France’s pension reform kicked in in September of this year despite widespread protests. This means some changes to the way people retire in France, and it’s important for organisations and people to know what to expect.
What is the change?
Before the reform, the legal retirement age in France was 62. This means that people could start claiming their pension at age 62, if they had met all the requirements. Now, the legal retirement age will increase to 64 in 2030.
The already decided increase in the necessary contribution period for a full pension to 43 years will be become effective in 2027 instead of 2035.
Why the change?
The French government is reforming the pension system to make it more sustainable. The current system is facing a deficit, as the number of retirees is increasing while the number of people working is decreasing. The reform is designed to address this deficit and to ensure that people have enough money to live comfortably in retirement.
How does this affect organisations?
The pension reform will have a number of impacts on organisations. First, it will mean that people will be working longer. This could have a number of benefits for organisations, such as a more experienced workforce and increased productivity. However, it could also lead to challenges, such as managing a workforce with a wider age range and meeting the needs of older workers.
Second, the reform will increase the cost of employment for organisations. This is because organisations will have to pay pension contributions for their employees for a longer period of time. However, the government has introduced a number of measures to help organisations cope with this increased cost, such as tax breaks and subsidies.
How does this affect people?
The pension reform will also have a number of impacts on people. First, it will mean that people will have to work longer to retire. This could have a number of negative consequences, such as reduced leisure time and increased stress. However, it could also have some positive consequences, such as a higher retirement income and a healthier lifestyle.
Second, the reform will reduce the amount of pension that people receive. This is because the contribution period required for a full pension is being increased. However, the government has introduced a number of measures to protect people on low incomes, such as a minimum pension.
Most special regimes – those covering workers in network industries (electricity, gas, metro), the central bank, notary clerks, etc. – will be closed for new hires from September 2023
What is the ‘norm’?
The pension reform in France is not revolutionary. Many other countries have already implemented similar reforms in recent years. However, it is a significant change for France, and it is important for organisations and people to be prepared for it.
Do businesses need to do anything to meet this change?
Yes, businesses will need to do a few things to meet the change in pension reform. First, they will need to update their HR policies and procedures to reflect the new retirement age and contribution period. Second, they will need to communicate the changes to their employees so that they are aware of their rights and obligations. Third, they may need to make changes to their workforce planning to ensure that they have enough staff to meet their needs in the future.
The pension reform in France is a significant change, but it is important to remember that it is designed to make the pension system more sustainable and to ensure that people have enough money to live comfortably in retirement.
Get in touch
If you have any questions about the pension reform or how it will affect your organisation, please do not hesitate to contact Cintra.
We have a team of experienced experts who can help you to understand the changes and to develop a plan to comply with them.