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Do the proposed changes to France’s pension system affect you?

Do the proposed changes to France's pension system affect you?
If you're planning your retirement in France, things might be about to change. Photo: AFP
If you've been paying even cursory attention to French news recently, you will have noticed that the government wants to change the country's pension system and the unions aren't very happy about it.

We don't know the outcome of the battle over pension reforms – neither the government nor the unions sound like they're in the mood for compromise at the moment – but if the government does manage to push its proposals through, who will be affected and how?

Well firstly you need to be working in France, the reforms are to future pensions so if you're already retired this won't affect you.

The planned reforms affect both employees and the self-employed, although in different ways and in different timescales.


Prime Minister Edouard Philippe revealed more details of the proposed changes on Wednesday. Photo: AFP

How old are you?

For employees the crucial thing is your age.

If you were born before 1975 this won't affect you, your pension will continue to be calculated under the current system and if you are on a special regime that allows early retirement you can still do that. The government had initially proposed that only people born before 1963 would be exempt, but they lowered the age in an attempt to appease public anger over the proposals.

If you have not yet entered the workforce you are likely to be affected. Anyone entering the workforce in 2022 or later would go straight onto the new system.

For everyone else the government is proposing a phased introduction, so for somebody who is already more than half way through their career, but was born after 1975, their pension would be calculated 70 percent on the old system, 30 percent on the new system.

What about retirement ages?

Well the legal retirement age would remain at 62, so there is no change there, but there are certain caveats.

The reform is introducing a 'pivot age' of 64, at which point the full pension comes in to force. So you can still retire at 62, but you would get less than your colleague who stays on for another two years.

There would also be an end to 'special regimes' some of which allow people in certain professions to retire much earlier, at some cases at 52. Under the new regime only certain types of nurse, police officers, firefighters, prison guards and the military would still qualify for earlier retirement.


Firefighters and police are among those who would retain the right to retire younger than 62. Photo: AFP

Are you planning a family?

If you're a woman who is planning to have kids then you will benefit from the new regime – maternity leave would be compensated 100 percent in your pension pot and mothers would get an extra 5 percent pension provision from having their first child (at the moment the extra only kicks in once you have your third child).

And what about the self employed?

Self-employed people in France have their own pension schemes – it's among the 42 different regimes – and this would change too, but on a much longer timescale. 

Prime Minister Edouard Philippe suggested a “15 year horizon” for looking at changes to the self-employed system, with very little detail given on what is proposed. But certainly for the immediate future no changes are planned, and contributions already paid in to the self-employed scheme would not be transferred to the universal scheme.

And how exactly does the new system work?

Well the big change is that it will be a 'universal system' so everyone's pension is calculated the same way.

The government has proposed a points-based system, where “every hour of work counts”. One of the big disparities of the current system of having 42 different regimes is that different professions get their pensions calculated in different ways. So some regimes, largely in the public sector, calculate the pension based on the last six months of the employee's salary, while others take into account the highest-earning 25 years.

The new system would count the whole career, with every euro earned adding 'points' to the pension pot. Unions says this would be unfair on public sector workers, who tend to earn less than private sector employees, especially in the early part of their careers.


The proposed changes have provoked much public anger. Photo: The Local

And what if I change professions?

That would become easier because the new system is the same for everyone so it doesn't matter where you work. Under  current system pensions are tied to professions so if you were, for example, a journalist who decided to retrain as a train driver your pension would shift from one regime to another, creating highly complicated calculations.

The government says it is important to recognise that these days many people work in several different professions over the course of their working life.

And when does this start?

At the moment it's more a question of if rather than when. Unions say they are determined to fight this and will not stop the strikes until the government scraps the whole idea. But the government is also sounding pretty resolute at the moment, with Prime Minister Edouard Philippe saying that the reform will continue and laying out a timetable to consult ministers on January 22nd before bringing the proposals before the French parliament at the end of February.

What's probably more likely is that a compromise will be reached. The proposals also need to go through both French parliaments – the Assemblée nationale and the Senate – and that's where further compromises and changes could be made.

 


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