Franceinfo was able to consult the COR’s annual report, which forecasts the trajectory of the French pension system over the next few decades. The authors have incorporated the latest pension reform into their forecasts.
Tomorrow, a pension system still in the red? So says a new report from the Pensions Orientation Council (COR) to be published on Thursday 22 June and that franceinfo was able to consult. To justify lowering the legal retirement age from 62 to 64, the main measure of its pension reform, the government had highlighted the need to reduce the deficit, promising a balanced system by 2030. . Objective already missed according to the COR, which predicts, in three of the four scenarios it has studied, that the forty existing regimes will remain “sustainably in deficit”.
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To arrive at their predictions, the authors of the report based themselves on four different assumptions of productivity gains, from 0.7% to 1.6% per year. The calculations take into account other elements, such as the evolution of the French population “based on demographic predictions from INSEE”, which includes the birth rate as well as the migration balance, but also the future economic context, in particular growth or the unemployment rate. Franceinfo goes around what to remember from this report of more than 300 pages.
A deficit system by 2030
Surplus in 2021, 2022 and 2023, the pension system should return to deficit in all the scenarios adopted by the COR from 2024, despite the government reform. The cost of this deficit would represent between 0.2% and 0.3% of the Gross Domestic Product (GDP). In the long term, only one scenario, the most optimistic, foresees a return to equilibrium “mid 2040s”. To achieve this, productivity should increase by 1.6% per year on average, “a rate more than twice that observed between 2009 and 2020 (+ 0.7%)”underline The world. In the scenario chosen as a reference by the government “during the presentation of the reform” pensions (1% productivity gain per year) the deficit would reach 0.8% of GDP in 2070.
The share of pension expenditure in the budget will fall
Pension expenditure relative to GDP is expected to increase from 13.7% in 2022 to 13.5% by 2030 for the reference scenario. “SUnder the reform, this ratio would have remained globally stable over this period”, estimates the COR. In the long term, the amount devoted to pensions will fall in three of the four scenarios studied and “would thus vary between 11.4% and 13.9% of GDP on the horizon 2070″.
The authors note that “the decrease or quasi-stability of pension expenditure (…) may seem surprising in view of demographic aging expected”, while INSEE foresees a decrease in assets in the decades to come. According to the COR, this effect has been mitigated by successive reforms, which have pushed back the effective retirement age “and therefore reduce the number of retirees”.
A different situation depending on the regimes
Not all pension plans will evolve in the same way, warns the COR. The basic schemes for employees in the private sector, which concern earound 88% of the population who work according to the Social Security, “would be loss-making over the entire period in three out of four scenarios”. Supplementary schemes for employees in the private sector should, however, be “surplus” from this year. Civil servants’ schemes “would experience financing needs over the entire period and in all scenarios”. As for the regimes of “unemployed”they should be surplus “from the mid-2030s.
Retirement pensions on the rise
The report precisely analyzes the consequences of raising the retirement age on the lives of future retirees. Thus, the COR estimates that the average pension will increase “in constant euros”.
On the other hand, if we take into account the cumulative pension received throughout the duration of retirement, some will be losers. According to the COR, the generation born between 1966 and 1984 will see their cumulative pension drop by 1%, a steeper drop for men (1.1%) than for women (0.8%). In question, the increase in the duration of insurance required for the full rate and “the raising of the eligibility age”. For insured persons born after 1984, on the other hand, the reform is positive, with a 0.9% increase in the cumulative pension – 1% for women and 0.7% for men.
However, the amount of pensions should increase less quickly than that of earned income. Consequently, “the standard of living of retirees compared to that of the population as a whole would thus be between 75.4% and 87.7% in 2070, compared to 101.5% in 2019”. Currently wealthier on average than workers, retirees will lose purchasing power, according to the COR. However, this decrease could be “thwarted by a change in the behavior of the insured”who would save more or voluntarily retire later.