While it should be published soon, the report of the Pensions Orientation Council (COR) has already leaked. Two and a half months after the adoption, then the promulgation of the pension reform, its conclusions are already calling into question the merits of this reform and have relaunched the debate around its necessity. Indeed, the government has been clear: if the pension system fails to restore its balance by 2030, the pension reform will be a success. On the contrary, the opposition specifies that the prediction of the COR of a deficit deemed “sustainable” of the system proves its uselessness. We take stock for you.
Created in 2000 under the government of Lionel Jospin, the COR’s mission is to observe the pay-as-you-go pension system by tracing the medium and long-term financial prospects of the various schemes. It is an independent service, however attached to Matignon, made up of 41 members, including parliamentarians, social partners and pension system experts. Each year, it publishes a report on the outlook for pensions in France: important data, which is likely to be commented on at length in this period of reform.
In its latest report, published on Thursday, the COR asserts that the government’s reform will not bring the accounts of the pension system back into balance in 2030. As our colleagues from BFMTV report, the forty existing systems “would remain permanently in deficit”. After two years of surpluses, we can therefore envisage a new deficit as of next year. Until 2030, the deficit would be between 0.2 and 0.3 points of GDP, i.e. between 5 and 8 billion euros per year.
In this report, the COR forecasts are based on an assumption of productivity growth of 1%, i.e. the scenario adopted by the government. Contrary to forecasts, the four forecast scenarios retain the assumption of an unemployment rate of 4.5% in 2032. In particular, a basic scheme for private sector employees is planned to be balanced until the beginning of the 2030s before a continuous decrease “in three out of four scenarios”.
The COR specifies, however, that the situation would be all the more degraded without the reform, which will slow down the rate of retirements. One way to curb spending with GDP, which will drop from 13.7% in 2022 to 13.5% in 2030. As for pensions, a revaluation of the most modest should be on the agenda with a drop in higher.
Faced with the COR’s first announcements, the government did not hide its reservations about these conclusions. The president of the COR therefore affirmed that “pension expenditure has stabilized overall and even in the very long term”, during a hearing before the Finance Committee of the National Assembly.
Statements that did not fail to annoy the Prime Minister, Elisabeth Borne, who accused the Pensions Orientation Council for the poor image of the reform in the eyes of the public. The COR has since spoken firmly about its work, explaining problems of financial equilibrium, as well as the “decrease or quasi-stability of pension expenditure” in the long term in all its hypotheses.
