France will have an ‘appropriate’ retirement funding system by the turn of the century, which will contribute to the ‘mobilisation’ of nat-ional saving and the defence of French business, Domique Strauss-Kahn, French minister for economy, finance and industry has declared.
And a new pension funds law has been submitted to the French parliament, setting the ball rolling for what President Jacques Chirac has called ‘real retirement savings development’.
Before a meeting of the French parliamentary ‘savings’ commitee in Paris on January 19, at which European Commissioner Mario Monti also spoke, Strauss Kahn, stated: “We need to move towards national saving based on investment so our businesses can flourish and we can create employment. The pension funding system under research by Jerome Cahuzac (author of the long awaited Cahuzac report on pension funds), which we are seeking to implement in 1999 is integral to this push, although we are very sensitive to the preservation of our current social security system.”
Strauss Kahn also called for European tax harmony to boost such initiatives, which he said was “necessary and urgent”, adding: “It is a natural consequence of the single currency and must be implemented if we are to eliminate dangerous competition elements on the Continent. Each country should be able to determine its own fiscal policy on the condition that it fits into a loyal and transparent European framework.”
The minister also pledged his support for Monti’s initiatives in this area, saying: “We must not relax our efforts. Nothing would be worse than to reach a bad compromise which is worth nothing.”
France has seen enormous levels of activity on the question of retirement provision in the last month, prempting the release in March of the government’s ‘Rapport du Plan’ investigation of the pensions debate.
In December, French planning superintendent Jean-Michel Charpin issued a report highlighting the growing demographic imbalance of the country’s pay-as-you-go system, with seven retirees expected for every worker by 2040. Accordingly, he wrote that social security contributions should leap from 8.6% to 11.2% or the retirement age raised to 65 against 60 today.
Failure to do so, he added, would result in a budgetary deficit of up to E61bn. As a result, the French government announced the creation of a Fr20bn ‘reserve fund’ to plug the looming social security gap.
And in his report, Jerome Cahuzac proposed the creation of a fiscally driven long term savings plan, surplus to social security, in order to ensure safe retirement for France’s pensioners. Hugh Wheelan and Gilles Pouzin