Pension Funds in France: Still a Dead-End?

Today there still lack a consensus on pension funds in France. The only issue that seems not to be debatable is the willingness to maintain a PAYG public scheme for the basic and complementary pension schemes. The debate concerns the introduction of pension funds as a third pillar. We show in this paper that, even if pension funds hardly exist in France, they have close, but imperfect, substitutes such as life insurance and employee-saving schemes. The difficulty is that these saving instruments are not specifically designed for retirement purposes. There is thus a risk of insufficient saving at old-age. We advocate the introduction of pension-oriented schemes, but not as designed by the Thomas Act, since there is an insufficient protection of wage-earners against financial risks. The first section is devoted to an institutional overview of the French pension system, and presents basic statistics. The second section gives some details on the supplementary occupational funded schemes. In section 3, we argue that funding does exist in France, through personal savings. In section 4 we show that the last reforms did not pave the way to pension funds. Section 5 concludes.