NOTour country is facing a demographic evolution that challenges our pension system. Retirees now represent a quarter of the population, compared to only 5% in 1960, 10% in 1985, 15% in 1995, and 20% in 2013. Moreover, the years of life in retirement have been extended by nine years in half a century, to the point that in France the expected duration of retirement is about twenty-six years, compared to twenty years on average in other European countries.
This double demographic challenge (boom in the number of senior citizens and lengthening of the retirement period) unsurprisingly upsets the financial balance of our system. The question is whether the revenue (contributions, taxes and other tax contributions) can cover the expenses (payment of retirement pensions). To convince of the usefulness of its reform, the government promises financial balance by 2030.
Opponents (unions and left-wing parliamentary groups) consider, on the contrary, that the imbalance is not sufficient to justify a decline in the age of retirement at the full rate. Beyond this question of macroeconomic accounting there is a fundamental problem that no one addresses. Namely that our current pension system indirectly prevents millions of unemployed people from finding a job. Because the retirement pensions are today financed for more than two thirds by the assets.
Six working people will finance the pensions of five retirees
However, employer and employee contributions considerably inflate the cost of labour. A coffee server who earns, for example, 1,600 euros net per month costs his boss 3,200 euros, which is double. This abysmal gap between what work costs the employer and what it brings to the employee partly explains the shortage of labor in sectors where remuneration is not perceived as sufficiently attractive (such as catering where 200,000 positions would need to be filled).
A good part of this gap comes from the sums taken by pension funds. Thus, a school teacher with five years of seniority (whose net salary is 1,750 euros) pays the equivalent of his net salary solely to fund pensions. This ratio is even higher for a teacher certified out of class at the end of his career (whose net salary is 2,900 euros) since he provides more than 3,000 euros each month to the pension funds.
This phenomenon is constantly worsening. Because, while the proportion of retirees in the French population has quintupled since 1950, that in activity has remained the same (nearly 43%). So much so that at the time the burden of each retreat was distributed on the shoulders of
five contributors. This contributor-retiree ratio was already only two twenty years ago. Today it’s down to 1.6. In 2050, it will only be 1.2. That is to say that six assets will have to finance the pension of five retirees.
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