Sarkozy Announces Pension Reform Concessions

by Ulrika Lomas, Tax-News.com, Brussels

Thursday, September 09, 2010

In response to nationwide demonstrations that took place recently in France, French President Nicolas Sarkozy announced a series of modifications to the government’s pension reform plans, in a bid to allay fears and to prevent further strike action.

Defending the government’s reform bill, President Sarkozy referred it as an “essential reform”, and one of utmost importance for France. While standing firm on the corner stone of the bill, to progressively increase the minimum legal age of retirement to 62, President Sarkozy nevertheless acknowledged the need to take into account certain hardships, out of respect for the general balance of the reform.

Determined to ensure that the reform is fair, and that the government does not demand the same effort from everyone, President Sarkozy announced that the existing measure pertaining to those with long careers (le dispositif carrières longues), created in 2003, is to be both maintained and extended. Consequently, in accordance with the provision, anyone who entered the job market before the age of 18, having paid their required pension contributions will be entitled to retire at the age of 60, if not before.

The government’s draft bill provided that anyone insured in France and with a disability rating of 20% or more could retire at 60; President Sarkozy revealed that this measure would be extended to farmers. He also explained that anyone with a disability rating of 10% could appeal to a commission who would decide whether or not to grant retirement at 60.

Regarding the government’s aim to strengthen the solidarity of the country’s pension system by demanding an extra effort from the country’s top earners, and from revenue from capital and from companies, Sarkozy confirmed that these plans will serve to generate almost EUR4bn in additional revenues for the government from 2011.

French Labour Minister Eric Woerth is to present the government’s amendments to parliament shortly.