French Government Unveils Its Retirement Reform Plan

?On Jan. 10, the French prime minister presented the government’s proposal for the future of the public pension system.

The part of the proposal that has gotten the most public attention is a gradual increase in the retirement age from 62 to 64. There is much more to the plan, however. Here are the significant points to note. 

Measures for the Balance of the System?

The legal age from which it is possible to retire will be gradually raised starting in September, at the rate of three months per year of birth.?It will thus be set at 63 years and three months in 2027 at the end of the five-year term, then will reach the target of 64 years in 2030. 

The number of years that must be worked in order to receive a full pension will also change. In 2027, to benefit from a full pension, it will be necessary to have worked 43 years. In the same way as today, people retiring at age 67 will always automatically benefit from a full pension—that is, without a discount—even if they have not worked for 43 years. 

Measures for Long and Difficult Careers

The long career system will be adapted so that no one who started working early will be forced to work for more than 44 years.?The long career retirement ages will be as follows: 

  • Age 58 for those who started working before the age of 16.
  • Age 60 for those who started working between 16 and 18 years old. 
  • Age 62 for those who started working between 18 and 20 years old. 

As today, people in a situation of disability or incapacity will be able to leave at the age of 62 at the full rate, and disabled workers from the age of 55. Employees who have suffered an accident at work or an occupational disease may, under certain conditions, retire two years before the legal age.?The conditions for accessing this early departure will be relaxed. 

Measures to Protect Against Occupational Wear and Tear

More employees will be able to benefit from the professional prevention account with more rights—for example, in the event of night work or when employees are exposed to several occupational risks.?Each year, more than 60,000 additional people will be covered by the professional prevention account. A new use of the professional prevention account will also be created with the possibility of financing retraining leave to change jobs more easily. 

An investment fund for the prevention of professional wear and tear will be set up.?It will support identification of trades exposed to ergonomic risks—for example, carrying heavy loads, awkward postures, vibrations—and finance prevention and retraining actions with employers. Reinforced medical follow-up will be put in place with employees working in jobs identified as exposed to hardship, in order to carry out preventive actions and better detect situations of incapacity allowing early retirement. 

Measures for All

The reform will mark the extinction of the main special pension schemes.?New recruits in the public transport sector, public utilities and other workers who had special pension schemes will be affiliated to the general pension scheme. 

Public-Service Workers

Gradual retirement will be extended to public servants, allowing for end-of-career working time adjustments starting from age 62. Civil servants in active categories and the military will retain the right to leave earlier, given their particular public service constraints and exposure to risks.? 

Self-Employed

Technical and consultation work will be undertaken to reform the social security base of the self-employed, to simplify its calculation and to reinforce the pension rights of the self-employed. 

Measures for a Decent Retirement

The proposal includes a boost in the minimum pension for low-income workers. The minimum pension will increase by 100 euros—approximately $109—per month for a full career.?This means that an employee who has earned the minimum wage—”salaire minimum de croissance” in French or “SMIC”—throughout his or her career will have a pension of 85 percent of the net SMIC. 

Periods of parental leave will be taken into account for purposes of the long career scheme and calculation of the minimum pension. Family carers, who are forced to reduce their work activity to care for a close relative or a child, will benefit from quarterly validations. 

Measures in Favor of Seniors

A seniors index will be created to create transparency in companies and to put age management back at the heart of social dialogue. 

Progressive retirement, which allows a worker to liquidate part of his or her pension before the legal age to start working part-time, will be relaxed and extended to the public service.?Retirees who resume working will be able to acquire rights and increase their pension. 

© Capstan Avocats, a member firm of Ius Laboris, which is a global alliance of law firms that specialize in employment law. All rights reserved. Reposted with permission of Lexology.

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