What are the alternatives to postponing the legal age?

Barthélémy Philippe, edited by Romain Rouillard

If President Emmanuel Macron seems determined to push back the legal retirement age to 64 or 65 years, against 62 currently, he comes up against the unanimous hostility of the unions and the French. The other possibility, which consists in extending the duration of contributions, does not have the favors of the government.

The equation is difficult to solve for the head of state in his quest for pension reform. On the one hand the postponement of the legal age of departure arouses an outcry from the unions and struggles to seduce the French. On the other hand, the extension of the contribution period, which acts as a fallback solution, does not convince the executive.

However, the latter will quickly have to solve the problem since the National Pensions Orientation Council (COR) estimates that the pay-as-you-go pension system (active people contribute to pay pensions for retirees) will be in deficit from 2023 and for the next 25 years.

The alternatives to postponing the retirement age are not legion but exist all the same. The economist Eric Berr, close to Jean-Luc Mélenchon, pleads for an increase in contributions, paid by the employer and the employee. “It would be enough for an increase of 2 euros per year for the boss and the employee to absorb the deficit provided for by the COR”, he argues, with Europe 1.

Capitalization to the rescue of the system?

For his part, Nicolas Marques, Director General of the Molinari Institute, defends a radically opposed vision. According to him, although he is in favor of it, simply raising the legal age to 64 or 65 is insufficient to guarantee the financing of the pension system in the long term. The economist therefore wishes to go further by generalizing the possibility of supplementing one’s retirement through collective capitalization, which consists of saving for one’s own retirement by investing part of one’s contributions in financial or real estate products.

A possibility already offered to pharmacists, who benefit from their own pension plan, but also to civil servants. The latter can invest part of their premiums in the financial markets for their retirement. “The challenge is to offer this system to all French people to complete the distribution which is struggling because of the constant reduction in the number of contributors compared to the number of retirees”, concludes Nicolas Marques.

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