From the outset, the Pension Monitoring Committee displays agreed optimism : “If the economy manages to regain the growth rates that were envisaged in 2019”, he explains, “We will find in the long term values comparable to those of the projections of previous years, in particular a share of pensions in the GDP stabilized at around 14% in a scenario of productivity growth of 1% per year. As it stands, the pension monitoring committee notes that these results are not incompatible with the objectives of the pension payment system in relation to earned income, fair treatment of insured persons and intra-generational solidarity ”. Phew, we are saved! Certainly, there are short-term problems, but as the song says “all these little miseries will be fleeting, it will all work out.” “
There is however a downside to this fine optimism: “ The Pension Monitoring Committee nevertheless notes that, from the point of view of financial balances, the crisis has major effects in the short term, with a deficit in the pension system representing 1.1 percentage point of GDP in 2020, and strong uncertainties about the results of the following years. More broadly, the pension monitoring committee takes up its previous observations on the fact that the pension system, in most assumptions, is underfunded over the next 25 years, also pointing to a risk that growth will stabilize at a low level. level below the current low assumption of the Pension Orientation Council. ” In short, things will probably go well, unless the system does not manage to make ends meet. Thank you, we are well informed!
And finally, a lip service, in Newspeak style: ” The Government takes note of all these observations, which will help to fuel the social dialogue when the time comes on the recovery strategy of the retirement system, with a view to preserving our pay-as-you-go system and guaranteeing the income of retirees, in a spirit of readability for policyholders, and equity both inter and intra-generational. Poor CSR! But in fact, what reality is hidden under this acronym?
What is CSR?
The Retirement Monitoring Committee (CSR) was created by a law of January 20, 2014. This small group of 5 people constitutes, according to this law “a steering system which aims over time for the retirement system to respect the objectives of ‘financial balance and justice’. In fact, the CSR does not pilot, which, in good French, would mean making decisions, so for example increasing the legal retirement age (62 years currently in the general scheme) : it issues “opinions” based on the work of the COR, the Retirement Orientation Council. We have here an example of confusion in the vocabulary which does not bode well: what can we expect from a legislator who does not obviously know the meaning of the words he uses? Who would board a plane whose pilot would limit himself to giving an opinion, without being able to touch the controls?
It is possible that the CSR is simply intended to reformulate more concisely the advice provided by the COR. This institution with 41 members, including 8 parliamentarians and 16 “social partners”, likes voluminous texts: its report of June 2021 contains 328 pages. Such prolixity probably embarrasses politicians and social partners, all the more so as medium, long and very long-term projection exercises may seem questionable to them: the current pandemic, fraught with economic and financial consequences, was not obviously not considered by reports from a few years ago.
This time, the COR delivered its report on June 11; the opinion of the CSR is therefore closely following this publication. Fashion having led to joining a “citizen jury” to the COR, the CSR is careful to assert that it “took note” – that does not commit to anything – of the “observations” produced by this body. It all smells like the mothballs that our great-grandmothers used to protect clothes that we no longer wear: people who are in principle competent produce opinions on reports instead of preparing the essential implementation of a diet. single realistic PAYG pensions, that is to say respectful of Sauvy theorem (“We do not prepare our pensions by our contributions, but by our children”).
The real problems are not posed correctly
The plan to switch to a single regime concocted, at the request of the Elysee, by a “high commissioner for pension reform”, resulted in a stillborn legislative text. The diagnosis of illegibility and injustice of the system made up of several dozen plans was accurate and fairly widely shared, but the bill had major flaws and its burial relieved many actors and observers of the French pension system by division. However, one essential observation was lacking: the authors of the bill did not understand the absurdity of the principle of attribution of pension rights because of the contributions paid by the social insured, often for 4 decades, for the benefit of his elders. It must be said in their defense that neither the reports of the COR nor the opinions of the CSR had put the tip to their ears: the ancient belief resulting from the passage, in 1941, from capitalization to distribution was not “Deconstructed” by the “councils” and “committees” in charge of pensions.
Hundreds of pages have been published each year by people who are in principle competent, but in reality ignorant of the real operation of PAYG pensions – or closing their eyes to a reality they know but which they do not want to take into account. This operation was however well explained by Alfred Sauvy, the creator of the National Institute of Demographic Studies, INED, but his successors do not seem to have understood his message, which nevertheless takes the very simple sentence quoted above (“we do not prepare our pensions by our contributions, but by our children”).
It is clear: without births today, there will be no workers tomorrow to support the elderly. This means that it is absurd to award points (or any other form of pension rights), in proportion and in proportion to the contributions paid for current retirees. Common sense would like the rights to be allocated because of what adults do to prepare for their succession: bringing children into the world, raising them, financing their studies. Our legislation needs to be changed, not on a point of detail, but with regard to the very principle of exchanges between members of successive generations. That thousands of pages of reports and opinions are devoted to the problem of pensions, and that nothing is found there on the economic exchanges between members of successive generations is incredible and heartbreaking.
What to do ?
The next five-year term could usefully be used to carry out a reform of “pay-as-you-go” pensions which makes our system exemplary. First of all, our rulers and our legislators should make the effort to understand the exchange between successive generations, which has existed for millennia: adults give birth to children, do what is necessary so that they become men and women. women able to produce goods and services, and obtain in gratitude the right to be maintained by them during their old age. Once this principle of the round of generations has been understood, it obviously remains to be implemented, that is to say:
– Primo, introduce intelligent and fair legislation, providing for deducting from adults enough to maintain the elderly in proportion to what they will have done during their “second age” to invest in new generations, whether by having children or by contributing to the maintenance and training of the children of others.
– Second, give adults pension rights, for example in the form of points, which will allow them to choose very flexibly their transition to retirement: some will prefer to stop professional work quite early, by settling for a modest pension, ‘others will continue to work, possibly part-time, until an age considered “advanced”. This freedom will obviously not be that of the fox in the henhouse. : who wants to liquidate his pension at age 60 will obviously have to be content with monthly income much lower than what he would have been entitled to while waiting 70 years to “drop out”.
– Third, introduce a maximum of flexibility, for example to combine part-time work and the receipt of a pension corresponding to the points already acquired, or to revert totally or partially to the liquidation of these points, for example because we take a employment.
– Quarto, do all that can be done in terms of flexibility as long as no injustice results. Actuaries are perfectly capable of organizing this while avoiding any penalization of an original social insured, but also any windfall profit for smart kids.
In other words, we could build an economically rational system, promising nothing more than what it can keep, and leaving each of its members a great deal of freedom to organize their retirement as they see fit. : the application of actuarial rules will prevent any possibility for the “smart guys” to take an excessive share of the pie in relation to their actual contributions, and will protect those who have been victims, for example, of accidents or illness: nothing it is simpler, in such a system, than to award “solidarity” points.
But it would still be necessary to have a President of the Republic, ministers and parliamentarians who know the pension economy, based on the formation and reproduction of capital, starting with human capital! The CSR, chaired by an eminent demographer, would be well placed to provide them with this essential education.