France to raise retirement age from 2023

12/02/2023 08:55 AM

French Prime Minister Elisabeth Borne announced that in January 2023 the French Government will raise the official retirement age of workers to 64 from 62 currently. This means French citizens would have to work until the age of 64 to be eligible for a full pension.

According to this plan, from September 2023, the normal retirement age will raise by three months each year, until 2030. Every French citizen will need to work at least 43 years to receive a full pension, starting starting from 2027. Longer working period will allow future retirees to receive higher pensions.

This is part of reforming the pension system in France, helping to solve the pension fund deficit problem.

Other changes are including: increasing the minimum monthly pension allowance and including maternity leave periods in the total working years for women. The average pension this year is 1,400 euros ($1,500), with pension differences depending on workers’ occupations. The reform would allow the minimum monthly state pension for low-income workers to increase by an average of 100 euros ($107) to around 1,200 euros ($1,288). These proposed reforms are expected to bring in around 17.7 billion euros ($19 billion) revenue annually for the pension fund by 2030. "By 2030, our (pension) system will be financially balanced," said Borne.

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Illustrative image (internet)

She added that people who started working before the age of 20 and workers in some special industries such as police and firefighting could be able to retire earlier.

According to the Organization for Economic Co-operation and Development (OECD), France spends more than most other countries on pensions: almost 14% of GDP in 2018. In 2019, it had the highest welfare spending in the European Union (EU) with nearly 34% of GDP, 6% higher than the average level of the EU. The government of President Emmanuel Macron has set out goals to reform the pension system, reduce the deficit and credit payout ratio, and make the system more financially sustainable.

In general, raising the retirement age to 64 has not changed the status quo of French people who retiring earlier compared to other countries. The age for full retirement in Europe is 65 and gradually raising to 67. In the US and UK, the retirement age is between 66 and 67, depending on the birthyear of the workers. The UK current law promulgates for a gradual increase of retirement age to 68 from 2044 to 2046.

Therefore, pension reform in France is a necessary reform. Despite strong criticism and calls from leftist opposition and workers' unions, passage of the reform was

almost certain. In case this proposal would not be supported by the French National Assembly, the Government can implement Article 49.3 of the French Constitution - a mechanism that has been used many times to promote budget-related bills without the need for submission for vote in the National Assembly.