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ORIGINAL FRENCH ARTICLE: Retraites : Ayrault abat ses cartes

by Stéphane Aubouard, Fanny Doumayrou, Yves Housson, Thomas Lemahieu

Retirement “Reform” – Ayrault Lays Down His Cards

Translated Monday 2 September 2013, by Gene Zbikowski

Dues-paying period lengthened. No increase in the CSG tax, but retirees must pay. Partial satisfaction of a few trade union demands, and a fat gift to the bosses…

Late in the afternoon on August 27, just minutes after the FSU teachers union delegation (the last to be consulted in two days of talks with the trade unions and the employers’ organizations) had left the prime minister’s official residence, the prime minister’s staff announced, to general surprise, that the government would present its plan to reform retirement schemes that very evening.

“Today our retirement periods are longer and we enjoy them more. And we have the means to preserve this fair patrimony of retirement.” It was with these words that the prime minister began his speech, announcing straightaway the main point of the coming reform: the lengthening of the dues-paying period. The government will draw its inspiration from the 2003 Fillon law, with a dues-paying period rising to 41 years and three quarters in 2020, as against 41 years and two quarters (166 quarters) at present. Then, from 2020 to 2035, an increase of one quarter every three years, up to a dues-paying period of 43 years in 2035. Moreover, this lengthening of the dues-paying period will be applied to everyone, in both the private and the public sectors. The CGT trade union confederation believes that this measure alone, weighty in its consequences, greatly “justifies” the joint trade union demonstrations set for September 10.

In terms of the financing, the government sprung a surprise in finally announcing that it was abandoning the idea of increasing the generalized social contribution tax (CSG). An “effort” will indeed have to be made, the prime minister said in justification, but not via the CSG tax, “which would hit all households, and which had not been created to finance the retirement schemes.” Hence the chosen means is an increase in the retirement contributions or dues paid by both workers and their employers, “at a low level and little by little,” Mr. Ayrault explained. The increase is said to be 0.15 percent in 2014, and then 0.05 percent a year until 2017, to attain a total increase of 0.3 percent in that year. But it is understood that this increase will be compensated, the prime minister hinted in order to reassure the employers, guaranteeing a “quasi-stability in the obligatory withholdings” and in the cost of labor. The idea of reducing the family contributions paid by companies (34 billion euros) had been mentioned on August 26.

Retirees “will pay their share” the prime minister warned. Aligning the rate of the CSG tax paid by retirees with that paid by active workers has been ruled out, and the 10% deduction in calculating income tax will be maintained. But retirees will be hit by two measures. On the one hand, the annual adjustment to retirements will be postponed from April 1 to October 1., and on the other hand, the 10% increase in the retirement pension granted to parents of three or more children will henceforth be subject to income tax.

43 years of dues-paying in 2035.

“This is a fair reform” Jean-Marc Ayrault proclaimed at the end of his speech. The prime minister insisted on the fact that the government would take into account hard jobs, not without mocking the 2010 Fillon counter-reform which strictly limits adjustments allowed to workers suffering from infirmity: a “personal account for the prevention of hard work” will be set up “beginning on January 1, 2015.”

According to Jean-Marc Ayrault, “It will be in the interest of 20% of the workers in the private sector to have one” – any worker who is exposed to one or more factors counting as making work hard will see his or her account credited with one or two points each quarter. The worker will then be able to use those points to benefit from training for higher-skilled jobs, to work part-time toward the end of his or her working life, or to take early retirement. But, for prime minister Ayrault, the objective must be to “permit the greatest possible number of people to exit hard work.” The mechanism will be financed by the employers.

As their retirement pensions are 30% lower than men’s, the government also states that it will attack “the injustices done to women” through better treatment of quarters of part-time work and maternity leave.

As regards taking “part of the time spent in academic studies” into account to the benefit of young people, the mechanism seems to be extremely modest: to aid in “buying” quarters of dues-paying, the government “will set up a fixed-sum aid package limited to four quarters.”

There will be no change in the rules governing the civil service or the special retirement programs.

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