“According to the COR report”: the Pensions Orientation Council (COR) is on everyone’s lips to comment, justify or criticize the government’s pension reform project. For some, the COR forecasts, published in September 2022, show the urgency of balancing a system whose deficit will widen in the decade; others point to rather stable future expenditures which in no way justify such a reform.
Each year, the COR, an independent body made up of parliamentarians, senior civil servants, social partners and experts, is responsible for “describe the medium and long-term prospects for mandatory pension schemes in the light of economic, social and demographic developments”. It publishes a report of more than 300 pages presenting the evolutions and perspectives of pensions in France.
But these are economic projections: they depend on parameters that are difficult to anticipate decades in advance, and the results vary greatly depending on the assumptions made. The Decoders explain to you the richness of these indicators, but also their limits.
What is the current state of the pension system?
Aging of the population, falling birth rate and retirement of baby boomers are putting pressure on the pay-as-you-go system. How to pay pensions for retirees who are becoming more numerous? At the start of the 2000s, there were 2.1 working contributors for 1 retiree; there were only 1.7 left in 2020, and this ratio will drop to 1.2 workers per retiree by 2070, according to DREEs forecasts. This demographic change will be offset in the medium term by the increase in the retirement age already provided for by past reforms.
In 2021, the last year for which data are available, most of the financing of the system (79%) was provided by social security contributions from employees and employers – including the State. Next come taxes and duties, including the CSG (12%), transfers from other bodies, such as unemployment insurance or the family branch of Social Security (7%), and, finally, 2% subsidies from the State to balance certain special diets. In total, for the State, pension expenditure represented 23.4% of public expenditure in 2021.
For twenty years, pension system spending has increased faster than the wealth produced in France: the increase has reached two percentage points of GDP (with a peak in 2020 because GDP contracted during the health crisis).
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