The French government presents recent plans to update the pension system. Analysts expect a response from some employees.
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French President Emmanuel Macron is doing it again.
A recent pension reform proposal was unveiled on Tuesday, which included plans to raise the retirement age in France – which is anticipated to meet significant domestic opposition.
Macron is serving his second term as French president, but the overhaul of the pension system is a long-standing promise that dates back to when he was first elected in 2017.
The legal retirement age in France is now 62, which is lower than in lots of developed markets, including much of Europe and the US. The public sector also has “special schemes” or sectoral agreements that allow employees to retire before age 62.
At the end of 2019, the Macron government proposed a single point system that allowed people to retire after earning a certain number of points. The idea was to harmonize regulations across all sectors.
But the plan was met with uproar. Public sector employees – arguably the ones with the most to lose from potential reforms – protested for several days in some of the country’s biggest strikes in many years. In the face of such strong opposition and the coronavirus pandemic, Macron decided to put his plans on hold in early 2020.
This yr shall be the yr of pension reform.
Emmanuel Macron
President of France
There was talk of returning to the plans in early 2022, however it was considered too close to the presidential election that took place last April.
“This yr shall be the yr of pension reform, geared toward balancing our system in the years and many years to come,” Macron said during his Recent 12 months’s address.
“As I promised, this yr will indeed be the yr of pension reform, which is designed to ensure the sustainability of our system for years and many years to come.”
He added that he wanted to conclude negotiations in time for the recent rules to apply from the end of summer 2023.
“There shall be disturbances, there shall be strikes, [but Macron] decided to act fast: the current procedure is anticipated to last not more than 90 days,” Renaud Foucart, a senior lecturer in economics at the University of Lancaster, told CNBC’s “Squawk Box Europe” on Tuesday morning.
“Possibly quick and dirty, however it’s rather more likely to pass than it was five years ago,” he added.
Étienne Ollion, a professor of sociology at Ecole Polytechnique, told CNBC’s Street Signs Europe on Tuesday that Macron “wants to maintain the image of a reformist president.”
His first term was dominated by key reforms, touching on issues similar to labor laws and taxes.
What has been revealed?
Speaking at a press conference on Tuesday, French Prime Minister Elisabeth Borne said the government plans to raise the retirement age from 62 to 64 by 2030.
“I’m well aware that changing our pension system raises questions and concerns amongst the French,” Borne said, according to Reuters translation.
In the past, Macron has suggested that this might be raised from 62 to 65, but at a gradual pace, with a rise of about 4 months a yr until 2031.
!['Maybe quick and dirty': How Macron could deliver a crucial pension reform](https://image.cnbcfm.com/api/v1/image/107176316-16733336861673333684-27637178876-1080pnbcnews.jpg?v=1673333846&w=750&h=422&vtcrop=y)
Macron’s first proposal from 2019 also provided for addressing the so-called special regimes.
Any recent change to these agreements is probably going to lead to opposition from the industries concerned.
The relatively low retirement age in France is a strain on its public funds. The National Pensions Advisory Council has reportedly estimated the deficit of the pension system to be around 10 billion euros ($10.73 billion) per yr between 2022 and 2032.
Borne added on Tuesday that “nothing is final” and that a recent bill, presented in the next few weeks, will start discussions about welfare in the country. She said the reforms would also introduce a guaranteed minimum profit of around 1,200 euros ($1,288) a month.