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the bill in the National Assembly, now what?

Pension reform: the bill in the National Assembly, now what?

RETIREMENT. Debates on the pension reform bill in the National Assembly have been bogged down since the beginning of the week.

[Mis à jour le 21 février 2020 à 09h00] Will the executive be forced to use article 49, paragraph 3, of the Constitution to have its pension reform adopted? The scenario seems more and more plausible at a time when the debates in the hemicycle are getting bogged down day by day. Since the opening of the debates Monday February 17, the left opposition multiplies criticisms and procedural battle. As a result, the public sessions are interspersed with invective, rcalls for rules and suspension of sessions, considerably slowing down work on the substance of the reform. The left particularly disputes the fact that amendments placed in different places in the text fall on the grounds that they have the same object. A total of 41,000 amendments were tabled. At the current rate, 150 sitting days would be required to complete this exam, warned the President of the Assembly, Richard Ferrand. The government is still counting on a first vote of the Palais Bourbon before the municipal elections which are to take place on March 15 and 22.

This new parliamentary phase comes while funding conference started Tuesday. A new meeting took place on Thursday. Technically, the social partners have not yet entered the negotiation phase, reports The echoes. Unions and employers have called for a new governance scheme for the future universal pension system. This new working meeting came at a time when the CGT issued an “ultimatum”, ultimately threatening to leave the conference if it did not receive a response to its proposals relating to gender equality or higher wages.

Documents sent to the social partners and consulted by AFP establish that the cumulative deficit between 2018 and 2030 could reach 113 billion euros. As a reminder, the COR (Pensions Guidance Council) had estimated the deficit between 7.9 and 17.2 billion euros in 2025, largely due to the drop in revenues, which makes several officials say politicians and unions that there is no deficit. According to information from echoes, financial reserves would be one of the tracks seriously studied, and in particular those of the Retirement Reserve Fund (FRR), which should amount to 22.4 billion in 2025. As a reminder, the financing conference must make their recommendations by the end of April. Draw on reserves, lower contributions, introduce an age measure … Do you want to know more about the ideas that have been put forward? Consult our dedicated file.

The first parliamentary phase ended last week. The special commission failed to complete consideration of the ordinary law, but adopted the organic part of the bill. The creation of a universal pension system by points is far from being unanimous within the hemicycle. On the right and on the left, the deputies compete against counter-proposals. Interested in learning more about what opposition parties have to offer? Consult our dedicated file:

Bill to arrive in Senate in spring 2020, for a final vote before the end of the parliamentary session. And after ? The executive wants the creation of a universal system, therefore the disappearance of the 42 existing regimes. The establishment of such a system involves long periods of transition which have not yet been set in stone. Several elements of the universal system will, however, need to be implemented quickly, starting with governance. Here are the major deadlines to come:

  • 1st december 2020 : implementation of the governance of the future universal system.
  • January 2021 : first salary increase for teachers.
  • 1st January 2022 : implementation of the new system for the very first generation concerned, born in 2004. It is also planned for 2022 the introduction of the minimum retirement pension at 1,000 euros for a full career.
  • 2037 : implementation of the retirement system for the generation born in 1975 for the general scheme (1980 or 1985 for special schemes and civil servants, with an advanced retirement age).

Know already that if you are retired now, you are not affected. Same story for people who are less than 17 years of the legal retirement age. If you are in these two cases, rest assured: the calculation of your pension rights and the amount of the pension will remain the same, before and after the entry into force of the law. The changeover will take place in 2022 for people born in 2004 : they will then be 18 years of age and will have all their pension rights calculated according to the rules of the universal point system. For previous generations, the scale, it is planned in 2025 for the 1975 generation for the general scheme. From this date, acquired rights will be converted into points, and contributions will give rise to points which will eventually be converted into pensions, depending on a service value (read below).

You are official or affiliated to a special scheme which allows you today to retire before age 62? You are affected by the pension reform if you were born after 1980, and that your job allows you to leave from the age of 57. If it allows you today to leave at 52 – this is the case for SNCF drivers for example – you are concerned if you were born after 1985. For you too, entry into the system will take place in 2025.

A simulator called “Am I concerned”, which you can consult here, is available. Another simulator, known as a “typical course”, has also been put online. It allows you to obtain a simulation of the amount of your pension in the current system and in the universal system, according to your retirement age. Take the results of these simulators with caution. Not all parameters are defined and the answers are still very general.

Manage “every euro contributed gives the same rights “, whatever your job and your status. This is the objective set by the government through this reform. It implies a harmonization of the methods for calculating pension rights, as well as rights, and therefore the end of the 42 pension plans. Your rights will no longer be calculated in quarters but with points. “Each hour worked will earn points“, can we read in the bill. Solidarity points will be awarded for periods of inactivity suffered : unemployment benefit, sickness, disability and maternity.

