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Objectives and challenges in the implementation of a universal pension system in France

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  • Hervé Boulhol

Abstract

The mission of the French High Commission for Pension Reform is to prepare the reform introducing a universal pension points system in France. This paper explains why implementing a universal points system in France would increase transparency, reduce inequality and generate efficiency gains for the whole economy. It documents the experience of OECD countries which have opted for a points or a notional defined contribution (NDC) schemes, and provides a technical framework to compare defined benefit, points and NDC pension systems. The paper discusses some key issues related to the main parameters of the new system. While it can include a wide range of redistribution schemes depending on political choices, indexation rules should be designed in a way that maximises, as much as possible, the rates of return on pension contributions within a pay-as-you-go system while ensuring financial sustainability and accounting for changes in life expectancy. This implies that the value of the point would vary at the individual level depending on the cohort and the effective age of retirement based on actuarial principles. No country having a points system currently uses age-cohort point values, and France could be the first one to introduce such an innovation.This Working Paper relates to the 2019 OECD Economic Survey of France (http://www.oecd.org/economy/surveys/france-economic-snapshot/)

Suggested Citation

  • Hervé Boulhol, 2019. "Objectives and challenges in the implementation of a universal pension system in France," OECD Economics Department Working Papers 1553, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1553-en
    DOI: 10.1787/5a476f15-en
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    1. Hervé Boulhol, 2020. "Towards a Universal Pension Points System in France," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(2), pages 82-87, March.

    More about this item

    Keywords

    France; life expectancy; pensions; redistribution; reform;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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