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Sustainability of the French first pillar pension scheme (CNAV)

Author

Listed:
  • Florence Legros

    (ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine)

  • Frédéric Gannon

    (ULH - Université Le Havre Normandie - NU - Normandie Université)

  • Stéphane Hamayon

    (Harvest France)

  • Vincent Touzé

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract

In this paper, we apply two types of automatic balance mechanism (ABM) to the French first pillar pension system for private sector employees (CNAV). One is based on a tax gap ratio (TGR-ABM) and the other is the smooth ABM (S-ABM) developed by Gannon, Legros and Touzé (2013). Two long-run forecast scenarios over the period 2014-2063 are analysed. The first is optimistic ("benchmark") and assumes a 4.5% unemployment rate and a 1.5% productivity growth rate in the long run. The second is more pessimistic ("prudent"), with a 7.5% unemployment rate and a 1% productivity growth rate in the long run. For the benchmark (respectively prudent) scenario, a TGR-ABM requires, now and for the next 50 years, a 2.8% (respectively 6.3%) decrease in pensions and a 2.9% (respectively 6.7%) increase in the tax rate. An S-ABM requires, for the benchmark (respectively prudent) scenario, an immediate 1.5% (respectively 3.6%) decrease in pensions and a 1.4% (respectively 3.5%) increase in the tax rate. In the long run (50 years), an S-ABM requires a 4.5% (respectively 9.1%) reduction in pensions and a 4.5% (respectively 9.1%) increase in the tax rate.

Suggested Citation

  • Florence Legros & Frédéric Gannon & Stéphane Hamayon & Vincent Touzé, 2014. "Sustainability of the French first pillar pension scheme (CNAV)," Post-Print hal-01513971, HAL.
    • Handle: RePEc:hal:journl:hal-01513971
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    Cited by:

    1. Frédéric Gannon & Florence Legros & Vincent Touzé, 2020. "Sustainability of pension schemes. Building a smooth automatic balance mechanism with an application to the us social security," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(6), pages 377-401.
    2. repec:hal:spmain:info:hdl:2441/1nnmnobpu685qait9jaqir07rn is not listed on IDEAS
    3. Frédéric Gannon & Florence Legros & Vincent Touzé, 2020. "Sustainability of pension schemes. Building a smooth automatic balance mechanism with an application to the us social security," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(6), pages 377-401.
    4. repec:spo:wpmain:info:hdl:2441/1nnmnobpu685qait9jaqir07rn is not listed on IDEAS

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