Pensions system

       I.            Background
The French pension system, as it exists today, was phased in since 1945.

Before, with the exception of the officials and employees of some large public companies, the general public was not really covered.

The general plan was created in 1945 for all private sector employees. Initially, it was expected that all plans will be integrated. Today, all these plans tend to be closer after reform, but remain distinct.

From 1947 to compensate for the lack of pensions paid under the general scheme of supplementary schemes are set up for certain professional categories. In 1972, the supplemental plan for employees of the general scheme becomes mandatory. Thereafter, all supplementary plans become progressively mandatory in turn.

    II.            A wide variety of retirement plans

France has a total of 35 inherited pension funds. French average pay into 2 or 3 different boxes during their existence. Because they can change their profession, so plan during their careers.

• The general scheme:
It covers 71% of assets. The basic plan of the general scheme is managed by the CNAV (national pension insurance). And the supplementary scheme is managed by ARRCO (Association for the supplemental pension plan for employees), AGIRC (General Association executive retirement institutions) and IRCANTEC (Supplementary Pension Institution for non-permanent staff of the State and local authorities).

• The plans of the Public Service (17% of contributors)
These plans cover all State employees, local communities and hospitals. They now, since 2005, a supplementary scheme which is the additional retirement of civil service (ACM).

• Diets non-employees (10% of contributors)
They are managed by funds which provide both the basic plan and supplemental plan. These are:
o IHR (social security scheme for self-employed) for craftsmen, traders and manufacturers;
o the CNAVPL (national pensions fund professional) for the professions;
o MSA (MSA) for farmers.
• Special diets
These plans cover 2% of the contributors and gather the autonomous unions of various professions and public companies (RATP, SNCF, CNIEG, sailors, miners, Paris Opera ...)

 III.            Distribution

A. Distribution - How does it work?

The mandatory pension schemes operate by distribution. This means that the contributions paid by active each year are immediately required to finance the pensions of retirees.

Distribution systems are opposed to funded systems. These allow assets are regularly put aside in savings and then recover at the time of retirement.

This capitalization is often used in voluntary schemes that assets can subscribe to increase their retirement. Retirement Savings There is talk.

  IV.            A system "contributory" and generous compared to the retirement systems of developed countries

The French pension system is a system called "contributory": this means that retirees receive a pension that is proportional to the amount of contributions they made during their careers. These contributions are levied on wages and retirement, and depend on the occupation in life.

Other countries, like the UK, have developed very different functions: the pension system is financed by taxes, and pays seniors a modest pension, to enable their survival. So there is no relationship between what we pay and what we receive. To collect more, the person has to save its own.

It is this which explains the low share of savings in the incomes of retired French (8.6%, against 43.8% in the UK): the pension system already guarantees them a large pension, compared to other countries. However, it is not certain that the pension level is maintained in the future: saving for retirement is bound to grow.

     V.            A unified system

The French system is however more only contributory: while pensioners receive pensions based their contribution to the system; devices but can also increase the pension or take its faster without having paid pension contribution for this. It is in these cases, to make the system more supportive. The unemployed, workers on sick leave, parental leave parents do not pay pension contributions. Nevertheless, they acquire pension rights during these periods.

Similarly, persons who are at least 65 years old who have not contributed enough or have never worked, receive an allowance since 1956: the "minimum age".

The French system is the result of a long and complex history. In particular mixture contributory logic with the logic of solidarity.
For contributory logic, I get based on what I give and the logic of solidarity I get some other criteria.

Successive measurements of pension reform since the early 1990s

Since the early 1990s, various French governments have implemented major reforms to address the worrying developments. We include:

- The Act of 22 July 1993 on pensions and safeguarding social protection:
This law reformed pensions in the private sector. This is to establish pension adjustment based on prices rather than wages, raise the contribution period to qualify for a pension at the full rate of 150 to 160 quarters and finally change the years taken into account for the calculation of the reference salary. They spend ten (10) to twenty five (25) best years.

- 1996: Consolidation measures for supplementary pension schemes for private sector employees (ARRCO and AGIRC): this is the increase in the contribution rate and the decrease in yield.