How are we going to acquire these famous points? A single contribution rate – with the exception of the self-employed – must be set up at 28.12% up to 120,000 euros annual income, then a non-rights-creating contribution at 2.81%. Finally, the entire career will be taken into account, and no longer the last six months for civil servants and the best 25 years for employees.

The point value issue has not been resolved, but referred to the governance of the universal pension fund. In fact, two values ​​must coexist: purchase value (the amount you must contribute to acquire a retirement point) and service value (the amount by which you must multiply the number of points acquired during your career to obtain the amount of your retirement pension).

In the bill, it is stated that “the acquisition value of the points will be fixed each year by the Board of Directors of the National Universal Pension Fund”. Same story for the service value. “Thea point value can not fall, this golden rule being enshrined in article 55 of the bill“, completes the text, specifying that the value will be indexed on wages, and not on inflation. It remains to be seen what the indicator will be, the Secretary of State having recognized in committee that such a tool does not yet exist.

Very concretely, the age of equilibrium implies the creation of a bonus bonus system. An insured person who leaves before this age of balance would see his pension penalized by a discount. “When the universal pension system came into effect, they [la décote et la surcote] will be fixed by decree at 5% per year (0.42% per month) like the current discount and premium rates, “we can read in the bill. Who will be affected? It was initially a question of creating an equilibrium age from 2022 for the generation born in 1960 at 62 years and four months, to gradually raise it until reaching 64 years in 2027 for the generation born in 1965.

The idea was abandoned in the short term, but there is talk of creating a full rate age under the universal system – therefore from 2037 for the 1975 generation. The impact study suggests setting it initially at 65, for an insured who entered working life at 22 and who has “validated his whole life four quarters a year, ie 43 years” (contribution period required as part of the Touraine reform). To validate a complete career, it will be necessary to validate 516 months in the future system.

And after ? The pivotal age would increase by one month per generation, if we follow the INSEE hypothesis that life expectancy increases by one and a half months per year. He could thus reach 67 years for the generation born in 1999. Projections of the impact study must be taken with caution, as they depend on life expectancy. However, the latter is far from being as linear as we think. Also bear in mind that the pension reform plans to keep the system for long careers and early departures for incapacity and disability – as is already the case today.

This is what makes the executive say, including in its impact study, that workers will not be affected in the same way by this pivotal age. “Half would not change their starting age “, either because they “would have reached the full rate, in the absence of reform, at an age close to the pivotal age”, or because they will leave, as today, at 62 without a discount for invalidity or incapacity, specifies the impact study. “A third could leave earlier”, in other words, before age 67, which is today the age for canceling the haircut, around “a year and a half” for the generation born in 1981. Finally, “a fifth would leave later “, about “three years on average for the generations born in the 1990s”, it is indicated.

The impact study also highlights “very significant pension gains“, resulting from this pivotal age. She expects an average pension increase” of about 5% “for the whole 1999 generation compared to today. Same story for the previous generations. The world cited the example ofan employee receiving the minimum wage and born in 1980: he “will see his replacement rate increase by 11 points (from 59 to 70%, a jump from 1,175 euros gross to 1,398 euros gross) “, reported the daily newspaper.

The “occupying trades” will have the possibility of leaving “two years earlier“thanks to the consideration of arduousness. The professional prevention account (C2P) will be open to officials classified in the active category – who can leave today early at age 57 – and employees of special schemes. “The system will continue to allow retirement at the earliest from the age of 60 depending on the number of points allocated to this use, with a reduction in due proportion to the age of equilibrium,” we can read in the law Project.

The whole question remains to know what will be the trades considered “weary” About this question, the ball was returned to the professional branches. The latter are responsible for listing these exhausting trades and even for propose solutions for the prevention of arduousness, within six months which will follow the publication of the law, said Edouard Philippe after the multilateral meeting on Thursday, February 13.

A relaxation of the criteria has also been announced so that night work is taken into account. The lowering of the thresholds was included in the bill. They are lowered from 120 to 110 nights per year and from 50 to 30 nights for alternating teams. Finally, for nursing assistants specifically, it is planned that a new system will be set up to finance part-time work, “without loss of income”, at the end of the career.

The arduousness criteria, they should not evolve, the executive refusing the reinstatement of the four criteria rejected in 2017 (handling heavy loads, painful postures, mechanical vibrations and chemical risks). There are currently six criteria in total:

  • Repetitive work,
  • Work in successive alternating teams,
  • Work in a hyperbaric environment,
  • The work carried out in extreme temperatures,
  • The work done in noise
  • Night work.

