France Pension Reform Takes Effect Today... Retirement Age Raised from 62 to 64
Early Retirement Possible if Work Starts Early
Outlook Also Suggests Inevitable Future Financial Deficit
French President Emmanuel Macron's strongly pushed pension reform came into effect on the 1st (local time).
Opponents of the pension reform are largely dissatisfied with the extension of the retirement age, but the government maintains that it is a necessary choice to prepare for an aging society.
The core content of this pension reform is to raise the retirement age from 62 to 64 by 2030.
However, early retirement is allowed for those who started working early. For example, if the starting age of work was before 16, retirement is possible at 58; before 18, at 60; before 20, at 62; and between 20 and 21, at 63.
Reaching the retirement age does not guarantee receiving 100% of the pension. Currently, one must contribute for 42 years to receive the full pension, but from 2027, the contribution period will be extended by one year to 43 years.
The minimum pension floor has also been raised from 75% to 85% of the minimum wage. This means an increase from 1,015 euros per month (approximately 1.45 million KRW) to 1,200 euros per month (approximately 1.71 million KRW). The government estimates that about 1.7 million pension recipients will benefit from the minimum pension floor.
However, despite this pension reform, forecasts indicate that future fiscal deficits cannot be avoided. According to Le Figaro, the Pension Advisory Council (COR) predicted in its annual report released last June that the pension system will record deficits 'continuously' starting next year. It also projected that the government will not be able to restore a balanced state by 2030 as promised.
Some speculate that the pension system might be revised again in 2027, when the next presidential election is held.
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In France, nationwide protests and strikes against this pension reform took place from January to June this year. President Macron, judging that it would be difficult for the bill to pass in the National Assembly where the ruling party does not hold a majority, used a constitutional provision that allows bypassing the lower house vote to implement the pension reform.
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