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ORIGINAL FRENCH ARTICLE: La Cour des comptes prône la retraite à soixante-quatre ans

by Yves Housson

Cour des Comptes Favors Retirement at 64

Translated Wednesday 24 December 2014, by Gene Zbikowski

Upping the retirement age by two years is one of the solutions put forward in a new report to fix the growing financial imbalance in the Arrco and Agirc retirement schemes.

This is what’s commonly called preparing people’s minds for new, supposedly inevitable social sacrifices. The Cour des comptes – the French equivalent of the U.S. general accounting office or the U.K. controller and auditor general – is getting ready to publish a report on Dec. 18 on the supplementary retirement schemes, Arrco (which concerns 18 million private sector workers) and Agirc (4 million executives).

The stakes are big: depending on a person’s wages or salary, the supplementary retirement schemes account for between 30% and over 60% of a person’s total pension. According to le Parisien on Dec. 15, the Cour des comptes has established an alarming diagnosis: at the present rate of growth of indebtedness, Agirc will go bankrupt in 2018, with the same threat looming for Arrco a few years afterwards.

In March 2013, in view of the worsening financial situation, the MEDEF (the main association of French bosses) and the CFDT, CFTC and FO trade union confederations (The CGT and the CGC confederations having refused to sign on) concluded an agreement to make retirees pay by forcing them to accept increases in their pensions that do not keep pace with inflation, resulting in a fall in their purchasing power. This social regression has not made it possible to balance the books.

This time, among several solutions and for the first time, the Cour des comptes is openly envisaging upping the retirement age (presently 62) by two years, which is to be realized (by hiking by as much the legal age of retirement.) This is what the MEDEF has been clamoring for. Gattaz (its president) is even envisaging 65 as the minimum retirement age.

Of course, by definition it’s up to the legislators, not the trade unions or the bosses associations (which alone manage the supplementary retirement schemes) to set the legal retirement age. But using the situation of the supplementary retirement schemes to put pressure on the government is a tried and tested tactic. Already in 2013, the government used the Agirc-Arrco decision as an argument for increasing pensions at less than the rate of inflation.

The Cour des comptes is also said to favor “increased financial solidarity on the part of Arrco” to the benefit of Agirc, which is facing greater difficulties, indicating that “the question of a merger of these two supplementary retirement schemes must be addressed” in the short term.

It comes as no surprise that increasing contributions, and hence the schemes’ resources, are not put forward. And yet, as the report notes, the accounts of Agirc and of Arrco began to go into the red in 2009, following the outbreak of the new world economic crisis, which in France resulted in a historic fall in wages paid at the same time as financial needs rose as the baby boom generation reached retirement age.

The supplementary retirement schemes, like the whole of the social protection system, need above all a different economic and jobs policy, which would guarantee a lasting financial improvement.

Adding grist to the MEDEF’s mill…

Right now, a worst-case scenario is not inevitable … if the free trade rhetoric about the “cost of labor” is contested and contributions are increased, at the cost of the share of wealth paid out to shareholders. This is what the CGT is proposing with a modulated increase in company contributions depending on its wage and jobs policy.

Another solution put forward: wage equality between men and women, which, according to a calculation done by Agirc and Arrco at the request of the CGT, “would have very positive consequences on the supplementary retirement schemes’ resources, with, for example, a 4-billion-euro positive balance from 2017.”

The report by the Cour des comptes comes as the trade unions and the bosses begin discussions aimed at reaching an agreement by June 2015. The report adds a lot of grist to the MEDEF’s mill. The MEDEF is opposed to any increase in contributions, leaving the devil or the deep blue sea as the only choices: lower pensions or a higher retirement age.

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