In the current debate on pensions, there are too many caricatures to have an
opinion. Everyone wants us to believe that there is no solution, but one,
which for the opposition party means taxes and for the government delaying
the legal age of retirement. In fact, each of these solutions are only one
among others, and each weighs particularly on some French people. Let’s try
to summarize the issues clearly.
1. Retirement funding distribution is provided by taxes and by contributions
of the working population, which was 4 per retiree in 1960 and only 1,7 now
and will be down to 1.5 in 2020.
2. The average life expectancy in retirement has increased from 8 years in
1981 to 13.7 years in 1982, and 19 years today. At the current rate and
without changing the law, this expectancy will exceed 21 years in 2020;
lifespan in retirement will eventually exceed the remainder life spent
studying and working.
3. In these circumstances, the pensions deficit, which is 32 billion this
year, will rise to 45 billion in 2024 and 102 billion in 2050.
4. Funding for this additional cost can be achieved by an increase in tax or
contribution, which would represent each year ten or so Euros per month for every
citizen.
5. If we decide to fund other than by taxes, for not adding to it, or not to
put the capital to contribution, or because it will be needed to reduce
another part of the debt, we can decide a contribution in the form of work,
which amounts to delaying the retirement age.
6. There are two main ways: increasing the legal age or the length of
contribution. According to the calculations of a great French demographer
Hervé Lebras a postponement of one year will save $ and $ 1.5 billion each year thereafter. While one year increase in the
number of years of contribution will save $ 5.3 billion the first year and
$ leads to a strong increase in the proportion of people said to be in “long
career,” forced to work beyond the legal age because they started early (70%
per generation instead of 50% today) and the average number of years worked
beyond the statutory 40 years (1.5 years on average for the whole population
and 2.1 years for those who work beyond the legal age). On the contrary,
increasing the contribution period reduces the proportion of long careers
that rise to 30%, or 0.3 years on average overall and one year for those who
must stay at work beyond the legal age because they started late.
So if we increase the legal age, those who began to work very young, without
schooling, will pay more, if we increase the contribution period, it is
those who started late, because they had to study, who will bear the burden.
Among funding by the capital owners, workers or managers, the government
seems to have chosen. It has this right. But it cannot say that its choice
is the only possible one. Especially since it will probably use all these
means at the same time, given the magnitude of the problem, in proportions
that will show which classes each majority favors. It is the honor of
politics to do so clearly.