Draft legislation (Bill 760) proposes several changes to social security retirement eligibility and benefits to address the long-term financial health of France’s pension system. The controversial bill, sparking multiple national strikes and global press coverage, would gradually increase the minimum retirement age for most individuals, from age 62 to age 64. For those retiring before the normal retirement age of 67 (which would remain unchanged), the current timetable would be accelerated for increasing the minimum number of years of insured employment needed to be eligible for a full pension. According to the National Old Age Insurance Fund, the average actual retirement age for men and women was 62.9 in 2021, compared with 61.5 in 2010 when the minimum retirement age increased from age 60 to age 62. Other measures in the bill would reform pensions for civil servants and close some special state pension regimes, such as those for workers in the electricity and gas industries, but the primary aim is to increase legal retirement age. If enacted, the changes would be phased in starting September 2023.
The proposed changes include:
As noted, the reforms have encountered strong opposition. Certain provisions (notably the “senior index”) were voted down during the bill’s first reading in the National Assembly; however, the government is using an accelerated legislative procedure for the adoption of draft budgets for financing social security. On February 18, the bill was sent to the Senate with a few additional amendments expanding the senior index to companies with 50 or more employees (from July 1, 2025); adding gender indicators in the senior index; and harmonizing the tax treatment of contractual termination indemnities (i.e., financial inducements as part of separation agreements), which currently differs depending on the employee’s eligibility for a social security retirement pension. Such payments are exempt from income and social security taxes (up to certain limits) on the same basis as statutory severance unless the employee is entitled to a retirement pension from social security, in which case the payments are fully taxable.
While its enactment is by no means assured, if the bill becomes law it should, like past measures, cause many employees to retire later and encourage employers to review their workforce policies and practices on the employment of older workers. If the bill is not adopted by March 26, 2023, the government intends to issue an ordinance to implement it while at the same time acknowledging that this approach has not been attempted before. Prospects for a negotiated settlement between the opposition and minority government in parliament are dim, and it’s not clear how the Supreme Court might rule on the government’s use of the accelerated legislative procedure. The only certainty is that further industrial action and protests will ensue until the issue is settled.
