Pension reform in France became a key element in this year’s presidential election. The future of the French retirement system was intensively discussed by the social partners, and was one of the hot issues during the electoral campaign.
Before the election, opposing candidates Jacques Chirac and Lionel Jospin publicly clashed on the future of the French retirement system. Chirac defended the creation of an Anglo-Saxon-style pension market, whereas Jospin argued that the only way forward for supplementary pensions was through collective savings funds managed by the trade unions. Since the election, with Chirac returned to power, retirement provision has continued to be debated and some pre-election promises are now being questioned.
Just before the election, Chirac promised that the recently created state reserve would have accumulated €150bn by 2020, enough to pay pensions between 2020 and 2040. This huge amount of money would come, he said, from the privatisation of state-run companies.
However, the Paris-based pensions association Observatoire des Retraites, warned in July that the economic climate, union influence and the forthcoming ‘tribunal committee’ elections – held every five years when employers and employees elect members to try to resolve areas of conflict, including retirement income and benefits issues – could prevent these promises being realised and certainly delay any decisions regarding the pension fund reform for months.
The new government has also had to listen to the claims of the asset management industry in the past few months. The French association of asset managers, the Paris-based AFG-ASFFI, called on the government to reform the tax system to encourage people to save more and to set up a new regulatory body to ensure the continued growth of the asset management and pensions industry. But some important steps towards the future of the industry were taken earlier this summer, when news about the merger between Argic and Arrco hit the headlines. The two caisse des retraites supplementary retirement fund associations are joining forces to create a new umbrella association, the Groupement d’Interet Economique AGIRC-ARRCO. This move was made as a way to avoid competition between the two and in preparation for 2004, when the number of supplementary caisses des retraites will be limited to 25. .
As part of the run-up to the government’s plans to meet both employers and the trade unions about the future of supplementary pensions in France, now scheduled for 2003, both of the social partners have reached an interim agreement about early retirement provision.
Under the AGFF funding agreement set up in 2001 by AGIRC and ARRCO to finance the costs of early retirement for employees covered by the two funds after pension payouts were frozen until December this year because of deficits in the funds. Those retiring under 65 receive their pension in full, as otherwise they would have been slashed by up to 22%. However, the agreement has only been extended to October 2003, which the unions believe is too brief.