France Retirement Policy



France Retirement Policy

Introduction

In France, the pension system is based essentially on the principle of distribution, the contributions of assets used to pay pensions to retirees. This system has many special diets. It has been subjected successive hotly contested reforms since the 1990s. It is possible to distinguish three school of thoughts: those who want to keep the system as it exists, those who want to reform it partially and those who want an overhaul of the system with the introduction of a system by points.

Now france has introduced a new retirement policy. The "disincentives" to work are particularly high after a minimum age for entitlement to retirement. Thus, in France, in the general scheme, the increase in pension entitlements due to an additional year of work is often insufficient or no. It is therefore far from being able to cover the additional pension contributions and the shortfall on the pension from these longer working lives. These "disincentives" are often measured by the tax on the extension of activity. It appears that this tax has an impact on attitudes towards retirement, and it distorts the choice of agents in favor of an age of retirement below that which would prevail in a context of optimality. This early exit from the labor market is often accompanied by a lengthening of the extraordinary life expectancy, and a late entry into working life, which leads to a duration of activity shorter and shorter as opposed to the period of inactivity is increasing. They are now the order of retirement of twenty-five to thirty years the need to finance. Therefore, the phenomenon of declining rates of 55-64 years in these countries together with the increase of the population over 65 years and longer life expectancy, is responsible for generate a substantial increase in pension expenditure. These expenses represent 11.6% of GDP in 2000 should reach, if we maintain the current regulations, from 13.6 to 13.8% in 2020.

Beyond these considerations relating to financial difficulties that pension systems face, hands shortages of works began to appear and could develop in the future. Faced with these challenges both by the phenomenon of early withdrawal of activity and population aging, many OECD countries have undertaken reforms and are now working to increase the participation rate of elderly. Most of these reforms were meant to 'ensure the financial sustainability of pension systems via an extension of the duration of activity and a stronger link between the contribution period and the level of pensions. For this, measures have been taken to make pension systems more neutral actuarial perspective, and thus more attractive to the pursuit of activity, so that if people are retiring later, and thus contribute advantage), their pensions will be increased accordingly. This helps reduce or eliminate the tax on the extension of activity. Hairault work, and Langot Sopraseuth [2004], are the most recent work in this regard. The originality of this work, which explicitly retains the criterion of "surges" as a determinant of the ...