French Pensions

For many years France has had the reputation of treating its retired people more than fairly. For instance the retirement age in France is 60 years (in Italy it is still 65 and in the UK 65 for men and women) and French pensions are comparatively generous. Whereas in the UK pensions are paid at a basic flat rate in France, rather like SERPS, the pension is earnings related. For instance under the Socialists the average pension amounted to 50% of the pensioner's average salary based on the average of their ten highest earning years up to a maximum of about £15,000. Under this men received about £660 and women about £350); i.e. considerably more than British counterparts. The problem is that this high rate of pension payment is unsustainable in the current economic climate. The system relies on those in work paying into the Caisse de ILetraite (state retirement fund) now, to fund those who are elderly now. The problems are that not only is unemployment still relatively high, but the population is also getting top-heavy with older people, which will be a problem for Europe generally in the next quarter of a century. Currently the French pension fund is running at an annual deficit of billions of euros. So far, the government has been wary in tackling the problem head on. Instead it has tampered with the length of time people must work in order to be entitled to a pension which will be raised from 37.5 years to 40 after the year 2003 and will also be calculated on the 20 highest earning years thus reducing the final total.

The most radical reform of the French pension scheme is the introduction of private pension schemes. These were almost unheard of prior to a new law passed in June 1997. The government is determined on this innovation, not least because it produces much needed capital for the Paris bourse.

For those French pensioners (usually farmers and women) who fall below the Minimum Vieillesse there are additional benefits which are means tested. In France there is also a legal obligation for children to contribute towards the upkeep of parents and grandparents unless they can provide proof that this is not financially possible.

See Pension Pros & Cons