why the government is accelerating upgrading

by time news
why the government is accelerating upgrading

Pensions will exceptionally be increased six months before the scheduled date. The Minister of Labor Olivier Dussopt announced Tuesday, May 24 his intention to carry out a revaluation of the retirement pensions which will be paid at the beginning of August.

→ UNDERSTAND. Key figures for retirement and retirees

The minister thus confirms a campaign promise by Emmanuel Macron, who explained in April that he wanted to increase pensions “considering the prices” for the approximately 17 million retirees in France. That same month, inflation reached 4.8% over one year.

► What is the government planning?

To increase pensions, the executive intends to apply the indexation of pensions to inflation. The government should have this accelerated revaluation of pensions ratified by Parliament immediately after the legislative elections.

“Under the general scheme, the pension for the month of July is paid on August 9, explained Olivier Dussopt. It is our goal that the indexation will come into effect on this date. »“When I talk about indexation, if we take into account inflation at 4% and we think of a pension at €1,200, it’s a gain of €45 per month, it’s not negligible” , he further emphasized.

This figure of 4% had already been put forward by the Minister of the Economy Bruno Le Maire, recently reappointed, shortly after Emmanuel Macron’s declaration.

► How are they normally increased?

The indexation of pensions to inflation is in fact provided for by law. Since 1994, pensions have in fact been supposed to be aligned with the rise in prices observed over twelve months, from November to October. These revaluations taking place every January 1 have however been repeatedly tarnished by the government of Emmanuel Macron.

→ EXPLANATION. How are pensions indexed?

As of January 1, 2020, pensions had only been increased by 0.3% while inflation reached 1.8%. Enough to generate savings of nearly 3 billion euros for the government.

The gap between the evolution of pensions and that of inflation gradually widened until the beginning of 2022. Pensions only increased by 1.1% in January 2022 while inflation galloped at 2.9%. The revaluation planned for 2018 had been purely and simply postponed for a year.

Stratagems to grab a few billion are not the prerogative of the current President of the Republic. From 2014 to 2016, his predecessor François Hollande had also given up aligning retirement pensions with inflation by freezing them. Inflation, however, not having exceeded 0.5%, the measure had not had too great an impact on the portfolio of pensioners.

► How are supplementary pensions revalued?

The state does not have the power to increase this share of private sector employees’ pensions. The revaluation of supplementary pensions takes place each year in November, on the decision of the social partners, the representatives of employees and employers. Since 2019, the increase in supplementary pensions has been calculated on inflation, excluding tobacco, in the same way as for the basic scheme.

However, as for the basic plan, exceptions have been decided in order to consolidate the good financial health of Agirc-Arrco, the body responsible for supplementary pensions. In November 2020, no increase was applied. The following year, the increase was only 1%, when inflation reached 1.5%.

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