Report
Patrick Artus

Pension system in France: What will happen if nothing is changed?

Let us assume that, despite population ageing, none of the present parameters of the public pension system in France are change d (retirement age, level of pensions, conditions for obtaining a complete pension). These parameters currently vary, for example by under-indexing pensions to wages: we assume that they no longer vary. Let us also assume that the employment rate of the working population does not change. We then see that the weight of public pensions in GDP would increase from 13.8% currently to 18.4% in 2040. If the method of financing pensions remains unchanged, the levy on the working population’s wages to finance pensions would increase from 26 percentage points to 35 percentage points. This raises two questions: What do young people and future workers think about this ? Would they accept this tax burden to benefit from a very generous and long-term pension at a later stage? How can the cost-competitiveness problem with the other euro-zone countries be managed? Is a far more generous pension system compatible with keeping France in the euro?
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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