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16-04-2023, 12:05 PM
Analysis by William Horobin and Samy Adghirni | Bloomberg
March 23, 2023 at 6:32 a.m. EDT
For more than a quarter of a century, there hasn’t been a French president who didn’t try to fix the country’s gigantic state pension system, and Emmanuel Macron is no exception.
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Levies on workers and employers pay the pensions of the retired population. The problem is that French people spend less time working, and more time in retirement, than most of their European peers, leading to funding shortfalls that increase the public debt. And an aging population is making the problem worse. Without change, the national pension deficit could balloon to as much as 0.8% of annual economic output over the next decade
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That’s a liability the government can ill-afford in a country that already has one of the highest public debt burdens in Europe.
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France’s minimum retirement age of 62 is one of the lowest in Europe.
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Raising the minimum age to 64 and increasing the minimum period of contributions to access a full pension will eliminate the system’s deficit by 2030, according to the government. That would ease pressure on public finances, allowing the government to invest more in digital technologies, fund the transition to a low-carbon economy and boost employment and growth. Raising the minimum retirement age could also improve low employment rates among older workers
......
Politically, Macron has little to lose as he can’t run for a third term. And he’s determined to seal his legacy as a pro-business reformer and score a win for his centrist movement against populists of the right and left.
......
Labor organizations say adjusting the age thresholds will unfairly hit the low-skilled and the least wealthy who began working earlier in life.
......
past experience may give Macron the confidence to stare down the unions. The unrest of 2019 did little to dent growth and, ultimately, it was the coronavirus outbreak — not the protests — that led him to hit pause on the pension reforms.
......
Is this just a French problem?
Hardly. The world’s population of people aged 60 years and older is expected to double by 2050, according to the World Health Organization, while fertility rates are in long-term decline. The financial strain is challenging old-age support systems and leaving many countries facing tough choices about raising the age of retirement, cutting benefits or lifting taxes. Pension shortfalls will be the equivalent of about 23% of world output by 2050
......
One key measure is the old-age dependency ratio — the number of older people compared to the population that is working age. In Europe and North America, that ratio will be about 50 per 100 by 2050, according to UN forecasts, a rise from 30 per 100 in 2019. In short, we’re on a trajectory toward a smaller share of people paying taxes and a higher proportion drawing pensions. By 2035, the basic US system known as Social Security will no longer be able to cover payments, forcing a 20% reduction in benefits
https://www.washingtonpost.com/business/...story.html
March 23, 2023 at 6:32 a.m. EDT
For more than a quarter of a century, there hasn’t been a French president who didn’t try to fix the country’s gigantic state pension system, and Emmanuel Macron is no exception.
......
Levies on workers and employers pay the pensions of the retired population. The problem is that French people spend less time working, and more time in retirement, than most of their European peers, leading to funding shortfalls that increase the public debt. And an aging population is making the problem worse. Without change, the national pension deficit could balloon to as much as 0.8% of annual economic output over the next decade
......
That’s a liability the government can ill-afford in a country that already has one of the highest public debt burdens in Europe.
......
France’s minimum retirement age of 62 is one of the lowest in Europe.
......
Raising the minimum age to 64 and increasing the minimum period of contributions to access a full pension will eliminate the system’s deficit by 2030, according to the government. That would ease pressure on public finances, allowing the government to invest more in digital technologies, fund the transition to a low-carbon economy and boost employment and growth. Raising the minimum retirement age could also improve low employment rates among older workers
......
Politically, Macron has little to lose as he can’t run for a third term. And he’s determined to seal his legacy as a pro-business reformer and score a win for his centrist movement against populists of the right and left.
......
Labor organizations say adjusting the age thresholds will unfairly hit the low-skilled and the least wealthy who began working earlier in life.
......
past experience may give Macron the confidence to stare down the unions. The unrest of 2019 did little to dent growth and, ultimately, it was the coronavirus outbreak — not the protests — that led him to hit pause on the pension reforms.
......
Is this just a French problem?
Hardly. The world’s population of people aged 60 years and older is expected to double by 2050, according to the World Health Organization, while fertility rates are in long-term decline. The financial strain is challenging old-age support systems and leaving many countries facing tough choices about raising the age of retirement, cutting benefits or lifting taxes. Pension shortfalls will be the equivalent of about 23% of world output by 2050
......
One key measure is the old-age dependency ratio — the number of older people compared to the population that is working age. In Europe and North America, that ratio will be about 50 per 100 by 2050, according to UN forecasts, a rise from 30 per 100 in 2019. In short, we’re on a trajectory toward a smaller share of people paying taxes and a higher proportion drawing pensions. By 2035, the basic US system known as Social Security will no longer be able to cover payments, forcing a 20% reduction in benefits
https://www.washingtonpost.com/business/...story.html
