- March 2023
- Climate Change
- Mergers & Acquisitions
- PRODUCTS & INITIATIVES
- GREATER CHINA
- FIXED INCOME
- C-SUITE INTERVIEW
- UK PENSIONS
- ESG OUTLOOK
- JAPAN REPORT
- SEARCH DIRECTORY
- ROAD WARRIOR (HYBRID WORK)
- MARCH 2023 E-MAG
- GOING PLACES
There are places in the world where you would consider nationwide strikes and street protests over pensions justified. Like the US, where the Milliman 100 Public Pension Funding index of the top 100 public pension plans showed the average funding ratio dropping to just 72.8%. According to the Equable Institute’s 2021 survey, New Jersey, the worst funded state public pension system, managed just 50.2%. New Jersey pensioners would be very angry about their retirement prospects.
But the protests over retirement provision are happening in France. And as in the US, the issues are far less about finance and economics than about politics and the price paid to sustain grand illusions. In the US, the grand illusion is that states can be competent and trustworthy financial administrators for their constituents. In France, it’s the illusions of the French left, and the public, that the state can deploy limitless resources and powers if badgered hard enough. It’s also the illusion of the old French left that the Confédération Générale du Travail brand of militancy still has relevance after its break with the Communist Party in the mid-1990s.
France owes its current retirement age of 62 to François Mitterrand, who made a low retirement age part of his left-wing agenda that secured Communist and Socialist cooperation to propel him to office in 1981. Many doubt his principled commitment to this agenda, much of which was walked back after his first couple of years in office. Few doubt his personal commitment to his own power.
The current opposition leaders appear just as opportunistic. Jean-Luc Mélenchon on the left and Marine Le Pen on the far right both preach retention of the current retirement age, or even reducing it to Mitterand’s target of 60 years, with plenty of stoking of public ire but not too much detail on how to accomplish it.
There should be a debate about how France can pay for the current retirement system amid rising life expectancy, but there’s little sign of one. The country struggles with a high level of youth unemployment but lowering the retirement age – on the basis that jobs for the over-60s will somehow magically re-emerge as jobs for the under-20s – isn’t the solution. Unfortunately, grand illusions persist on both the left and the right, especially when they’re stoked by irresponsible populist politicians.
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