French retirees are among the best off in Europe. How many presidential candidates or heads of state have agitated this argument in recent decades to legitimize accounting reforms and try to slim down the budgetary mammoth of pensions: 327.9 billion euros in 2019, or 13.5% of the GDP (according to the 2021 report of the DREES which depends on the Ministry of Health).
A number of studies support the idea that French retirees would not have to complain. As for the poorest among them, according to Eurostat data, France has the lowest poverty rate in Europe at 9.6%, just ahead of Norway (8.6%) and Luxembourg ( 6.9%). Proof of the relative effectiveness of the French pay-as-you-go system in protecting the elderly against poverty, even if strong disparities exist.
What are we talking about ?
Periodically, however, a question comes up on the table: that of the purchasing power of gray temples and more precisely of the revaluation of pensions. As a reminder, the average pension for all schemes is 1,503 euros gross per month according to the DREEs, from which all social security contributions must be withdrawn (i.e. around 15% less on the amount of the pension paid net).
While pensions increase each year, the standard of living of the 16.7 million pensioners has eroded over time. Of how much ? The CGT has advanced 10% over the past ten years. However, it is difficult to quantify precisely. But an appendix to the Social Security financing bill (PLFSS) for 2022 establishes black and white a drop in the purchasing power of retirees since 2010. What do we read there? “Pensions from the general scheme (the security part)the civil service and Agirc-Arrco (additional for managers and employees) liquidated in 2010 guarantee in 2021 a purchasing power lower than that which they gave during their liquidation in 2010.” In other words, a loss over ten years. We can no longer count the number of demonstrations by retirees who denounce it… In 2021 alone, they marched in September, October, November and December to demand an increase in pensions. A theme – the purchasing power of retirees – also at the heart of the Yellow Vests movement and the Great Debate of 2019.
What is debating?
Beyond the reforms, for ten years the successive governments, like the managers of the supplementary schemes (Agirc-Arrco in particular) have got into the habit of activating a lever which allows discreet savings to be made: the annual revaluation of pensions. The rule since 1987 has been to index retirement pensions to inflation, ie to average consumer prices excluding tobacco. However, between 2011 and 2021, “the guarantee of purchasing power provided for by article 27 of the law of August 21, 2003 is not reached over the period”, affirms this document of parliamentarians annexed to the PLFSS. It was first of all the Agirc pensions (managed by the social partners) which gave the first blow to this use in 2011 with a revaluation lower than inflation. In 2014, the government of Manuel Valls decided to limit by half the revaluations of the pensions of the general system and the public service beyond 1,200 euros and to freeze them for a year and a half, with the key to a forecast of ‘1.3 billion euros in savings. A dropout that has increased for all retirees, regardless of the plans, from 2017, under the effect of various measures decided by the government of Edouard Philippe: under-revaluation, freezing but also calendar shifts .
Why are the reset dates changing?
The date of revaluation of the pensions… it is the other means of making economies on the pensions. With each date shift, savings are at stake because there is no catch-up on the months separating the old date from the new one… All governments, right and left alike, have also had recourse to it recently. Before 2009, the date of the revaluation of the pensions of the general system and the civil servants was fixed at January 1st to stick to the annual statistics of inflation. Between 2009 and 2013, the calendar was pushed back to April 1 each year. Then in 2014, the date was moved to October 1st. In 2018, the revaluation scheduled for October 1, 2018 is this time postponed to…. January 1, 2019. In 2020 again, but this time the Social Security financing law introduces “differentiated revaluation”. Pensions, less than 2,000 euros gross per month, all schemes combined, have been revalued by 1% and for those above 2,000 euros a limited increase of 0.3%. In supplementary pension plans, the scenario is the same.
What also weighs on the amount of pensions?
Beyond indexation and floating calendars, the famous social security contributions also weigh on the level of pensions… Rates that retirees are used to peeling, because they burden the amount of pensions (between 10 to 20% ). Since 1995, they have continued to pile up and increase. With, pell-mell: the generalized social contribution (CSG) created in 1991 and which today has five different rates; the social debt repayment contribution (CRDS) since the end of the 1990s; the additional solidarity contribution for autonomy (Casa) since 2013. In addition, retirement pensions from supplementary schemes are subject to a health insurance contribution at the rate of 1%.
What parameter to move to restore purchasing power?
The main subject today is the indexation of pensions to inflation. Technically there is no obstacle to re-establishing this simple rule put on hold in France for ten years while many countries continue to apply it. This is a political decision to be made, considering that the bulk of the effort should not be borne by retirees alone. In the pension reform project carried by Jean-Paul Delevoye, entitled “towards a universal system”, the former High Commissioner even put forward another hypothesis: reindexing pensions on the average salary, a rule abandoned in 1987. “This would make it possible to maintain a constant rate of acquisition of rights over the course of an average individual’s career,” he explained. “And to argue that “the revaluation of retirement pensions would thus be more regular and less dependent on economic growth”. Some countries like Germany, Belgium or the United Kingdom have done so.
How much would re-indexing cost?
Impossible to answer this question because it depends on the level of inflation at the time when the decision is taken to restore indexation. Same thing for the indexation on salaries, which would be calculated on the average salary on the date of application.
What are the candidates saying?
Not much at this time, if we are to believe the statements of each other. The only candidates to pose the problem of indexation are the last in the presidential race. Nicolas Dupont-Aignan (Debout la France) is in favor of “an indexation of pensions on inflation”. As for François Asselineau (Popular Republican Union), his suggestions are very vague since he asks for “a reassessment of pensions each year” and an “adjustment according to inflation”.
In this campaign, most focus on small pensions. In other words, on the level of the safety net capable of ensuring that the most precarious employees or those who have not worked enough do not fall into poverty for life during retirement. A campaign promise from candidate Macron in 2017, on the menu of the Delevoye reform – bringing small pensions to 1000 euros for those who have all their quarters – which has not seen the light of day. It could appear in the 2022 program as well as the reindexation on wages.
On the right, candidate LR Valérie Pécresse recommends “guaranteeing in 2030, for all those who have worked all their lives, a retirement pension of at least one net minimum wage per month”. Marine Le Pen for the RN, offers “a universal pension of 1,000 euros minimum regardless of the contribution period”. The Reconquest candidate Éric Zemmour gives him no answer: “I am not Santa Claus, you see”.
On the left, the candidate of the Insoumis, Jean-Luc Mélenchon, wants “to bring at least to the level of the minimum wage – revalued – all pensions for a full career”. Anne Hidalgo (PS) intends to “raise the net amounts of the minimum old age to 1,000 euros and the minimum contributory to 1,200 euros”. Fabien Roussel for the PCF “claims that there is not a single pension below 1,200 euros net for those who have a full career”. As for Yannick Jadot, candidate Europe Ecology-the Greens, he deserts the question.