321.100 million euros. This is the amount allocated to the payment of basic, complementary and derived pensions in France in 2021, after taking social security contributions into account, according to the latest report from the Pension Guidance Council (COR).
The system’s gross expenditure, before deduction of social contributions (CSG, CRDS, CASA, etc.), amounted to 345.100 million euros. Or 13.8% of tricolor GDP. A ratio that has changed little compared to 2017. That year (last known figures for all countries), pension spending represented 13.9% of GDP in France (13.6% excluding private spending) . Only Italy (16.7%) has a higher proportion among the countries studied by COR.
If countries like Belgium, the United States, Germany or Japan “are at relatively similar levels to each other” with spending on pensions that represents between 11 and 12% of GDP, “several countries (…) dedicate a much smaller part ” of their national wealth to pension spending, notes the COR, citing in particular the United Kingdom, the Netherlands and Canada.
It is also necessary to take into account the structure of pension spending between public and private. Indeed, while public spending represents practically all the pensions paid in France and to a lesser extent in Germany, Belgium, Spain and Italy, private pension funds are much more developed in the United States, the United Kingdom or Canada, where private spending accounts for around half of total pension spending (between 5 and 6% of GDP).
Low employment rate and earlier legal retirement age
Eurostat also measures the weight of retirement pensions in the GDP of the EU member countries. Its field of analysis is slightly broader than that of the COR, since it takes into account not only basic pensions, survivor’s pensions, disability pensions, early retirement due to reduced work capacity, but also early retirement. For economical reasons.
Despite a different methodology, the conclusions are generally the same as those presented by the COR. In 2020, France ranked third among European countries with pension spending representing 15.9% of GDP, behind Italy (17.6%) and Greece (17.8%). The EU average was 13.6%. Keep in mind, however, that these ratios were inflated by the impact of that year’s health crisis.
Covid or not, the public finance specialist and founder of the Fipéco site François Ecalle explains that “the weight of public pensions as a percentage of GDP in France is mainly explained by the low employment rate of people aged 20 to 64 and by the high rate of retirees in the population over 65, reflecting above all an earlier retirement age than in other countries due to the specific parameters of the French pension system”.
No long-term spending slippage
Between 2002 and 2021, the proportion of pension spending in GDP increased by 2.1 points in France, according to the COR. “After reaching a high point in 2014, the share of pension spending in GDP then fell steadily from 2014 to 2019 (-0.5 points of GDP), due to the recovery of activity and the measures taken in pensions. Over the last two years, it has been strongly affected by the health crisis and its effects on GDP: it thus rose 1.1 points between 2019 and 2020 before falling 0.9 points in 2021 in line with the strong recovery in activity ”, detail the experts of the Council Pension Guidance.
However, pension spending as a percentage of GDP should not explode in the coming years. “Pension spending is not slipping” towards 2070, “they are relatively under control,” said the president of the COR, Pierre-Louis Bras, at the end of January.
In fact, they should be between 12.1 and 14.7% of GDP in 2070, according to the scenarios adopted by the COR.
Source: BFM TV
