Pensions: Revisiting the Facts and Figures

By way of introduction to his article, Didier Blanchet recalls two essential facts: that the number of persons aged 60 or over can currently be expected to increase, whilst the working-age population seems likely to stabilize (insofar as we are speaking still of those in the age range 20-59); and that expenditure on pensions as a proportion of GDP (13% at present) will increase correlatively in a way that is likely to continue, particularly if economic growth is weak (and assuming that retirement pensions remain at a stable level, the current replacement rate running at around 65%).
Blanchet goes on to recall the various simulations carried out for France by the Conseil d’orientation des retraites (COR; Council for Guidance on Pensions) since the early 2000s, and the impact of the reforms introduced in 1993 and 2003, showing what would have happened if these had not been adopted, first assuming a favourable economic situation, then in the much more worrying context resulting from the economic crisis and the poor economic prospects of the coming years. In so doing, he shows, in effect, the major consequences of that crisis and the very rapid deterioration of the pensions to GDP ratio. In this way he brings out the crucial role of three variables: total pension costs, rate of growth of GDP and the age at which the French begin to draw their pensions.
Having laid out the relation between these figures and shown by how much pensioners’ income would be reduced if nothing were done, Didier Blanchet — basing himself throughout on the most recent publications of the COR — stresses the need to adjust the pensionable age through two measures that will have effects on varying time-scales: on the one hand, raising the legal pensionable age and, on the other, increasing the number of years of contributions required to enjoy a full pension.