Why is the government refusing to reinstate the four criteria? The executive justifies its position on the grounds that their technical application is not possible. Still in this perspective of recognition of the arduousness, the Ministry of Labor also worked on its side on retraining leave for employees exercising a difficult job for ten, fifteen, or even twenty years. Lasting six months, the latter would be paid 100% of the salary and accessible from a certain number of points accumulated in the arduousness account. “We understand the logic well: if you have spent a decisive period of your career exposed to arduous work, it may be smarter to allow those who wish to switch to a profession that will no longer be exposed to arduous work rather than to wait until the end of his career and take it into account when repairing or leaving early, “said Edouard Philippe.

The latter noted that consultations with the social partners had led to the idea that it was necessary to generalize the generalized medical examination for arduous occupations from the age of 55, in order to identify those “who will be able to assert their rights to early retirement due to permanent incapacity“And the civil servants? After discussions with the unions, the Secretary of State Olivier Dussopt made reference to” a right of reclassification “of the agents of the public service, whose provisions could be integrated via an ordinance. It is also a question of establishing a list of difficult jobs via a rating system.

“We are in a somewhat paradoxical dialectic. On the one hand we are asked to employ more seniors, on the other we try to imagine devices to increase early departures”, estimates Geoffroy Roux de Bézieux in the columns of the echoes. “We do not deny the subject of wear and tear at work but it should be taken out of the retirement debate and discussed within the framework of the industrial accidents branch”.

The other major issue in pension reform is the employment of seniors. On phased retirement, Edouard Philippe had reiterated in December his wish to see progressive retirement extended to everyone, including civil servants and executives on a fixed price basis. Phased retirement will be accessible from the age of 60 and will be “much easier to access” for the private sector and the public. As a reminder, the latter is reserved for insured persons under the general scheme, the agricultural scheme and the self-employed. It allows an employee to to work part-time, therefore to receive a salary corresponding to half-time, and part of his pension of retirement. “Private employers will now be able to refuse part-time work to their employees eligible for progressive retirement only if this reduced proportion of work is incompatible with the economic activity of the company”, we add to article 25 Bill.

And the cumulative retirement employment? At the moment, it is possible to have an activity while being retired, but it does not allow to acquire new rights. As part of its pension reform, the executive hopes that any salaried activity makes it possible to acquire new rights and thus to enhance the amount of his pension. “When the insured persons liquidate their retirement and continue to exercise an activity, they will acquire rights in respect of the contributed activities from the equilibrium age”, can we read in article 26 of the text of the law transmitted to Board of state. Certain rules will not change: 67 years will remain the age from which an employer can separate from his employee with his agreement (70 years without his agreement). The improvement of the device is planned “from January 1, 2022”, we can read.

A reflection will be initiated by Muriel Pénicaud around a time savings account “who would follow each of our fellow citizens throughout his life to promote management of his working time in a differentiated manner according to the time of career”. “Without waiting, we are going to strip the time savings account in the public service to make it possible to work half-time at the end of a career, for example at the hospital,” said Edouard Philippe.

It is one of the so-called social measures of the pension reform. It aims to bring the minimum retirement pension to 1,000 euros net per month for the completion of a full career (established at 516 months in the bill) from 2022, then 85% of the minimum wage in 2025. “The workers independent and the farmers are the main concerned, the small amount of their supplementary pension bringing their pension to an overall level lower than that of private sector employees “, can we read in the bill. During his speech before the Cese, the Prime Minister had also clarified that solidarity points will be awarded for periods of inactivity suffered (unemployment benefits, maternity, illness and disability).

As a reminder, retirees in the private sector can now benefit from the minimum contribution – provided that you have the right to a full pension and that the total amount of pensions does not exceed 1 EUR 177.44 monthly -, whose amount is 636.56 euros per month with less than 120 paid quarters and 695.59 euros per month with more than 120 quarters, as you can read on the service-public site. This MICO complements the basic retirement. Civil servants now receive the guaranteed minimum also known as MIGA, the amount of which is 1,177 euros.

If on paper this minimum pension seems simple, it raises a number of questions. The social partners must resume discussions on this point of the pension reform in order to reach an agreement.

Why are lawyers opposed to the reform?

The National Bar Council (CNB) announced last Friday the continuation of the movement against pension reform, in the wake of new government announcements. In a press release, the Minister of Justice called for the social movement to be suspended. What measures have the government put forward? The project provides for a harmonized contribution rate for all assets. The self-employed are an exception since the rate at 28% will be applied up to 40,000 euros of income (then 12% up to 120,000 euros of income) per year. Lawyers, like other liberal and independent professions, fear to witness the doubling of their contributions, and therefore the planned death of their sector. To compensate for the sharp increase in charges, the government has promised a reform of the contribution base with a 30% reduction. An amendment was adopted to this effect last Monday in committee.

