No need for new reform of French pension system: minister

Tue Dec 16, 2014 11:54am EST
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By Emmanuel Jarry

PARIS (Reuters) - France's social affairs minister said on Tuesday there was no need to reform an indebted pension system despite a report showing it will face chronic funding shortfalls unless the French accept to work longer and take home smaller pensions.

A report by the Cor consultative body, a copy of which was obtained by Reuters, was the second this week to point to a funding crisis in the system after the Cour des Comptes state audit body raised the alarm on private pensions.

In the short-term, the Cor report found that the pension system's total deficit - a component of France's overall public deficit - would fall from 9.3 billion euros ($11.6 billion) this year to 8 billion in 2018 as a result of reforms passed in 2013 to extend the length of time workers must pay into the fund.

However, even based on optimistic government forecasts of an unemployment rate more than halving to 4.5 percent between 2030-40, the deficit could only be wiped out by 2030 if further measures are taken, it found.

Notably, it would involve the average retirement rate rising from 61 years now to 64 years by the end of the 2030s, with a 22 percent drop in the ratio between pensions and work income between 2013 and 2060 - and a 31 percent drop if more pessimistic macro-economic scenarios are used.

"Another reform of the state pension system is not necessary," Social Affairs Minister Marisol Touraine told journalists. "The Cor report shows that the reform is bearing fruit and we can reassure the French: we are not heading for a crash of the retirement system."

While Touraine ruled out raising the legal retirement age, she said the government could consider extending the length of time that contributors pay into the system.

The statutory retirement age in France is currently 62 years.   Continued...