The French government has unveiled a much-anticipated reform of its deficit-hit pension system, raising the level and duration of contributions but avoiding some of the measures demanded by the EU and others seeking a more radical overhaul.
Anxious to avoid an outbreak of social conflict that accompanied previous reform efforts, the government stuck to a promise by President François Hollande not to raise the prevailing minimum retirement age of 62, as many other European countries have done, and as Brussels recommended. Instead, faced with a deficit in the pay-as-you-go system set to reach €20.7 billion in 2020, contributions by both employees and employers will rise progressively over four years to total an increase of 0.3 percentage points in 2017 – or €4.50 per month for a worker on the minimum wage.
The contribution period required to earn a full pension will not change before 2020, but will then rise from the present period of 41.5 years to 43 years by 2035 – hitting all those born after 1973. This means that, although the government has avoided an increase in the minimum retirement age, most people will have to work beyond the age of 62 to earn a full pension.
“It will lead little by little to a rise in the effective age of retirement and it is because of this that this is a major structural reform”, said Jean-Marc Ayrault, the prime minister, who announced the measure after two days of intense talks with employers and trade unions.
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