- In 1999, a reserve fund for pensions was established.
They must be able to establish a reserve sufficient mutual fund to smooth financing efforts regimes between 2020 and 2040 related to the arrival of many classes at the age of retirement.

- The Act of 21 August 2003
The Act came into force on 1 January 2004 and had two objectives:
• Alignment of starting conditions retired Public Service that insured the private sector. This result in the alignment of the contribution period required for a full pension, and indexing pensions to prices rather than about the public service;
• Adaptation of system parameters to aging and the introduction of greater freedom in the starting conditions. The contribution period required to obtain a full pension will rise with the increase in life expectancy. And it is possible to leave earlier with a decrease of the pension (discount) or delay his departure to increase the amount of retirement (premium).

- The Act of 9 November 2010
It revolves around two sets of measures:
• measures to raise the retirement age from 60 to 62 years and the gradual increase in the age of retirement without liquidation of a discount of 65 to 67 years.
• measures to increase the revenue of the pension system: alignment of pension contributions of civil servants with those of employees, increase in levies on households and businesses.

The pension reform: François Hollande

Our retirement system by distribution is at the heart of the republican pact that binds the different generations. It is today confronted to the retirement of the post-war generations (the number of departures is increased from about 600,000 to 800,000 per year) which will continue until 2035, and to the extension of life expectancy.
The pension expenditure accounted, in 2008, 13.4 per cent of GDP (Gross Domestic Product), The need for funding of the pension system was estimated for the same year to EUR 11 billion, 0.6% of GDP.

In the economic scenario of the central guidance council of retirees (COR), and in the absence of reform, these expenditure would reach 14.5 per cent of GDP in 2015 and 15.1 per cent in 2030. Despite this increase, the ratio between the average pension and the average income of activity would decrease by 20 %. The need for funding of the system would be of 1.8 percentage point of GDP in 2015 and 2.5 in 2030.
In order to restore the financial balance of the pension system in this horizon, it should decrease the ratio between the average pension net income and average net assets of 8.7 %, or increase the rate of levy of 5.6 points, or even raise the effective age of liquidation of the retirement of a year and a half.
The situation of pensions in France seems worrying for the future, and there is a lot of debates:  system by distribution or by capitalization, periods of contribution, age of departure, levels of pensions, special schemes, retirement savings...
A minimalist reform:
After having restored the retirement age at 60 for the insured who have begun to work early and have sufficient contributions, François Hollande has chosen to reform the pensions using the less painful levers.
The pension reform bill is not structural. In fact, it does not cause great upheaval It is merely play to the margin on some levers and excludes aspects that may actually sustain the retirement system (report legal age of retirement, harmonization of public and private schemes, deletion of the special schemes ...). In addition, a large part of decisions will be applicable only after the next electoral deadlines important, further decreasing the effects of the "reform".
In substance, the project is based on three main aspects:
Contribution Period
The contribution period before an individual can benefit from a full pension will
be increased. it will be reduced from 41.5 years to 43 years of contribution in 2035 to be eligible for a retirement pension at the full rate for the generations born from 1973.
In practice, this means that for the legal age of retirement, which is maintained at 62 years, it will be necessary for these generations have begun to work at the age of 18 and not having known interruption of activity period (ex: unemployment).
Special policies will make provision for “interruptions” in contribution periods for women taking maternity leave, students, and interns.

  Old-Age Pension Contributions
Another measure intended to balance the social security accounts by 2020 will gradually increase old-age pension contributions (cotisations vieillesse) reaching 0.3 percent in 2017 for employees and 0.3 points for employers
The pensioners will be put to contribution via a time lag for the revaluation of pensions and an increase of their taxation. In fact, the annual adjustment of pensions of retirees should now be realized with a time lag of six months, resulting technical budgetary effects of 1.5 billion euros per year of savings for the State. Then, the budgetization of retirees who have large families (from three children) will be increased, resulting in an annual tax additional ranging from 50 Euro to more than 1 '000 euros depending on the case.
The reform project presented by the government is guided by short-term political objectives and does not solve the equation of financing for the long term retreats. Moreover, in the short term, it only solves part of the problem because it does not take into account the deficit related to public and special plans for which he prefers the financing by the debt to avoid political, electoral and social frictions.
Beyond the diversity of solutions proposed for ensuring the sustainability of the of the french pension system, the common observation is is that a financial imbalance ahead of magnitude.

