It is a long-awaited document. The annual report of the Pension Guidance Council (COR), which the government will present on Thursday but which we were able to consult, estimates that the “pension system would be in deficit on average for the next 25 years”, after having “Surpluses registered in 2021 and 2022”.
In detail, pension plans had a surplus of almost 900 million euros in 2021. A first since 2008.
The improvement should continue this year with an expected surplus of €3.2 billion. On the other hand, the projections are darker for the coming years with a deterioration of the global balance as of 2023. The COR expects a deficit that oscillates between 0.5 point of GDP and 0.8 point between 2022 and 2032 depending on the scenario of growth adopted. The return to equilibrium is expected “by the mid-2030s” if the average growth of labor productivity reaches 1.6% per year and in the following decade, if it does not exceed 1.3%. In the worst case scenario (0.7% annual productivity growth), we would have to wait until the 2070s.
Expenditure evolution rate “not compatible with the government’s objectives”
The COR report also judges that the dynamics of pension spending would remain “contained” in the face of the evolution of national wealth, although at a “growing level compared to the latest projections.” Thus, these expenses would go from 13.8% in 2021 to 13.9% of GDP in 2027. They would then increase significantly between 14.2 and 14.7% between 2028 and 2032 depending on the growth scenarios. In the longer term, they would stabilize (0.7% growth scenario) or even decline to between 12.1% and 13.7% in 2070.
Although the COR experts point out that it is not up to them to say whether “it is necessary or not to implement a reform of the pension system”, they already state that “even if pension spending stabilizes as part of GDP during the period 2022- 2027, its rate of spontaneous change does not seem compatible with the Government’s objectives set in the stability program of July 2022”.
“To meet these objectives, the growth of public spending should be limited to 0.6% in volume between 2022 and 2027. However, spending on pensions, which represents a quarter of this public spending, would increase in the period by 1, 8% in real terms,” they add. While explaining that “the results of this report do not validate the validity of the discourses that raise the idea of an uncontrolled dynamic of pension spending.”
Unions warn government
This Monday, the unions unanimously warned the Government against any measure on pensions that slips during the budget debates this fall, stressing that this would cause their mobilization and their withdrawal from the social consultations wanted by the Executive.
The Minister of Labor, Olivier Dussopt, and the Delegate Minister for Vocational Training, Carole Grandjean, met the social partners on Monday to present their “road map” for the five-year period. Consulted at the exit, the unions indicated that Olivier Dussopt did not advance on the schedule of the reform, in reference to the presentation on Thursday of the report of the Pension Guidance Council (COR). Rather, the Minister mentioned the issues of employment of the elderly, evolution of work and hardship.
“The COR report must be the alpha and omega” of the government, concluded Jean-François Foucard (CFE-CGC). But if the Government decided, as a result of this report, to introduce a “hidden” age measure in the Social Security financing bill as “acceleration of the Touraine reform”, “it would be dangerous and would lead to a strong mobilization, demonstrations and strikes”. “, warned Michel Beaugas (FO). The Touraine reform of 2014 gradually increases the contribution period up to 43 years for people born in 1973 or later.
Source: BFM TV
