French special retirement plan

In France employees of some government-owned corporations enjoy a special retirement plan, collectively known as régimes spéciaux de retraite. These professions include employees of the SNCF (national railways), the RATP (Parisian transport), the electrical and gas companies (EDF and GDF) which used to be government-owned; as well as some employees whose functions are directly related to the State such as the military, French National Police, sailors, Civil law notaries' assistants, employees of the Opéra de Paris etc... The main differences between the special retirement plan and the usual private sector retirement plans are the retirement age and the number of years a worker must contribute to the fund before being allowed a full pension. In the private sector the minimum retirement age is 60, and the minimum number of years of contribution to the retirement fund in order to receive a full pension is 40 years. Employees who are enrolled in the special retirement plan can retire earlier.

According to the Conseil d'Orientation des Retraites, a governmental organism created to study the French retirement funds, the statistics for special retirement plans must be considered with caution for the following reasons:

There are 15 special retirement plans. Most suffer from an imbalance in regards to the number of workers relative to the number of pensioners, in total there are 500,000 workers contributing to the funds and 1,100,000 pensioners. In comparison, in the private sector there are 18 million workers versus 15 million pensioners.

Because of this discrepancy the special retirement plan is partly financed by the State, or by the employees of the government-owned companies that are on the standard retirement plan.

There have been several plans by conservative governments to abolish the special deal and replace it with the standard retirement plan for government-owned companies and civil servants. These efforts have been highly controversial and have caused large strikes such as those of 1995 (1995 strikes in France) and November, 2007 (November 2007 strikes in France).

History of the special retirement plan

Before the welfare state came into being, some companies decided to give their employees a pension in order to attract workers to strenuous or dangerous jobs. Starting from 1679 sailors were allowed a pension if an injury stopped them from working and in 1709 all fishing and merchant sailors were granted a retirement pension. During the 19th century, various other professions were granted pensions, including employees of the Banque de France, employees of the Comédie-Française, civil servants, national rail employees, and miners. Some professions were also given health insurance funds.

In 1930 and 1945 general public welfare funds were introduced that included retirement plans. The employees of the companies who had previously been granted pension schemes decided to keep them instead of participating in the new plans. The ordonnance (law created by the executive organ of State) of October 4, 1945, which is now incorporated into the set of laws regulating social securities measures (code de la Sécurité Sociale), officially permitted these older pension plans to subsist and they became known as the régimes spéciaux (special retirement plans).[2]

Beneficiaries of the special retirement plans

In 2007:[4]

Retirement Plan Standard private sector plan Standard public sector plan Special SNCF plan Special RATP plan Special EDF and GDF plans
Salary basis used for calculation of the pension 25 years in 2008 6 months final earnings (validated over 6 months) 6 months final earnings
Contribution length 39.5 years in 2007, 40 years in 2008, 41 years in 2012 39.5 years in 2007, 40 years in 2008, 41 years in 2012 37.5 years 40 years in 2012 (if the reform project takes effect) 37.5 years 40 years in 2012 (if the reform project takes effect) 37.5 years 40 years in 2012 (if the reform project takes effect)
Employee contribution percentage between 10 and 11% 7.85% 7.85% 7.85% 12%
theoretical retirement age 60 60 50 to 55 50 to 60 50 to 60
actual age 61 57 50 to 55 55 55
decrease per missing contribution year 10% and then 5% in 2013 0.6% and then 5% in 2013 0% 0% 0%
re-valuation method inflation inflation company salary company salary company salary

Financing of the special retirement plans

Because of the diminishing number of workers in many of the sectors using special retirement plans, most noticeably in mining and railway employment, the contributions of these workers alone would not be sufficient to cover all of the pension commitments. The State, local government agencies, and the standard retirement fund provide the funds needed to balance the expenditures.

The special retirement plan funds are largely in deficit. In 2006 €14.7 billion were paid out in pensions under the special retirement plan, whereas the contributions by workers were only €6.2 billion. As such it has become necessary for the losses to be offset by four different mechanisms:

Relative budgetary weight of worker contributions/pension disbursements

Source:[5]

Worker category/company Worker contributions as a percentage of the total revenue of the special retirement fund*: Pension disbursements as a percentage of the total social benefits budget**:
Miners 4.5% 89.9%
EDF and GDF 35.8% 52.5%
RATP 28.1% 92.7%
SNCF 33.40% 96.30%
Sailors 13.4% 95.0%
Opéra de Paris 46.90% 97.17%
Military 45.1% 87.7%
Elected members of the National Assembly and of the Senate Unknown Unknown
Local government 97.5% 78.1%
Civil law notaries' assistants 75.2% 89%
National Police Unknown Unknown
Religious ministers 15.8% 90%
Workers in state-owned industrial establishments 29.5% 99.2%

∗ The difference is made up from sources other than worker contributions, these sources may differ depending on the sector or company involved.
∗∗ In addition to pensions, the social benefits budget includes disability insurance, life insurance, and maternity leave, among others.

SNCF special retirement plan

The decree 54-24 establishes that SNCF personnel may request the right to retire if they satisfy both the conditions of being over 55 years old (50 for drivers who have been working for at least 15 years) and having paid 25 annuities. This same decree also authorises the SNCF to forcefully retire its personnel who meet the same conditions. The pension is equal to 2% of salary per year of work, with a maximum of 75% of total salary.

The SNCF retirement fund created by decree 2007-730 is financed mainly by:

Special retirement plan reforms

In 1995 Alain Juppé's government attempted to align the special retirement plan with the standard one but abandoned the reform following large strikes.

In 2007 François Fillon's government is currently planning a reform of the special retirement plan to make it identical to that of the civil servants. This plan has also provoked widespread strikes in France.

References

  1. (according to the 4th report by the Counsel for retirement counselling Conseil d'orientation des retraites, p 155)
  2. "Historique" (in French). Retrieved 2007-11-22.
  3. "Enquête sur la France des régimes spéciaux" (in French). Archived from the original on November 18, 2007. Retrieved 2007-11-22.
  4. "Régimes spéciaux : comparaison des conditions de départ à la retraite" (in French). Retrieved 2007-11-22.
  5. "Régimes spéciaux de sécurité sociale" (in French). Retrieved 2007-11-23.
This article is issued from Wikipedia - version of the Thursday, April 21, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.