Primarily designed to generate savings, the pension reform will also come at a cost. In addition to support measures (minimum pension, premium for certain mothers, etc.) that will reduce expected earnings, the postponement of the legal age from 62 to 64 risks causing an increase in social spending.
Discovered by Les Echos, an Insee study published a few days ago focuses in particular on health spending. In an attempt to measure the short-term impact of a change in the retirement age on the health consumption of people nearing retirement, the statistics institute examined the effects of the 2010 reform, which gradually raised the age legal from 60 to 62 years, at a rate of four months per generation, and the age of the automatic full rate from 65 to 67 years.
More specifically, the authors of the study observe “that a postponement of the age of majority and of the full legal age increases the probability of having at least one sick leave during the period studied by 11.8% for men and 10 .3% for women”. to retirement. On the other hand, the pension reform had no impact on the total length of sick leave.
Increased spending, especially among specialists.
INSEE notes that postponing retirement age does not particularly increase the likelihood of consulting a general practitioner for people close to retirement. But it further increases the likelihood of consulting a specialist or physiotherapist.
Mechanically, this leads to an increase in health spending: “Overall, our results suggest that a four-month increase in legal age and full benefit age has a non-negligible effect on spending on visits to doctors or physical therapists.” , as well as on spending on medicines,” says INSEE.
Psychological and physical disorders.
The question now is why people closer to retirement are more likely to take sick leave when the retirement age is raised. INSEE proposes two hypotheses. The first is moral hazard. The reasoning is as follows: people close to retirement would consider the reform unfair and would reduce their activity in protest.
But this theory does not hold up. In fact, if the increase in sick leave were simply a demonstration of protest, it would increase the probability of consulting a general practitioner, “because employees might expect more complacency from their family doctor than from specialist doctors.” points out the INSEE. . However, this is not what we observe. In addition, “there would be no reason to increase visits to the physiotherapist and the consumption of drugs,” the institute also points out.
The second, more probable hypothesis is equivalent to saying that “people affected by an unfavorable modification of the pension system towards the end of their career are very disappointed”. Consequently, it is possible that this leads to “stress likely to cause psychological and even physical disorders”, according to the INSEE experts. In particular, “the need to give up one’s plans can cause psychological distress and affect physical well-being.”
Another complementary mechanism consists of saying that people who already suffered from “psychological or physical disorders (…) decide to seek more care knowing that they will have to work longer.”
Social spending is expected to increase
The INSEE study has two main limitations. First, it assesses the impact on healthcare spending of the 2010 reform, which is slightly different from the 2023 reform, which extends the working day by three months per generation (and not four) and does not affect the discount expiration age , which is fixed at 67. Second, it only evaluates the short-term effects, that is, those that occur in the ten months following the announcement of the reform. “Consequently, (…) we do not know if (these effects) persist in the medium or long term,” acknowledges INSEE.
Beyond health spending, the Court of Auditors estimated that the additional cost generated by the age measures of the 2010 reform was, at the end of 2017, 710 million euros per year within the framework of the RSA, the AAH and the ASS for the age bracket of 60-64 years. Los Sabios also estimated the extra cost corresponding to the compensation of an oversupply of 50,000 unemployed people between 60 and 64 years of age at 780 million euros per year.
Following the same logic, the Department of Research, Studies, Evaluation and Statistics (Dress) tried at the beginning of 2022 to simulate the impact of a reform that moved the legal retirement age from 62 to 64 years and whose acceleration would have ended in 2019. According to to this work, this would have meant “an increase in spending on social benefits excluding pensions and unemployment insurance of about 3,600 million euros”, of which an additional 1,800 million euros correspond to disability pensions, 970 million to sick leave and 830 million to social minimums (RSA, AAH and CULO).
In its study on the impact of the pension reform, the Government acknowledges that a postponement of the legal retirement age entails an increase in other social expenses, “particularly disability pensions”. Based on the work of the DREES, however, he stresses that this “carry-over effect” is “estimated at about 25% of the amount of savings achieved with this reform.”
Source: BFM TV
