Is Mélenchon’s 60-year-old pension reform “financially sustainable”?

Pension reform is one of the dividing subjects between the left alliance and the center-right, united under the Together banner. The two coalitions are neck and neck in the polls for the legislative elections. On RTL on Tuesday, the new Minister of Labor, Olivier Dussopt, criticized the proposal of the New People’s Ecological and Social Union (Nupes) to return the legal retirement age to 60.

“Retirement at 60 without changing the number of annuities, that does not hold, explains the one who will have to bring the reform wanted by Emmanuel Macron pushing back the retirement age to 64 or 65 years. And it doesn’t hold up financially either. We cannot promise a reform that would cost 50 billion euros. »

For him, the consequences of this reform are not conceivable: “We cannot promise people a reform with 42 annuities, that means that everyone would work well beyond that or would be heavily discounted. “Jean-Luc Mélenchon immediately corrected an error on Twitter on the contribution period: “It’s been twenty-two months of the campaign that we say 40 annuities. He does not understand on purpose? »

FAKE OFF

The Common Future program and now that of Nupes intend to restore retirement at age 60, at full rate after forty annual contributions, as the rebellious leader said. But, on the merits, is this reform financially tenable?

The Institut Montaigne, a liberal think tank, published in March a synthesis on the pension reforms wanted by the candidates for the presidential election. The cost of the reform defended by Jean-Luc Mélenchon was estimated at 85.8 billion euros per year by the Institute and at 71.5 billion euros per year by the candidate’s team, which had sent a counter – encryption. Or more than the estimate of the Minister of Labour.

“The Gordian knot is the distribution of the wealth produced”

For Jean-Marie Harribey, economist and former co-president of Attac, this reform is financially tenable, but under certain conditions. “The Gordian knot is the distribution of the wealth produced,” he explains. There are no other sources of wealth than what labor produces. Capital is sterile by definition, only labor produces. To be able to finance a retirement at age 60, several tools are available, such as increasing the rate of social, wage or employer contributions. Another way exists, which has not been implemented so far: broaden the base of the rate of social security contributions. “If we consider that what goes to social protection cannot grow, then there is a problem of financing, he continues, but if we consider that this part is not fixed, we can finance it. »

In its shared program, the Nupes proposes new sources of income: it would be a question of submitting to employer’s contribution the dividends, the participation, the employee savings, the repurchases of shares, the overtime, and to create an additional contribution on high salaries. In response to the Institut Montaigne, Jean-Luc Mélenchon’s campaign team estimated that these new contributions could bring in 36.6 billion euros per year. It would also be a question of increasing the old-age contribution rate by 0.25 points per year, a measure which would make it possible to support the reform to the tune of 16 billion euros per year.

An increase in social spending as a share of GDP

To complete this envelope, the rebellious party took into account the revenue generated by job creation and wage increases (estimated at 15.6 billion euros) and savings on social benefits and unemployment insurance ( €3.6 billion). “Is it financially sustainable? It’s hard to say, because it will depend on the reaction of the other countries financing the French debt, underlines, for his part, Victor Poirier, director of publications at the Institut Montaigne. But is it extremely expensive? The answer is yes. »

According to the Institut Montaigne, the share of pension expenditure in total expenditure would rise to 16.7% of GDP in 2027 – where the figure for the program L’Avenir en commun estimated it at 16% in 2040. In 2019 , the pension budget, the most important item of social spending with 327.9 billion euros, represented 13.5% of GDP, indicates the latest report from DREES.

The removal of the discount, a new proposal not yet quantified

One point remains to be clarified, however. At the beginning of May, Jean-Luc Mélenchon explained that he also wanted to remove the discounts, a measure mentioned for a long time by the rebellious, but which does not appear in the shared program of Nupes. This mechanism was introduced in 1993 by Edouard Balladur’s reform. In summary, if a person retires without all their quarters validated, a discount, i.e. a reduction in the pension rate, is applied, a measure which disadvantages women in particular, according to the unions, because chopped careers.

This development has not yet been quantified. “We are still in discussions with Jean-Luc Mélenchon’s campaign team, continues Victor Poirier. But, a priori, the cost would go between 90 and 100 billion euros for this total reform, with an additional cost due to the increase in the minimum wage, from 1,400 euros during the presidential election to 1,500 euros, with the increase in pensions at the level of the minimum wage, and the abolition of discounts. »