France’s Retirement Overhaul: Macron’s Greatest Challenge?

The fate of Emmanuel Macron’s presidency of France may lie in the fate of his planned overhaul of the retirement system, which has already prompted strikes and protests.Knowing that it’s not going to be the easiest of sells following the yellow vest movement that brought France to a near-standstill last winter, Macron is embarking Thursday on a “Tour de France” of meetings to try to convince skeptical workers that reform is exactly what France’s stretched and hugely complicated pension system needs to survive into the long-term.  
 
Here’s a look at the planned changes, and why they are generating debate:
 France old-age pension systemThe country’s retirement system has its roots in 1673 and the reign King Louis XIV. Initially for royal marines, the system swelled to include civil servants in the wake of the French Revolution at the end of the 18th century. Military personnel were added in 1831, followed by others over the decades to come, before employees in the private sector were finally added in 1930.
 
Now, all French retirees receive a state pension. The average French pension this year stands at 1,400 euros per month ($1,500 per month) once taxes are deducted. But that average masks an array of different pension regimes. In total, there are 42 pension regimes.
 So many special regimes
 
The easy bit: Employees from the private sector are affiliated to the overall system. The account for around 7 of 10 workers.
 
The more complicated bit: many professions have a special pension regime. Some workers like train workers and air crews allow early retirements, others, like lawyers and doctors, pay less tax.
 
Civil servants also have a separate pension scheme.
 
Over the last three decades, governments have made changes but each reform has been met with massive demonstrations. None of the changes managed to simplify the system.    
 Macron’s grand plan
 
Macron wants to simplify the system and replace it with a unified scheme, so that all French workers have the same pension rights.
 
He promises that the overhaul will make the system fairer.
 
He also wants to make the French pension system, which is projected to be in deficit in the coming years, more sustainable.
 
However, unions argue that the new system will require people to work longer and reduce pensions. Strikes have already taken place and more are expected over the coming months.
 
The government has promised the legal retirement age of 62 won’t change, but new financial conditions may encourage people to work longer.
 
Macron’s government said some specific measures would be maintained to allow military and police officers to retire earlier. Very arduous jobs would also be taken into account to allow workers to retire earlier.What’s next?
 
The government has opened three-month talks with unions, employer groups and professional organizations. Ordinary citizens are also being invited to give their opinion on a dedicated website and in public meetings — the first one taking place in the southern town of Rodez Thursday in the presence of Macron.
 
The government says that what finally emerges will take into account the outcomes of the current debate.
 
The bill is expected to be debated by lawmakers next summer. The government has said that the changes will only apply on people born after 1963 and will enter progressively into force between 2025 and 2040.
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