The pension system will not return to financial balances before the mid-2030s. This is one of the lessons of the annual report of the Pension Orientation Council (COR), that The world was able to consult in an almost final version.
These projections come at the very moment when the idea of reforming the system in order to achieve budgetary savings is again raised by the executive. On June 3, Emmanuel Macron, in fact, put the pension file back on the table, citing “Difficult decisions” which would aim to postpone the age from which insured persons can request payment of their pension.
Like the other compartments of our welfare state, pension plans, taken as a whole, have been violently hit by the crisis linked to the Covid-19 pandemic.
The contraction in business activity resulted in a drop in revenue, mainly attributable to the drop in contributions (- 4% last year). At the same time, expenses continued to grow by around 1%, despite the increase in mortality caused by the death of people infected with SARS-CoV-2.
“Less dynamic” growth in spending
Result: while the pension system was almost in balance two years ago, the deficit has widened “Very heavily” in 2020 to stand at – € 18 billion, or 0.8% of gross domestic product (GDP).
The financing need is however less important than that anticipated by the COR in its previous annual report, published late, in November 2020, because of the health crisis. At the time, the calculations carried out then counted on a “hole” of – 23.4 billion euros. In 2021, the “Rebound in activity” hoped would reduce the deficit “Close to 0.4% of GDP”. “This sharp deterioration in the deficit is essentially cyclical in nature”, believes the board.
Last year, the expenditure of the system amounted to 14.7% of the GDP. This percentage is particularly important, because the recession has resulted in a loosening of economic activity, “While pension expenditure has remained relatively insensitive to the economy – despite the decrease in the number of retirees linked to excess mortality”. Beyond 2020, which COR describes as“Exceptional year”, the weight of pensions in national wealth should return to its pre-health crisis level, below 14%.
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