DFrom a public finance point of view, raising the retirement age has two merits. On the one hand, it keeps workers working longer, thus promoting potential growth and increasing the number of contributors; on the other hand, it reduces the time spent in retirement, which tends to slow down the pace of growth in the number of retirees. Obviously, such a strategy for controlling the demographic dependency ratio (ratio of the number of inactive people to the number of active people) is not without raising a certain number of questions about its real effectiveness, in particular because of its social impact. : older workers are all the more confronted with hardship or employability problems the later they have to retire, which means that the actual increase is less than the theoretical increase in the retirement age. However, the prospect of working longer increases the profitability of investment in vocational training throughout life, facilitating job retention and professional transitions.
Since civil service (State, local authorities, public hospitals) and similar schemes are employer schemes, the right to a pension is attached to the employment contract; apart from a few nuances, this results in an obligation for the employer to honor its commitments by paying an additional contribution to the contributions deducted from salaries in order to balance pension expenditure.
manna for the state
During the presidential campaign, President Macron’s team estimated that his project for a gradual increase in the minimum age, combined with an increase in the minimum pension to 1,100 euros and “long career” measures, could lead to savings of around 9 billion euros in 2027 for the entire pension system.
Knowing that the civil service schemes account for almost 27% of expenditure, the windfall in savings for the employer State could potentially be 2.5 billion by the end of the five-year period (approximately 0.3% of the budget general). The State will certainly not be able to draw beyond this budgetary gain, because the remaining savings will be achieved independently by the private sector schemes. But, in a context of particularly strained public finances, this budgetary resource is not negligible. Therefore, the question of its assignment arises. Several avenues are possible.
The first could be based on the principle of maintaining the level of public expenditure in favor of seniors. Supporting the public payment of expenses related to the loss of autonomy (approximately 30 billion euros) would in particular provide financial security in a context where the baby-boom generations will gradually be massively confronted with this risk, and where the deindexing pensions in relation to wages and growth induces a loss of relative purchasing power, particularly noticeable at the end of life, where new needs are felt. A second track could aim to reduce the amount of the budget deficit (around 160 billion in 2021), which amounts to rebalancing the tax burden between generations, with the aim of intergenerational equity.
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