All advanced economies face demographic strains, but France’s stand out; now President Macron wants to raise the legal retirement age to 64.
MENTON, France—Jean-Pierre Demoy has been living the dream ever since he retired from the airline industry 14 years ago.
The 75-year-old sleeps in and strolls the beach while others in this sun-kissed town on the French Riviera report to work. Weekends are for dancing with his partner Roseline Soudan, 73. They are planning a trip to Greece in the spring after spending the fall in Italy.
Money isn’t a problem, because the couple receives around €6,000 in pension checks from the French government every month, or $6,444.
“I feel like a teenager,” Mr. Demoy says.
Younger generations of French workers are feeling less optimistes. The golden age of French pensions is coming to an end, one way or another, in an extreme example of the demographic stress afflicting the retirement systems of advanced economies throughout the world.
As people live longer and the population grows older, the number of active workers who fund each pension check is shrinking. France had more than four workers for every retiree in the early 1960s, according to the government. That figure stood at 1.7 in 2020, and it is projected to fall to 1.5 over the next decade, according to an independent panel of economists, lawmakers and union leaders advising the government on pensions.
French President Emmanuel Macron has proposed an overhaul of the country’s pension system centered on raising the legal age of retirement by two years to 64. The legislation, which is currently before parliament, has triggered waves of protests and strikes that have taken a toll on France’s economy. Unions have vowed to maintain the vise-grip as long as Mr. Macron refuses to reverse course, with a new protest planned for Wednesday.
Mr. Macron says the changes are necessary to save France’s pension system from collapse and maintain fiscal discipline. He wants to bring the national deficit—which was 5% of gross domestic product last year—back in line with the European Union’s 3% target while also boosting France’s military budget amid the war in Ukraine. France spends around 14.5% of its economic output on pensions, compared with 7.5% in the U.S. and 10.4% in Germany, according to the Organization for Economic Cooperation and Development, a club of rich nations. Paris spends 1.9% of GDP on its military.
France has one of the lowest rates of retirees at risk of poverty in Europe and a net pension replacement rate—a measure of how effectively retirement income replaces prior earnings—of 74%, according to the OECD. That’s higher than the organization’s average of 62%.
But in France, these benefits come at a cost. The country’s pension system is expected to run a deficit of €1.8 billion in 2023. That number is set to increase to €10.7 billion in 2025 and €21.2 billion in 2035, according to the independent advisory panel.
The government has ruled out increasing taxes to shore up deficits, saying taxes in France are already high. France ranked second out of 38 OECD countries in terms of tax-to-GDP ratio in 2021, according to the OECD, at 45.1%, compared with the OECD average of 34.1% and 26.6% in the U.S.
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Write to Noemie Bisserbe at noemie.bisserbe@wsj.com
Appeared in the March 15, 2023, print edition as 'The Party Is Ending for French Retirees'.
At 76, Lucienne Thibault has been retired for 20 years. She joined a 19th-century dance club and splits her time between the Cote d’Azur and Italy.
Photographs by Violette Franchi for The Wall Street Journal
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