No chance of a quiet retirement

ALL EMPLOYEES will have to work longer if the government’s new pension proposals are passed – but unions and opposition parties have already said they will fight the changes.

The government wants to phase in a retirement age of 62 by 2018 (from 60 today) and increase the minimum contribution years for a full pension at this age to 41.5 from 40.5.

This would affect both private sector workers and civil servants – who have become notorious for their favourable pension arrangements.

The rise will be phased in slowly over several years – four months a year until 2018.

The self-employed will also be affected by the changes, according to the RSI – the body which oversees their pensions.

The government has a e32 billion pension deficit, part of an even larger national debt.

The situation has worsened, with rising unemployment and more “baby boomers” retiring. There are currently 16 million pensioners, a figure which will rise to 23 million by 2050. They will also live longer. France, according to the OECD, is the country with the longest retirement – 24.5 years for men and 28.1 years for women in 2007.

The government also has to face a e27 billion hole in the state health insurance system – a debt that has tripled since 2008. Overall, France’s budget deficit is 8% of GDP. The government wants to cut this to 3% by 2013 by measures including a three-year freeze on public spending.

If France is perceived to be failing to tackle its debt it risks losing its AAA credit rating – which allows it to borrow money at low interest rates.

Launching the pension proposals Work Minister Eric Woerth said: “If we do nothing we have years of pension deficits ahead.

“Our objective is a balanced budget – not less deficit, but no deficit by 2018.”

Special rules for long careers and hard work

A rule allowing people who started work very young to retire early if they have made enough contributions will be kept. A new scheme will be introduced for those who work in especially physical jobs, who can still retire at 60 with no penalty even if they have not got a complete payment record.

According to the FSU, the biggest teachers’ union, the pension proposals are “brutal and totally unfair.” Aligning civil servants’ pension arrangements with those of the private sector would “be to the detriment of the public sector workers, who will lose spending power,” they say.

Unsa, a federation of several unions from different sectors, called the measures “unjust”.

They said many people would not now be able to retire until 67 – the age when most people would be able to stop work without their basic minimum pension being docked having paid their minimum contributions (at present this is 65).

The president of the Socialist Party in the National Assembly, Jean-Marc Ayrault, said the changes would weigh heaviest on manual workers, who often start work young.

Far left party the NPA said that “putting up civil servants’ contributions is equivalent to lowering their salaries.”

60% of French people are against the rise, according to poll group CSA.

MPs pensions have also come under scrutiny after it was revealed that some ministers are drawing parliamentary pensions even though they are still getting minister’s salaries.

This will be banned, said the prime minister. After an average period of service of seven years, an MP qualifies for a pension of about e2,400 a month at age 60.