Two politicians discussed this weekend an issue that falls within the management of our pensions by distribution: François Bayrou, High Commissioner for Planning, and a figure of the Republicans, Eric Woerth. They take a position, or question themselves, on raising the “normal” or “legal” retirement age, which is called the “pivotal age” in various systems on which the bill drawn up by Jean was inspired. -Paul Delevoye. In my humble opinion, that is not their role.
Politicians have to prepare a bill on pension reform, which is not at all the same as proposing parametric adjustments. They confuse the function of the legislator with that of a director general of pensions. At the same time, they confuse what deserves to be included in the law and what comes under simple management decisions. This conceptual confusion is unfortunately classic in France and in various other countries; it leads to the politicization of decisions which should be technical. This politicization is dangerous both for the health of our pension system, and for the proper functioning of our democracy.
The law should not be used to manage, but to define rules as stable as possible
It would be very useful to reform our system of pensions by distribution, which works on the head. In particular, we need to change two types of provisions currently in force:
– First, the way in which pension rights are acquired. It is grotesque to take the contributions paid for the benefit of retirees as the basis for allocating pension rights: indeed, it is not by providing their “old” with what to live properly after a long working life that the working people prepare. indeed, really, their own pension. Positive law is in contradiction with reality, this fundamental reality that Alfred Sauvy once expressed in a very simple sentence: “We do not prepare our pensions by our old age contributions, but by our children. “ In the so-called “pay-as-you-go” systems, it is logical to allocate pension rights in proportion to the investment that prepares future pensions: the birth and training of new generations.
– Second, the division into dozens of different regimes. It took legislators (and governments) devoid of common sense to allow categorical regimes to be set up, as if the children of traders automatically became traders and those of civil servants automatically became civil servants. The different regimes must be merged into one: this is clearly a matter for the legislator. And this one must fulfill its function to the end, by passing a law specifying that the single system thus constituted will operate in an economically rational manner, that is to say by attributing points in proportion and in proportion to the investments that each one will carry out in the youth.
Management should be technical, not political
A rule in accordance with common sense must be set up in the form of a law: pension rights take the form of points obtained as a result of the investment made in young people, namely firstly the birth and parental education of children, and secondly, the payment of a contribution financing the other components of this investment, starting with education. The law will have to indicate the way of calculating the rights to pensions according to these parameters and the age at the liquidation, but by entrusting the responsibility for the control parameters to the managers of a single body responsible for the management of so-called “pay-as-you-go” pensions, which we could call France-pensions : this is a condition sine qua non independence from political power, and therefore good management.
The “orders” through which the managers of the scheme will be able to manage it will include setting the pivotal age, the service value of the point, and the precise methods of acquiring points, allocated partly for the youth contribution, partly for the setting. to the world of children and the care that their parents take for them. Fixing the number of points awarded per 1000 € of youth contribution will be a technical decision taken by the managers, and not a political decision.
Concretely, those responsible for France-pensions will have control levers that allow social policy holders a great deal of freedom of choice without jeopardizing the financial equilibrium of the system. The pivotal age and actuarial neutrality are two very important devices: the point value will be fixed for liquidation at the pivotal age; social policyholders will be free to liquidate all or part of their points earlier or later, by applying actuarial coefficients that technicians know how to calculate. In this regard, remember that surprises are always possible: longevity can for example evolve more favorably than expected, or less favorably, which prohibits making very precise promises to retirees on the evolution of the point value.
Drawing inspiration from the statute of central banks
However, the establishment of such a system, more rational and manageable than that which the Elysée wanted to establish, would constitute a very important improvement: no more political choices partly dictated by social movements, France Retreats would have a stature and resources comparable to those of the Banque de France, whose management does not bring trade unionists and thugs into the streets, and which can thus render the eminent services which have enabled our country to hold out against the pandemic and its somewhat chaotic management by the public authorities. Retirement is too important a thing to be left in the hands of politicians!
To ensure the independence of the “pilots” of France-pensions faced with political power and corporate pressure, a solution has proved its worth: the statute of the governor of a central bank (and its staff). If the Banque de France and the ECB were run by politicians, it would be fair and mismanagement. Our monetary system has weathered the pandemic because it is governed by technicians with significant power, and a status that puts them (at least a little) free from political pressure. It is a model that the French legislator could and should be inspired by to create a coherent pay-as-you-go pension legislation, to endow our country with a set of rules finally making our pension system governable, subject to demographic changes that are not necessarily favorable.