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France

France to raise retirement age to 62, unions cry foul

Text by FRANCE 24

Latest update : 2010-06-16

The French government unveiled Wednesday a proposed reform of the state pension system, raising the minimum retirement age to 62 and introducing higher taxes for the rich in an attempt to tackle the country's ballooning public deficit.

The French system

When can you retire in France?

Anyone can draw a full pension in France at the age of 60 so long as they have paid social security contributions for at least 40.5 years. This is set to rise to 41 in 2012. At 65 anyone can retire on the full pension even if they have not worked the full 40.5 years. In some jobs, deemed especially wearing, it is possible to retire as young as 50.

How many pensioners?

According to the Labour Ministry, there are some 15.5 million pensioners in France, out of a population of some 65 million. This figure is set to rise to 18 million in 2030.

How generous are full pensions?

Public sector workers retire on 75 percent of their final six-month salary. Private sector workers get 50 percent of their earnings in the 25 best years, plus benefits from additional schemes.

How much do workers pay into the system?

Civil servants have 7.85 percent of their salary deducted each month for pensions contributions versus 10.65 percent for private sector workers.

How much does this cost the state?

According to the state Pensions Council, the annual pension deficit is forecast to reach 32 billion euros in 2010, then 80 billion in 2030.

The minimum retirement age in France is set go up from 60 to 62, Labour Minister Eric Woerth said as he announced a sweeping reform of the French pensions system.

 
“It is imperative that we salvage our pensions system,” he told a news conference Wednesday. “Working longer is inevitable. There is no magic solution.”
  
He added: "There are two requirements for this reform - it must be both responsible and equitable."
  
The right to a pension from age 60 has been enshrined since 1982, a legacy of Socialist president Francois Mitterrand's administration.
  
But with a growing deficit and an ageing population, France’s right-wing government has been keen to press ahead with reforms which are likely to stoke anger in trade unions, who have vowed to fight the changes with strikes and street protests.
 
A pensions reform bill will be presented to President Nicolas Sarkozy's cabinet next month before heading to parliament in September.
  
"All of our partners in Europe have done it," Woerth argued. "It is not possible to stay on the sidelines of this movement."
 
Balancing the books
  
Speaking after a meeting late Tuesday with Sarkozy to finalise the plan, Woerth said that the reforms would balance the books by 2018.
  
The government is also planning to extend the minimum period of contribution to social security necessary to qualify for a full pension, from 40.5 years to 41 years and three months by 2012.
 
At the moment, anyone can retire at 65 on a full pension, even if they have not worked the full 40.5 years. Under the proposed new law this age would be raised to 67 by 2018.
  
Several new taxes targeting high-income earners and capital income will be introduced to help finance pensions, with a view to raising an extra 3.7 billion euros.
  
The minister said that the retirement age would be raised incrementally, reaching 62 by 2018 "so as not to upset the plans of French workers who are nearing retirement."
  
Reforming the country's pension system is shaping to be the centrepiece of Sarkozy's reform agenda as he winds up his term in office and heads for a re-election fight in 2012.

Date created : 2010-06-16

  • FRANCE

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