How to think about the issue of pensions in France

To clarify the debate on the pension system in France, we believe one should go through the following steps: Defining the maximum weight of pension spending that is acceptable. Higher pension spending leads to a larger levy on the incomes of the working population and the young, and to a cost competitiveness loss. Once this maximum weight of pensions has been defined, the method of balancing the pension system must be chosen: In the current system, there are three possible instruments: the level of pensions, the retirement age, the contribution period; I n a point system, the only instrument is normally the point value. The transition to a universal point system creates winners and losers. How can one get the losers to accept it? One solution is to use, for example, privatisation money to give them retirement capital (in the new retirement savings plan) which offsets the decline in the generosity of their pension system. Lastly, we look at the choice of a pay-as-you pension system made in France, and point out how costly this choice is. From 1982 to 2019, the real (inflation-adjusted) return on a pay-as-you -go pension portfolio was 1.9% per year on average, that on an equity portfolio 11.1% per year, and that on a bond portfolio 6.1% per year