France to raise state pension age – and Britain could be next
The reforms have already been met with fierce opposition
France has laid out plans to increase its state pension age by two years by 2030 in the face of fierce opposition.
Under the new proposals, citizens will have to reach 64 in order to qualify for a full pension. From 2027, it will be necessary to have worked for 43 years in order to receive the full pension.
French president Emmanuel Macron has long pushed for an increase in the national retirement age, despite backlash from political opponents and unions.
Prime Minister Elisabeth Borne told Reuters: “I am well aware that evaluating our retirement system raises questions and fears among the French people. We want to respond to them and convince them.”
However the reforms have already been met with fierce opposition. Mathilde Panot, from the hard-left La France Insoumise party, described the policy as "archaic, unfair, brutal, cruel".
The news comes as the British government prepares to unveil a report into the state pension age early this year. The current state pension age is 66, with a scheduled rise to 67 in 2028 and then to 68 in the 2040s.
However, ministers have considered plans that would accelerate the move to the mid-2030s. This could raise the Treasury tens of billions of pounds, as well as generating more tax revenue from people who have no choice but to stay in the workforce for longer.
In France, President Macron has argued that raising the retirement age is the only way to maintain the state pension system as the retired population grows.
In his televised New Year’s address, he said that the French must work longer, with reforms designed to “strengthen the pensions system, which if we do nothing will be threatened since we will rely on debt to finance it”.
Like its British counterpart, the French state pension system is funded by tax receipts from today's workers. However, official forecasts suggest that it will move into a deficit over the next decade.
The retirement age in France last increased in 2010, from 60 to 62.
Alistair McQueen, of the pensions specialist Aviva, said: “Both France and the UK face similar problems. They must consider the fiscal, economic and political significance of increasing their state pension ages.
“In the UK, politicians have historically avoided the debate. But given the increasing life expectancy, the trajectory of the state pension age is only going up.
“Increasing the state pension age is a lever that policymakers can pull to encourage a longer working life, and hopefully drive economic growth and productivity.”
A recent report found that the state pension age in Britain will have to hit at least 69 due to the rocketing cost of supporting an ageing population.
However, Mr McQueen noted that any rise in the state pension age should be accompanied by an effort by both the Government and employers to create a suitable working environment for older workers.
“While staying in work can improve people’s sense of purpose and mental health, continuing manual labour can be extremely difficult. There is a fairness debate here that the Government must consider.”
Meanwhile in Germany, fears are rising over the sustainability of its state pension system.
Rainer Dulger, president of the Confederation of German Employers’ Association, told the Bild amSonntag newspaper in October that the system would break down within five years without intervention.
Under the current rules, the German state pension guarantees retirees at least 48pc of the average wage until 2025. The current retirement age is 65, but is in the process of gradually rising to 67.
Ms Borne also added that the French government wished to increase the minimum pension payment.
“In accordance with our commitment, paid employees and the self-employed who have contributed all their lives with revenue around minimum wage, will retire with a pension of 85pc of the net minimum wage, that is to say an increase of 100 euro a month. That is close to 1,200 euro a month for last year,” she said.