France unveils pensions overhaul but will keep legal retirement age at 62


This week, the French government revealed its plans for major pension reform. It promises sweeping changes including creating one single pension system. But the legal retirement age will remain 62, despite pressure to raise it.
It was one of Macron's campaign promises and he intends to keep it, despite pressure to beak it: the legal retirement age in France will not budge from 62.
 
The French government confirmed this on Wednesday, when it presented the main outline of its pensions shake-up plan to the unions.
 
"The legal retirement age of 62 will not change," France's work minister Muriel PĂ©nicaud told RMC. 
 
In France, tampering with the legal retirement age is a political bombshell. 
 
Business groups have been pushing the government to raise it to 64 or 65 but hardline unions threatened major strikes and protests if that happened. 
 
"If the government touches the 62 years limit, we will mobilise," the CFDT union said Monday. Other unions such as CGT and FO also threatened to take action this week. 
 
In the past, attempts to change the legal retirement age met with fierce opposition. When Nicolas Sarkozy tried a decade ago, more than a million people took to the streets to protest against them. 
 
And there's a good reason the French don't want to continue working longer. 
 
According to the OECD, French pensioners enjoy the longest and wealthiest retirement in the developed world.
 
On average, French workers stop working at 60.2 years compared with 64.4 years for their counterparts in other industrialized nations.
 
In the UK for example, the state pension age is currently 65 for men and 60 for women but it will reach 66 by 2020. In the US, it's 62 but it will be raised to 68 over the next 5 years.
 
 
 
French enjoy longest retirement in the developed world
 
 
If Macron has decided not to touch the legal pension age, other parts of his pensions shake-up plan however promise sweeping reforms.
 
One of the reforms core element is to simplify France's complex, highly fragmented pensions system.
 
This is not an easy task.
 
France has currently has no less than 42 different pensions regimes.
 
Retirement benefits in the public sector are based on a worker’s salary during the last six months before retirement. In the private sector, they are worked out from the average over the last 25 years. 
 
Under the changes, the government plans to align all the retirement systems in both the public and private sectors as well as the variety of different pension schemes for different professions. 
 
The new plans were presented to the unions on Wednesday and there will now be discussed over the next 10 months.
 
Although the French are critical of the current system and are largely in favour of reform, pension reforms are a sensitive subject in France.
 
"French people of all ages have high expectations of the government on pensions reforms," said Le Parisien. "It's an explosive subject. Pensioners and workers are very critical of the current system and have high hopes for the new one. They want a system that's clearer, fairer and more generous." 
 
The reforms won't be implemented before 2025. Macron had planned to push them through by early 2019, but because it is such a politically sensitive subject, it is now likely that the government will wait until after the European elections next March. 
 
Here are the key points of the new pension reforms:
  • The legal retirement age will be kept at 62.
  • All 42 retirement regimes will be phased into one single system.
  • The new single system will use points. This means that all pensioners, whether they worked in the private or public sector, will get the same retirement benefits for each euro paid.
  • Exceptions will be made for pensioners who work in specific sectors. For example, some employees who work in physically demanding jobs will still retain their right to retire before the legal retirement age. Independent workers will also have  specific pension contribution plans. 
  • For public sector employees, bonuses will be taken into account in their retirement benefits. 
  • Compensation points will be given for periods of unemployment such as illness, maternity and unemployment. 
  • Points will be given from the first child instead of from the third child as it is the case today.