Last week, however, clarifications were made on the transition. “There will be a transitional regime until 2040 (…), with a smoothing over time which can even go until 2054,” said Nicole Belloubet. “The normal increase regime (pension contributions) is 0.5% per year from 2029, that’s 15 euros per month. From there, we say, choose a smoother, more united transition if you wish it”. The Minister of Justice also denies any “lower pensions” for lawyers in the future system. As a reminder, the government agreed to maintain the CNBF (Caisse nationale des barreaux français). She will be responsible for the management of “all the lawyers”, concerned or not, by the project, we could read in the press release from the Ministry of Justice. The CNBF may also implement solidarity mechanisms specific to the profession and keep the reserves accumulated in the current regime.

These proposals are not suitable for lawyers. And for good reason, the latter contest the very principle of the universal regime.

What plans does the civil servants’ pension reform have? What about the teachers?

Like all insured persons, they will have their retirement rights calculated over their entire career. The so-called active categories, who benefit from early departures under the current regime, will no longer be able to leave at age 57. However, they will be able to benefit from the professional prevention account (C2P) to take into account the arduousness – and therefore leave, at the earliest, at age 60 to retire. A consultation has been opened in this direction, led by Olivier Dussopt. She must report her results the week of February 10.

The government has agreed to exceptions for regal trades : police, fire and military. Thus, the police will be able to continue to retire from the age of 52, provided they have completed 27 years of service. An employer over-contribution is also provided for these civil servants to compensate for the disappearance of the bonus for the 5th, which makes it possible to acquire an additional year of service every 5 years worked.

Teachers should benefit from salary increases in the form of bonuses. The very first revaluations must take place from January 1, 2021. For the time being, a budget of 500 million euros. This envelope should then grow to reach 10 billion euros in 2037. “It is actually more than that,” said Minister of Education Jean-Michel Blanquer at RTL’s microphone. According to Unsa-Education’s calculations, the budgetary effort could indeed reach 76 billion euros.

And on the teachers’ pay slip, how will this translate? “We want an increase next year that can be between 70 and 90 euros net per month“, had developed the minister. One thing is certain, not all teachers will be housed in the same boat. Those born after 1975, who are de facto affected by entry into the “universal” system from 2025, will undoubtedly see their wages more valued than those who were born before that date.

Minister Hinted These Increases Could Be “On Merit”“.” There is a dimension common to all which is going to make that there is an increase for all, because it is necessary to raise the general level of remunerations, and of course there is a dimension of merit, that already exists in part , and we will probably accentuate it, “he said at the microphone of BFMTV. “What will happen, it will not be little ones, it will be extremely substantial, over a lifetime it will represent several tens of thousands of euros for those concerned, “defended Jean-Michel Blanquer at the microphone of France info Wednesday, February 19. The next negotiations, scheduled from February 24, are particularly promising stormy with the unions.

Will women really win with the pension reform?

To demonstrate that women will be winners with the universal system, the executive highlights advances on family rights and survivors’ pensions. An improvement in the rights of 5% is provided from the first child. It comes with a 2% increase from three children. The government has therefore given up on extending the duration of insurance.

The government proposed Friday compulsory allocation of half of the family rights to the mother for maternity “for maternity without possibility of sharing“, to reassure feminist associations. The remaining 2.5%, granted for the education of the child, will remain shareable and allocated by default to the mother. Women who raise their children alone should, them, get “extra points“.

What about the rights already acquired? “For children born before the entry into force of the new system, the increases in insurance duration as well as the increase for parents with 3 or more children on this date will continue to apply and will be taken into account under the 100% guarantee of acquired rights“, can we read on the government website.” These children will be entitled, for the second part of their career completed in the universal system, to the allocation of the 5% increase and to the 2% supplement for large families “.

The conditions for converting these rights into points will be determined by order later. For parents who reduce or even interrupt their activity to raise a child, they can acquire retirement rights via old-age insurance for stay-at-home parents (AVPF). “Rights will thus be paid in respect of national solidarity up to 60% of the SMIC during the first 3 years of the child, and during the first 6 years from the 3rd child”, it is specified.

Regarding the survivor’s pension, it was decided that it would be open from the age of 55 and that it should guarantee 70% of the couple’s retirement. A mission was entrusted to Bertrand Fragonard from the High Council for the Family, whose conclusions were released last week. On the survivor’s pension, it was announced that divorced women will be able to receive “55% of the pension” of the deceased. The pension will prorated to the duration of the marriage, related to the duration of the contribution and means tested, said Laurent Pietraszewski.

Given all these elements, can we really say that women are winners? “The average pension of future retirees will be improved from 6% to 13% for the 1980-1990 generations, whereas that of men will be on average unchanged for the 1980 generation, and increased by 6% for the 1990 generation “, we can read in the impact study. On the duration of insurance, the lengthening of the duration insurance for mothers being subscribed, some fear that women will not be able to have real full careers. The High Council for Equality between Women and Men (HCE) has proposed to lower the age of the full rate of one year for “the parent who interrupts his career for four months”, “common duration of maternity leave”.

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