Tuesday, May 18, 2010

Retirement Reform

Retirement reform is to be the centerpiece of Sarkozy's domestic agenda in the runup to 2012. He seems to be taking a cautious approach, reluctant to renege on any promises yet eager to mollify various constituencies. Since he promised the bouclier fiscal, he won't modify that, except that he will: there will be a "solidarity contribution" from the rich to defray retirement outlays, and this won't be counted under the tax shield. The great debate seems to be about whether this exception constitutes une brèche in the bouclier or une entaille, the latter being the word Copé prefers. Sarko also refuses to cut retirement benefits, so the largely irrelevant legal age of retirement will be raised, and years of contribution required for full benefits will be increased, albeit with many exceptions for pénibilité, etc. Finally, the changes will be phased in very gradually, and equilibrium will not be achieved until Sarko is long out of office, so it will be somebody else's problem. In short, this is retirement reform of the sort we are used to, piecemeal, complicated, and difficult to assess. Reform by obfuscation and complication, but enough to provide a campaign theme and a modest defense against the charge that the government's policies since 2007 have favored the rich and hurt the working stiff.

1 comment:

Passerby said...

Art,

I was also thinking that the legal age for retierement was pretty much irrelevant. I thought that only the required numbers of years of contributions made a difference.

It is not so according to Danièle Karniewicz, présidente de la Cnav.
To my surprise this morning on France Cluture she was saying that this as the biggest way to impact the deficit in the short-term.

People who will be soon retiring at 60, started working at a younger age (close to 18). So when they reach 60 they already have more than the required annuities. Whether if you increase the age to 62, they still have to work even if the annuities didn't change.

Link to the show:
http://www.franceculture.com/emission-les-matins-la-r%C3%A9forme-des-retraites-2010-05-19.html