With an aging population, how will countries in Europe manage to pay pensions? Will pay-as-you-go systems survive? Will there be more use of capitalization? The explanations of Emmanuelle Réju, journalist at La Croix, in partnership with the magazine Vox Pop of the channel Arte, which broadcasts a program on this theme Sunday, January 20, at 20:05.
In partnership with Vox Pop, the European society magazine of arte
Europe is aging. 100 million Europeans are over 65 today. They will be 50 million more in 2060.
At the same time, fertility declines and we enter later into working life.
As a result, the ratio between the number of Europeans of working age and the number of retired people continues to deteriorate.
For example, in France, there were 5 assets for 1 retiree in the 1950s. There were only 3.5 to 1 in 2010 and they will be only 2 to 1 in 2040.
Above all, we spend on average 26 years in retirement, against 15 years after the Second World War.
Hence this question, which has been throbbing since the 1990s: how are pensions going to be paid? Will pay-as-you-go systems survive? Will there be more use of capitalization?
Agirc-Arrco Retreats, the penalty in the hot seat
Let's go around the question
In the face of the aging of their population, the European countries have followed the reforms since the 1990s. All of them have the effect of extending the working life by pushing back the retirement age.
Sometimes contributions have gone up, and in some cases pensions have even gone down.
On the other hand, no country has fundamentally changed the system.
When we talk about the pension system, we often tend to oppose distribution and capitalization.
In the pay-as-you-go system, the assets finance directly, through their contributions and those of their employers, the pensions of the pensioners. In doing so, they acquire the right to receive a pension when their turn comes, which will be financed by the assets of the moment.
In a funded system, each individual contributes for himself or each company for his employees. This money is placed. At the time of retirement, the capital thus constituted is transformed into a life annuity, which constitutes the pension of the person.
In fact, in almost all European countries, there is a mixture of the two systems. Schematically, the first floor - the basic schemes - operates on the mode of distribution. And the complementary or professional plans operate in capitalization.
A clarification, we are talking here about pension plan, that is to say the collective organization facing the risk of old age. Beside that, and if one has the means, one can always constitute a voluntary, and individual, retirement savings.
Supplementary pensions, frames and non-frames in the same basket
France is an exception in Europe: everything works on a pay-as-you-go basis, whether it is the basic scheme or the complementary schemes.
This principle will not be questioned in the complete overhaul of pensions in preparation. Everything will change or almost: the merger of different funds, the method of calculating pensions, which will now be in points instead of annuities.
But the principle of distribution - to which the French are very attached - is not called into question. For the public authorities, it is indeed the most financially stable system, the amount of pensions not being subject to the vagaries of the stock markets.