Posted Feb 25 2020 at 12:44 p.m.Updated Feb 25. 2020 at 4:20 p.m.
Five billion euros of technical deficit in 2015, 2 billion in 2018, and hopefully 600 million surpluses in 2020:
Agirc-Arrco is on the road to recovery
, with a depletion of reserves pushed back somewhere between 2033 and 2038, welcomes the Court of Auditors in its annual public report 2020. It also notes that its recommendation of 2013 to reduce management costs by 450 million euros to the horizon 2020 has been followed.
However,
savings decided in 2015
have been revised downwards, in particular due to the application of a floor to the under-indexation of pensions: annual gains were therefore “only” by 1.1 billion in 2017 instead of 1.7 billion, and will reach 5.5 billion in 2020 instead of 6.1 billion.
In addition, the Court considers that the body managing supplementary pensions for private sector employees has not studied enough the effects of some of the savings measures. Thus, the increase in the purchase value of the point saves generations near retirement and retirees, “And mainly transfers the burden of adjustment to policyholders born from the 1970s”, she notes. Conversely, the postponement to November of the revaluation of pensions and the under-indexation of points involve all generations.
In general, the Court notes that in matters of pilotage, “The work focused on the objective of financial sustainability, much less on inter and intra-generational equity”. “Rebalancing is desirable”, she said.
Contributions hurting the less wealthy
The setting of contributions is judged “Perfectible”, because it results in higher returns for high wages. This results from the application of non-entitlement contributions, the technical balance contribution and the general balance contribution, as well as a call rate of 127% on Agirc-Arrco contributions. These contributions without rights weigh 38% of the contributions of employees earning less than 3,400 euros, 34% for someone who would be twice paid, and 31.5% for eight times that salary.
“Thus, while a return of 6% is displayed by the plan, suggesting that a contribution euro paid in a year of activity gives the right to a pension of 6 cents each year during the entire retirement period, the effective return is lower and varies according to the salary bracket “, concludes the Court: 4.66% to 3,400 euros, 4.99% for twice this salary, 5.15% to eight times.
The Court therefore suggests reducing contributions for low wages, by around 7% to the level of 3,400 euros, and increasing them from around 1% to three times this level of income. It also proposes to gain flexibility in management by distinguishing in the future two service values from the point: that which is used when the pension is paid, and that which is used for the annual revaluation of pensions. Two proposals that will only have a limited lifespan, since Agirc-Arrco should quickly be incorporated into the universal pension plan.
In this regard, the Court considers that the principles of indexation of the point retained in the context of the merger of Agirc-Arrco “Would, if applied to all generations in the universal system, ensure long-term balance”. The purchase value is indexed to wages until 2033, and the point value on wage growth from which we still have to subtract 1.16 points from 2023 to 2033, a drop in real terms of 1.5 % over the period.
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