France: what does Macron’s pension reform approved without the vote of Parliament say?

French President Emmanuel Macron’s unpopular pension reform finally passed on Thursday through a constitutional mechanism which allowed the French executive to evade, not without controversy, an uncertain vote by the National Assembly. These are the keys to the initiative:

Balance the system deficit

The justification for the reform given from the outset by the Macron government is ensure financial balance on the horizon of 2030, given the potential deficit in the coming years due to the population ageingwhich means more retirees and fewer contributions.

The Pension Guidance Council (COR, an official advisory body) calculates that now and until 2027-2028, the deficit of this scheme will be between 9,000 and 11,000 million euros per yeara number that will rise to 16,000 by 2032.

In relative terms, this will mean a gap of between five and eight tenths of GDP.

Postponing the minimum age by two years

To compensate for this deficit, the main measure consists of progressively delay until 2030 the minimum retirement age in two years, from the current 62 to 64.

In parallel, the increase from 42 to 43 will accelerate of the contribution period necessary to collect a full pension, an increase that was foreseen in the previous reform, during the mandate of the socialist president François Hollande (2012-2017): it will be applied in 2027 and not in 2035.

What will not change with the law adopted today by Parliament are the 67 years maximum to be entitled to a full pension if the entire contribution period has not been covered.

Long careers for young workers

The government has designed a device for “long runs”which was extended during the parliamentary process, so that those who they started working very young (before the age of 21) and cover the entire contribution period are not particularly penalized by the delay in the minimum age to 64 years.

with that device could retire early (for example at 60, if they started working life at 17), provided they have 43 years of contributions, even if in some cases it will be 44.

Bonus for some mothers

To compensate for the negative effect on them of the delay in the retirement age, women who contributed 43 years before turning 64 and who also accumulate quarters for maternity, having adopted or devoted that time to the education of their children, they will have a bonus of up to 5% in their pension.

Revaluation of the lowest pensions

The lower pensions will be re-evaluated and, for those who have covered the period of minimum wage contributionsthe minimum pension will increase up to about 1,200 euros net in 13 monthly installments, equal to 85% of the current minimum wage (1,353 euros per month).

In the private sector, the calculation of the pension is carried out on the basis of the best 25 years and in the public for the past six months.

Abolition of special regimes

it is expected the extinction of most of the special regimes, in particular in the energy sector, at the RATP metropolitan transport agency in Paris or at the Bank of France, although the privileges for current employees will be maintained.

Specifically, the so-called “grandfather clause” implies that in these companies only workers will be subject to the general regime. contract since the entry into force of the reformwhich should be next September.

Encourage the activity of older workers

One of the fears of raising the retirement age is to further exacerbate a particularly serious problem in France, the low activity rate of older workers, often unemployed or inactive.

To avoid this, companies with more than 300 employees will need to publish a list of employment indicators each year over 55 years oldwith actions for make them work.

If these indicators do not improve in three years, they will need to be defined an action plan negotiated with staff representatives, but in the end there will be no penalties to ensure compliance.

In addition, a new finalized permanent contract was created those over 60 years old who have been unemployed for more than a year, with exemption from paying part of the contributions, for one year.

EFE extension

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