Macron’s plan to raise pension age to 64 might just work

In a concession to opponents, Macron would not raise the pension age to 65, and phase-in the increase to 64 over a period of seven years.

Those who started work before the age of 20 would still be able to retire early. Workers with disabilities could retire at 55. Macron is also increasing minimum state pensions to €1,200 per month.

He has canceled his plan to merge France's 42 occupational pension funds, which are run by employers and trade unions, into a single points-based system. Only the plans for the Bank of France, the state-owned energy sector and the Parisian public transport company would be phased-out by refusing new members.

Their extremely low retirement ages, ranging from 52 to 57, bring down the average French retirement age to 60 for men and 61 for women.

Mothers who interrupted their careers to raise children, on the other hand, and who don't have money saved to retire early, must work into their mid-60s to make up for the years they didn't contribute to a pension scheme.

Macron would rectify those injustices, which date from an era when life expectancy was lower and few women worked, by raising the retirement age for everyone and awarding pension rights for maternity and paternity leave in addition to work.

Trade unions still call the increase to 64 years of age "brutal". They should count their blessings. The Netherlands has raised its pension age to 67. By the time the French reach 64, in 2030, the German pension age will be 67 as well.

Young retirement, long life

The low French retirement age is especially hard to justify when French life expectancy at birth is among the highest in the world: 80 for men and 85 for women.

Since pensions are funded by active workers, the alternative to raising the retirement age is raising pension contributions. Currently workers pay seven percent of their salaries to the state pension fund and three to eight percent to an occupational pension plan. Employers also pay a share. That adds up to an effective rate of 28 percent on average earnings, the highest in the rich world after Italy.

France has 17 million retirees, a quarter of the population. By 2040, there would be 20 million pensioners. The working population is projected to remain stable at 30 million.

Twenty years ago, there were two workers for every retiree. That has fallen to 1.7 and would drop to 1.4 by the middle of this century.

Inevitably, the pension fund has sunk into the red. A deficit of €13.5 billion is projected by 2030.

With an increase of the age to 64, the system should be back in the black by then.