Unemployment, disability, illness: the forgotten costs of pension reform – Pension reform

Digging a hole by plugging another: the pension reform supposed to balance the accounts by 2030 risks encumbering those of unemployment insurance and health insurance, but also those of the State.

Raising the legal age of departure, from 62 to 64 in 2030, should however bring in nearly 18 billion euros, according to the Executive. Enough to ensure financial equilibrium at the end of the decade, even by devoting a third of the sum to “accompanying measures”, in particular the revaluation of small pensions. But “when you push back the retirement age (…), that causes expenses elsewhere”, recalled Pierre-Louis Bras, president of the Retirement Orientation Council (COR), during a hearing at the National Assembly last week.

At the start of 2022, the COR had precisely looked into the subject, concluding that there was an overall additional cost of around a third of the gains generated. A proportion that “is no longer valid” today, he said, because the current reform does not initially affect 62 years for disability. By pushing the cursor to 64, it would have been necessary to spend at least 1.8 billion more on invalidity pensions, mainly at the expense of health insurance, according to calculations by the Drees.

Towards an increase in the number of sick leaves?

If this backlash has been avoided, the statistical service of the social ministries has quantified others, starting with the expected increase in sick leave among employees over 60, for nearly a billion euros. An amount that does not appear in the bill presented by the government, nor in its impact studies.

No more than the increase in beneficiaries of “solidarity benefits”, estimated at more than €800 million, including €500 million for theDisabled adult allowance (AAH) and 150 million for the Solidarity labor income (RSA), both paid for by the State. Added to this are 170 million for theSpecific solidarity allowance (ASS) paid by Pôle emploi to unemployed people at the end of their rights.

For job seekers receiving benefits, the Dares – dependent on the Ministry of Labor – concluded in another study that the two-year “shift” in the legal age “would increase the expenditure ofReturn to work assistance (ARE) of 1.3 billion euros”. A result linked to a “persistence effect” observed after the passage from 60 to 62 years: those who are already unemployed tend to stay there “longer, whereas they could have switched to retirement in the absence of reform”.

However, this also applies to those who work, so that this amount would be reduced by “the increase in the employment rate of 62-64 year olds”, which would bring in more contributions. In the end, “the net financial impact would be less unfavorable”, underlines the Dares.

The daring bet of “full employment”

Produced at a constant unemployment rate, this forecast differs from the Executive’s project, which makes the bold bet of ” full employment “, i.e. 4.5% of the active population at the end of the five-year term against more than 7% currently. This would radically solve the accounting problem.

The public deficit reduced from 5% to less than 3%?

More broadly, the pension reform must also make it possible to free up budgetary resources. The government does not hide the expectation of “stronger tax and social security revenues”, in order to reduce the public deficit from 5% to less than 3% by 2027. “Rooms for maneuver” mentioned since the presidential campaign, which will serve perhaps partly to fill the holes dug by the reform.