“We must return to the principle of autonomy in the management of retirement insurance funds” | EUROtoday

PTo reform the pension system in France, there’s a easy and truthful answer: return to the social contract of the Liberation, adopted in 1945, with obligatory, common social insurance coverage, by distribution, managed autonomously by the social companions.

Failing to adapt pensions to demographics, France has progressively deserted the rules of insurance coverage, distribution, autonomy, to construct, along with distribution, a gasoline manufacturing facility of subsidies, from the State to the pension funds, with out democratic transparency.

Mandatory public pay-as-you-go pensions – what we pay for – attain 269 billion euros per 12 months, or 9% of gross home product (GDP). State subsidies for pensions, a French particularity, are 144 billion euros (5% of GDP), or 35% of whole pensions: which represents a betrayal of the social contract of 1945. The pay-as-you-go public pension is elevated in France by state subsidies. I subsequently recommend returning to the rules adopted on the Liberation.

Mandatory reserves

First, it’s a query of restoring the retirement insurance coverage funds as insurance coverage, as was deliberate in 1945. However, any insurance coverage should at all times assure its solvency (at all times have the ability to pay, with its personal assets, all its commitments) and handle the chance (right here demographic) as finest as potential.

In observe, insurance coverage mustn’t ever be in deficit ex ante. It should additionally set up necessary reserves to soak up cyclical shocks and accumulate provisions to guard in opposition to non-cyclical dangers, such because the getting older of society. However, social insurance coverage corporations didn’t act on their deficits or on their provisions: they failed of their major mission as insurers and waited to be bailed out by the State.

The sole operate of insurance coverage is to handle a particular threat; it doesn’t obtain social redistribution prematurely. This is actually official, however it issues solely the budgetary insurance policies of the State – for instance by the Old Age Solidarity Fund – and never the pension system.

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