FRANCE'S NEW PENSION SYSTEM

• The scheme aims to provide up to a maximum of 50% of the retiree's income during their 25 highest earning years up to the Plafond de la sécurité sociale (€41,136 annually in 2022). The state scheme is financed by a payroll tax known as "social security contributions".
• In France, all retirees get a state pension. Mandatory payroll taxes paid by those currently working fund the pension of retirees, meaning generations have been able to retire with assured, state-backed pensions
• The government now argues that as life expectancy in France increases, so does its ageing population which means more retirees than new entrants in the workforce
• This would cause the current pension system to fall short in the coming decades
• According to the administration’s projections, while there were 2.1 workers putting money into the system for every one retiree in 2000, this figure dropped to 1.7 workers per retiree in 2020, and is expected to further slide to 1.2 by 2070
• The government says the measure to gradually raise the legal retirement age by three months every year, till it reaches 64 by 2030, is “indispensable” in order to balance the pension system and keep it financially viable
• However, there are some exceptions. Those starting work between the ages of 14 to 19 will be able to seek early retirement, as will public workers engaged in physically or mentally arduous jobs
• But the minimum retirement age only applies to those who have worked enough years to qualify
• In Present system, many women who pause their careers to raise children and people who study for longer and start their careers late, must work till the age of 67 to retire with full pension benefits
• The government highlighted the potential outcomes of the pension reform, stating that new retirees will get a guaranteed minimum pension of not less than 85% of the total minimum wage  about 1,200 euros per month at current levels
• The government also plans to index the pensions to inflation levels for those who receive minimum incomes, a year after retirement
• It says that the pensions of the poorest 30% of retirees will increase by 2-5%

• France currently has one of the lowest qualifying ages for a state pension among big European economies
• The French cherish the retirement system, as well as national healthcare, as it is seen as hard-earned, having been introduced by the National Resistance Council after the Second World War, when the country was reeling from the aftermath of the war
• Generations of workers have accepted high mandatory taxes to fund the pension system because it creates interdependence and guarantees state-backed pension earnings
• The new system means current workers will have to work longer to sustain pensions for the ballooning aged population
• Observers also worry that the reform will negatively affect blue-collar workers who often start working young, have shorter life expectancies, or have less optimum working conditions compared to white-collar workers
• Opponents of the reform argue that instead of altering the pension age, the government could have balanced the system through other measures like increasing payroll taxes paid by workers, taxing the wealthy more, or not tying pensions to inflation