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Mer.26 novembre 201426/11/2014 Dernière édition

The five flaws in the French pension reforms

|  Par Mathieu Magnaudeix

The proposed pension reforms in France have met with strong opposition, including strikes and massive street protests that are set to continue in October. But just what are the objections leveled at what is viewed as President Nicolas Sarkozy’s single, major reform of his term in office? Drawing from Mediapart's extensive coverage of the pension reform bill, we detail here the five main criticisms.

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The proposed pension reforms in France have met with strong opposition, including strikes and massive street protests that are set to continue in October. But just what are the objections leveled at what is viewed as President Nicolas Sarkozy’s single, major reform of his term in office?

 

1) It taxes the workforce, but demands little of businesses and the wealthy

In its explanations of the proposed reforms to pensions, the government has centred upon an easy-to-grasp argument: the size of the active population is ever-diminishing, while the numbers of retired people are constantly increasing. The problem, therefore, is demographic (although this argument is tenuous), as is also the solution, which is that the French must work longer.

The minimum legal age of retirement has, as a result, been raised from 60 years to 62 years, a stage that will be reached gradually, through yearly increments of four months. The legal age is when one is able to claim retirement, whether all the contributions have been met or not, and it is a legal right. Clearly, by raising the retirement age, a lot more money fills into state coffers, because extra contributions are paid in by those in employment. This measure has become a pillar of the government’s reform, allowing it to revoke a previous retirement reform, introduced under the Left in the early 1980s, which brought the legal age down from 65 years to 60 years.

Meanwhile, the age at which one can claim a full pension – that is, a pension with no deductions - is also pushed back by two years; until now that stood at 65 years, but will become 67 years. The money gained will represent 20 billion euros per year by 2020, which will cover most of the pension costs. New company and wealth taxes have also been announced, but these will bring in just five billion euros per year.

In his report for the French parliamentary finance commission, published in July, the UMP1 Member of Parliament Laurent Hénart concluded that the reform “penalised the workforce” and “hoped that the social and fiscal revenues to be announced in the autumn will lean towards a greater balance between revenues raised from the workforce and revenues raised from capital.”

1: The UMP (Union for a Popular Movement), is President Nicolas Sarkozy's ruling conservative Right party

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