Pensions: Bayrou accused of juggling figures and debts

A heavy deficit?

According to Mr Bayrou, pension-related expenditure represents half of the "1.000 billion additional debt accumulated" by France "over the last ten years".

"Our retirement system pays out some 380 billion euros in pensions each year," while contributions from "private and public employers and employees," revenue dedicated to the retirement system, represent "approximately 325 billion per year," he said.

"There remains 55 billion, paid by the budget of public authorities, and to the first head of state, to the tune of some 40 or 45 billion. But these 40 or 45 billion annually, we do not have the first cent of it", continued the Prime Minister, for whom "each year, this sum, the country borrows it", putting "the burden" on future generations to pay for the "pension service".

A much lower official figure

The Pensions Advisory Council (COR) - an organisation responsible for shedding light on pensions debates, attached to Matignon - calculated a much smaller deficit in its latest report.

In 2023, the pension system was even in "surplus" of 3,8 billion euros (0,1% of GDP), he writes. The situation has since deteriorated "due to the economic slowdown and the significant revaluation of pensions", he continues, estimating the deficit at 6,1 billion euros (0,2% of GDP) in 2024.

It will reach 0,4% of GDP in 2030 - or 10 to 15 billion euros - and 0,8% of GDP in 2070, predicts the COR.

Two calculation methods

The gap between the diagnosis of the Prime Minister and that of the COR comes from a different consideration of the State's contribution.

The COR takes into account all of the State's contributions to the resources of the retirement system. This includes earmarked taxes and subsidies intended to ensure the financial balance of the civil service system and certain special schemes, which the law imposes.

"These sums are allocated" to the system by decisions of the government and parliament, observes COR president Gilbert Cette, in an online note, a part coming to "compensate for reductions or exemptions from contributions" of companies.

The COR calculation methodology is therefore in accordance with the laws in force and the accounting used to build the Social Security and State budget.

On the contrary, François Bayrou deducts part of the State's contribution from pension revenues, considering that it contributes at too high a rate (85,4%) compared to the private sector (27,9%). However, the demographic imbalance in the civil service system is linked to a reduction in the wage bill with a favourable impact on public finances.

Severe criticism

François Bayrou's approach is a minority among experts, economists and social partners. The right deficit "is the one calculated by the COR", believes Eric Heyer, director of the Analyst and Forecasting department at the OFCE.

For Yvan Ricordeau, number 2 of the CFDT, the Prime Minister is talking about "a deficit which is not established by anyone, except by him", based on a calculation "bordering on dishonesty" according to the president of the CFE-CGC, François Hommeril.

His reasoning "does not make sense", agrees economist Michaël Zemmour, professor at Sciences Po. "Our retirement system has mixed financing, through contributions and public contributions". This "choice" by the legislator makes it possible to finance the "solidarity" of the system: equality between women and men, minimum pensions, he says, stressing that unlike public debt, retirement spending is "stable" as a share of GDP.

An “impossible” negotiation?

The Prime Minister wants to entrust the Court of Auditors with a "flash mission" to establish "indisputable figures", prior to three months of negotiations between social partners to review the 2023 pension reform, subject to not "deteriorating the financial balance" of the system.

For a specialist in these issues, "there is no chance of an agreement!" "Finding 55 billion euros will be impossible," he believes, seeing in this proposal "a fool's game."

He sees in the "flash mission" entrusted to the Court of Auditors "an affront to the COR", whose analyses come from a wide range of actors: social partners, administration, Insee, Drees, parliamentarians... "All the elements of the debate have been on the table for a long time", he says.