because, beyond what is really related to the subscription of the employer, additional financing of the country’s general budget is displayed to guarantee the balance of the pension plan:
A “real” contribution rate of 34.7%
It circulates, is there nothing to do? Not precisely. Because the situation is not perfect, “the problem that can be raised on this contribution of the state employer is that it lacks transparency by mixing a similar contribution to that of employers in the general regime, the financing of solidarity devices (…) and a subsidy to balance the regime, without it being possible to distinguish these three elements,” says Hélène Paris, general secretary.
This is precisely what the IPP tried to do. Taking into account the specificities of the retirement regime for civil officials whose rules are very different from those of the general scheme, the institute estimated that the contribution rate of the “normal” employer should be 34.7%.
The rest (43.6% therefore) “who do not intend to be financed by a contribution of pension uniformly distributed to all state officials”, but by taxes as is the case in the private sector corresponds to the management of solidarity spending (increases in children’s pensions, the validation of the rooms under the disease …) and a state subsidy to balance the regime.
Incomplete compensation mechanisms
There are demographic “compensation mechanisms” that take the form of transfers between pension plans whose demography is favorable and those for which it is not.
But the State only received 500 million euros in 2021 for these mechanisms when it could claim more than 10 billion euros. In other words: the State has decided to take care of the imbalance instead of establishing full compensation between the regimes, which is equivalent to granting an “implicit” subsidy of 18 billion euros to the general regime, according to the PPI.
Expenses and income reviewed for 29 billion euros
For the PPI and the CAE, reveal in the stories of the officials of public officials, this subscription of the employer of 34.7%, different from the mechanisms of solidarity and the subsidy of the State, would be more fair and would make it possible not to have “a distorted reading of the distribution of public expenses”. Because taking into account a rate of more than 78% that combines cabbage and carrots lead to overestimate the level of public spending.
The explanation is due to accounting conventions. In this case, the contributions of employers employers are registered several times: “A first time in public spending” (remuneration paid to active public officials), “then in public income” (the officer “pays” the contribution to his employer) “and again in public spending” (pensions paid to civil servants), observes the PPI.
This is not the case with simple internal cash movements between administrations. What really are solidarity spending and state subsidy? In the same way, for example, that “the global operational assignment (DGF) of local authorities, which is an expense for the State and a recipe for local authorities,” illustrates Hélène Paris. Therefore, this endowment “is not included in the public spending of all public administrations: this would return, if it would not count twice the expenses of the local authorities allowed by this contribution of resources that the DGF is.”
Retain a contribution rate of the employer of 34.7% instead of 78.3%, therefore, would lead in the end To reduce the level of public spending and income by 28.9 billion euros by 2023, according to Hélène Paris. Or a public expenses ratio and public income recovered GDP for 1.1 points (57.2% and 51.4% in 2024). However, this new accounting method would not have an impact on the level of the public deficit since expenses and income would decrease.
Less important education and defense budgets than those announced
Taking into account a contribution of the 34.7% state employer also equals reducing the cost of an official. The budgets and expenses of the ministries that show the largest payroll would decrease mechanically on paper: -12.8 billion euros for education, -7.6 billion for defense, -4.7 billion for the “Public Order and Safety” sector.
This is what makes the PPI say that current accounting conventions distort international comparisons. “In the absence of a correction, France shows an educational expense of 5.4% of the gross domestic product. After correction, real spending is only 5% of GDP, which places France just above the average of the OECD countries,” the institute details.
Worse, the expense per student of the first grade “already bass” in France would place France in 25% of the OECD countries that spend less in terms of expenditure per student “if we exclude the” transfers “of the retirement contributions of public officials.
However, if the budgets of the ministries that use many officials overestimate due to the weight of pensions, other countries can use the same accounting methods. Except that “it does not exist, according to our knowledge, a country that shows the contribution rates of employers as high as France,” specifies the IPP. Therefore, it is unlikely that our neighbors overvalue their educational expenses as much as France. “
Source: BFM TV
