Editorial - March 2024


Retirement Savings

We would like to highlight two topics in the economic news at the moment that reveal the scale of the challenges facing our country. On the one hand, the budget debates in France around the €10 billion savings plan for 2024, likely to be double that in 2025, which are prevalent in the economic press. On the other hand, the more ‘technical’ and less publicised subject concerning the financial aspects of the law on 'green industry'. Both concern retirement savings, the ultimate type of long-term savings to finance the economy.

Investors and asset management companies are directly concerned.

With regard to the budget debates about savings to be made by the government, this once again highlights the difficulty of controlling the situation and respecting a certain financial orthodoxy. Trust is key for any investor. Some have the unwelcome impression that the State budget has been haemorrhaging uncontrollable spending for decades. The sustainability of the level and service of the State's debt and that of its operators must be questioned. A few voices are now making themselves heard on the non-exemplary nature of the State with regard to the transparency of its accounts, despite the proliferation of high commissions, guidance boards and other bodies. Requirements imposed on the private sector are not applied in the public sphere.

« With regard to retirement savings, the challenge is to create a stratum of funded pension schemes, presented as taboo by some politicians anxious to 'preserve the French social model', which even they themselves no longer describe as 'the envy of the world'. »


Yet some discreet funded pension schemes do exist in France, including for civil servants. The recent success of the PER, created by the 'PACTE' law of 2019, clearly demonstrates the need expressed by many to establish the equivalent of a funded pension scheme. The law on green industry seeks to 'channel' investment into long-term assets, with rules some of which are clearly too complex. Apart from the technical issues and administrative hurdles, however, the underlying idea is admittedly good.

At a time when the goal is to relaunch the Capital Markets Union (CMU), which aims to develop market financing for European economies, this is a first step.

« From the financier to the financed, the entire investment chain should benefit and thus, in the words of our Minister of the Economy, 'put the money to work'. »


What makes the convergence of budget choices and the need to build up long-term savings perplexing is the quasi-ideological debate that has emerged. Some critics have loudly vented their indignation at the announcement of the €10 billion savings plan, claiming young people are being sacrificed for the benefit of pensioners. In their view, retirement pensions are ultimately only discretionary social benefits. This is where the lack of transparency in public accounts comes into play. The detractors can count and above all seek to understand the underlying mechanisms at play. In simple terms, the pay-as-you-go pension system in the private sector is broadly balanced, so young people are not 'sacrificed'. In the public sector, financing remains opaque, with a subsidy system that translates into a deficit and therefore into a debt. Pensions are not a social benefit per se (barring solidarity exceptions) but a real system in their own right, based on mandatory contributions, which must be self-financed. Certain names are misleading and false, such as the term 'pension insurance', as there is no notion of uncertainty, hence why it is included in the 'social security' budget. Our leaders urgently need to take this into account for greater efficiency and transparency for all. At the end of the day, pensioners are but former young people. The reform of pension governance is therefore far from complete.

Yannick Tatibouët

Director of Strategic Intelligence, External Relations, and coordination on sustainable finance

March 11, 2024

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