In 2023, the French pension reform raised the retirement age from 62 to 64, sparking protests and strikes across the country. But did it go far enough?
Not according to Agnès Verdier-Molinié, director of the IFRAP Foundation think tank, who believes France should raise it even further.
“Raising the legal retirement age to 64, as decided in the 2023 reform, is a step forward,” she said. “However, this measure does not go far enough to guarantee the long-term sustainability of pensions.”
The latest Court of Auditors report, she argued, shows a deterioration in the balance of France’s pension system, even taking into account the 2023 reform.
“Raising the retirement age to over 65 is necessary to reduce the pension deficit, particularly for the public sector, to limit the burden of pensions on public social security debt and to ensure the sustainability of future pensions in a context of a declining demographic ratio.”
The IFRAP Foundation wants the retirement age to be raised to 66 in 2033.
“Even then, according to our estimates, pensions will still need to be under-indexed to achieve balance,” she said.
It is also time France’s system was more in line with other European countries.
“France has long had a legal retirement age of 62, which is significantly lower than most of its European neighbours, whose average retirement age is around 64 to 65,” said Ms Verdier-Molinié.
This difference has an impact on the employment rate of older people.
'France needs to follow European neighbours'
While France has a 61% labour force participation rate for seniors aged 55-64, the European average is 67% and Germany's is 70%.
“Raising the labour force participation rate would have a very positive effect on employment and growth. We have no choice, as healthy life expectancy is increasing, and the French now generally live longer than citizens of neighbouring countries.”
For Ms Verdier-Molinié, it is “imperative” that France aligns with European standards “by gradually raising the legal retirement age to 64-65 or older”.
“This would better balance the contribution and pension collection periods, ease pressure on social security accounts and labour costs, and ultimately ensure the system's sustainability for future generations.”
Within France’s social protection spending, the largest share is pensions.
“Given our budgetary challenges, retirees themselves should be the first to advocate for raising the retirement age, because in the event of a crisis, it is their pensions that would be threatened first.”
Some argue that employer and employee contributions should also be increased, but the pension contribution rate is already very high, at around 28%.
“This weighs heavily on labour costs, business competitiveness and, ultimately, employment,” she said. “This rate is among the highest in Europe. It cannot be increased further, especially since pensions are not the only sector in which there are deficits: this is also true for health insurance.”
Ms Verdier-Molinié said the reflex to increase contributions “is no longer sustainable”.
“Today, French companies are falling behind in international competition because they pay several billion more in taxes and contributions than the average Eurozone company. Rather than increasing these costs further, the Foundation emphasises the need to control social spending.
“This means promoting employment rather than slowing growth through additional contributions.”
Declining productivity and the low employment rate in France play “a central role” in the difficulties of the pension system, she said.
“The employment rate for 15-64 year-olds in France is only 68.4%, compared to over 77% in Germany, representing a deficit of approximately seven billion working hours per year.
“This lack of effective work reduces national wealth by approximately €130billion per year.”
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Underemployment, she added, “directly impacts” France’s ability to finance pensions – fewer workers mean fewer contributions.
“Therefore, it is essential to increase the employment rate and improve productivity.”
Protecting the interests of retirees
Education is the “key element” in ensuring people, especially the elderly, accept the need to raise the retirement age.
“It is primarily in the interest of retirees themselves, as it guarantees the sustainability and viability of their future income. Without reform, the system risks becoming unsustainable, which could lead to a drastic reduction in pensions.
“Retirees should be among the first to campaign for raising the retirement age, as it is the best way to protect their assets and those of future generations.”
To encourage acceptance, the government should implement concrete support measures for older workers, she said, such as appropriate training.
Some unions continue to campaign to lower the retirement age back to 62, a decision that would be “irresponsible”, according to Ms Verdier-Molinié.
“It would have the medium-term effect of weakening retirees themselves, particularly in the event of a fiscal crisis, as observed in Greece and Portugal, where pensions had to be abruptly cut.”
