The alarm signal has just sounded for Ircantec, one of the largest supplementary pension funds. In a report made public on Tuesday July 19, the General Inspectorate of Social Affairs (IGAS) and the General Economic and Financial Control (CGEFI) recommend savings measures in order to guarantee “the financial viability of the scheme” who “is far from assured” long-term. They also suggest reviewing governance, faced with a « situation (…) particularly worrying”which translates – among other things – into strong and persistent tensions with State services.
Ircantec is the compulsory supplementary pension system for non-permanent civil servants – in other words, contract workers who work for the State, local authorities and hospitals. Also affiliated are local elected officials and the personnel of certain bodies fulfilling missions of general interest. That is a total of some 2.9 million working people who contribute for about 2.2 million women and men to whom a pension is paid. The scheme is steered by a board of directors on which sit representatives of public employers and beneficiaries. Its management is entrusted to the Caisse des dépôts et consignations. In this system, the contributions paid by the employee enable him to acquire points, which then entitle him to a certain amount of benefits when he retires.
In 2020, Ircantec generated a positive result of nearly 600 million euros and today has more than 13 billion euros in reserves, which are placed on the financial markets. But these good results are unlikely to last. Projections made in 2021 “give a glimpse of the emergence” major imbalances “in the coming decades”, according to the IGAS-CGEFI mission. A deficit would appear for the first time in 2040, to widen gradually and reach 8.7 billion euros in 2070, if we retain the most favorable scenario (in terms of unemployment and productivity levels ). In the less cheerful hypothesis, the “hole” would form in 2033 and would represent 10 billion euros in 2070. As for the reserves, they could run out between 2054 and 2062, depending on the case.
“Organic Weaknesses”
Two elements are put forward to explain such a deterioration. First of all there are the “demographic changes”, which implies that the number of contributors relative to that of retirees decreases over time. The report mentions, on the other hand, “high level of performance” of the regime – that is to say its great generosity, which ends up weighing on the accounts. It must therefore be mitigated, in the eyes of the mission, and “consider, to this end, a gradual increase in the purchase value of the point”. This solution means, schematically, that people will have to pay a little more to acquire the same volume of pension rights.
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