Benefits / Disadvantages

       I.            The benefits of reform
• Women with children
To reduce inequalities between men and women, the government has shown a willingness to "make the pension system fairer." A new system will be put in place to better take into account the labor disruption quarters during maternity leave. Before, only two quarters were recorded but from 2014, quarterly taken on maternity leave will be considered assessed.
According to the Government, the premium to large families will be corrected so that it is more benefited by women.
After 2020, a lump sum based on the number of children will be paid only to women. Mothers will benefit from this bonus from the first child.
• Employees doing hard business
Night work, exposure to noise, painful positions ... According to the Minister of Social Affairs, Marisol Touraine, an employee in five, or 100,000 people retiring each year, has a difficult job that shortens their life expectancy. We can cite as examples, night nurses, truck drivers or certain workers.
From 2015, these employees receive a "hardship Prevention personal" account. In practice, each quarter of exposure to a risk factor will qualify for 1 point. An employee who gets 10 points will earn a pension quarter, part-time or training. The first 20 points should instead be spent on mandatory training. By cons, it will not be possible to collect more than 100 points, so that up to 8 quarters pension can be accumulated.
• The part-time employees
Today, a quarter is acquired with 200 hours paid at minimum wage. From 2014, this threshold will be 150 hours. In addition, unused contributions can be carried over from one year to another.
The part-time employees will benefit from a change in the terms of validating their quarters of contribution.
A ceiling will be added, however: only incomes below 1.5 times the minimum wage will be taken into account. With this measure, the government wants to prevent some employees who receive higher pay "can validate 4 quarters in less than 2 and half months of activity."
• Apprentices and trainees
The apprenticeship fee system will be reformed. It will now be possible for them to validate quarters during their learning. Thus, a quarter would be working a validated quarter, regardless of their remuneration.
For their part, young people who have made long studies will redeem quarters at a preferential rate. This bonus will be limited to a maximum of four quarters and it will be fixed. The redemption will, however, be made within five to ten years after graduation.

    II.            The disadvantages of the reform
• Pensioners with three or more children
Today the parents of three children or more receive a 10% increase in their pensions. This bonus will be made taxable by the government in the first place. Then, after 2020, the premium to large families will disappear gradually in favor of a system more favorable to women only.
• Employees, even those born prior to 1958
For employees born before 1958 - that have more than 62 years in 2020 - they almost pass between the drops of reform. The government has decided to extend the contribution period until 2020. By then, the rules of the Fillon reform will continue to apply, that is to say, a lengthening of the contribution period based on life expectancy. However, it has not progressed this year. Given that the contribution period is set six years in advance to allow time for future retirees to make their arrangements, it should remain at 41.5 years until the increase planned by the government in 2020.
By cons, those born before 1958, like all employees will have to pay higher pension contributions. Ayrault government reform provides for a gradual increase 0.3 contributions over four years. This increase in fine should represent 54 euros per year less on the payslip of an employee the minimum wage.
• The case of employees born after 1973
The Ayrault government has chosen to extend the contribution period until 2020, and that the rate of one quarter every three years until 2035. The generation born in 1964, who turns 62 in 2026, eg will contribute 42 years and a quarter to receive a full pension, against 41.5 years old.
However, in 2035, the contribution period will be set at 43 years, no longer move except new pension reform ... Thus, an employee of 30 years, born in 1983, will have contributed 43 years to receive his pension rate full. He will have to work up to 66 years if he started working at age 23.
• Employers
For employers, the pension reform provides for an increase in the amount of pension contributions paid by companies in the same amount as that endorsed for employees, ie an increase of 0.3 points after four years. This increase represents a total cost of 2.2 billion euros, which will be borne by employers. In compensation, so as not to overly burden the cost of labor, employers obtained a partial transfer of contributions under family policy on other samples.
Pensions system Reviewed by on samedi, janvier 28, 2017 Rating: 5        I.             Background The French pension system, as it exists today, was phased in since 1945. Before, with the exception of the...

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