January 27, 2023

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François Bayrou’s alert on the deficit of the pension system


Posted Dec 9 2022 at 02:34 PMUpdated 9 Dec. 2022 at 15:12

No question of saying that the financing of pensions is not a problem. “Our pension system risks being increasingly weakened in its financial balance and […] to weigh more and more on the economic capacity of the country and on its independence ”, warns the president of the Modem, François Bayrou, in a note published Thursday by the High Commission for the Plan which he pilots.

The alert comes opportunely a few days before the presentation by the government of a long-promised pension reform. This should seek to raise the legal retirement age from 62 to 65 years. The measure is however unanimously against it in the camp of the unions, where the very need to make a reform of this type to maintain the system in balance is disputed.

Reading difficulties

In its note, the High Commission for Planning denies wanting to “interfere with the consultations and the debates in progress”. The objective is to provide “civic opinion with precise elements on the current situation and the prospects of the pension system”, explains François Bayrou who opposed in September a forced passage of the reform in the budget. of Social Security.

The literature on the subject of pensions is however not lacking, between the reports of the Pensions Orientation Council (COR) or that of the Pensions Monitoring Committee, recognizes the tenor of the majority. However, this “abundant production” can “also make the situation less easily readable”, he underlines. And to deplore “the technical nature of the concepts used” or even the “hypothetical nature of the projections made for the future”.

Above all, the note puts forward an observation: the contributions “are far from financing the entire amount of the pensions paid”. A good part of the financing of pensions is borne by the taxpayer since the State balances the system of public schemes in particular.

Significant structural deficit

François Bayrou thus insists on the fact that the State and the public authorities “contribute substantially to the balance of the pension schemes of the State civil service, special schemes, agricultural schemes, the territorial and hospital civil service” .

This “substantial” addition is estimated at 30 billion euros. It is added to the public contributions which are logically imposed on the public sector (contributions, financing of exemptions intended to support the economy and solidarity measures for families, minimum pensions, etc.). “Overall our old age protection is in fact in a significant structural deficit”, insists François Bayrou.

Do not lower pensions

However, continues the High Commissioner, “everything shows that the demographic outlook risks further aggravating this situation in the next 15 years”. And this, “even if a slight improvement can be profiled from 2035 for the public sector” due to the disappearance of the children of the “baby boom”.

In the end, the High Commission puts forward an average annual deficit of 2.1% of GDP in the coming years (more than 50 billion euros) with no prospect of reform, instead of the 0.7% mentioned so far. . A figure that risks making the unions wink a little more.

Once this observation has been made, François Bayrou lists a few “available levers of action”. He insists all the same on the fact of not penalizing retirees. Unsurprisingly, he also notes that a shift in the average retirement age would be “a powerful lever for improving the financial balance of pension schemes”.