A every five years, for more than twenty years, the same pension reform debate has seen the same arguments wielded, the same scarecrows, the same obsessions. The question of the pension fund is generally confined to the sole technical methods of withdrawing assets, with two points of tension: the retirement age and the period of contributions to benefit from the full-rate pension.
However, the subject of pensions is not limited to the modalities of the current disbursement system. It is above all a financial question, a balancing act whose purpose is to guarantee pensioners a correct level of pension, which goes beyond our sacrosanct pay-as-you-go system.
The intergenerational flows, through which today’s workers finance the pensions of yesterday’s workers, are no longer sufficient. Therefore, if we do not want to crush assets under the weight of contributions, we must integrate the current system, which dates back to a period of strong economic and demographic growth, with innovative financial mechanisms.
One of the avenues explored here is the monetization of real estate owned by retirees.
A growing imbalance
The ability of the current system to cover the needs of pensioners depends mainly, on the “contributory” side, on the number of taxpayers and the rate of contributions, and on the “pension” side, on the duration during which pensioners receive their pension and the amount of pensions.
Today the system is facing a growing imbalance between the number of employed and the number of pensioners, combined with the lengthening of life expectancy which lengthens the duration of pension payments. If no action is taken, with the same level of contributions and pension conditions, the standard of living of pensioners will have to decrease in the coming decades, from 10% to 15% by 2050 according to the scenarios of the Pensions Orientation Council (COR).
The problem is that there is little, if any, room for manoeuvre. On the “contribution” side, the number of taxpayers depends above all on the unemployment rate, which no government has yet managed to structurally reduce below 7%. The contribution rate can hardly be increased given the already high level of compulsory levies.
On the “pensions” side, the decline in the level of payments is excluded. The only solution therefore remains the postponement of the retirement age… which is opposed by 67% of French people (Odoxa survey by LCP and Public Sénat, December 2022). So what’s going on?
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