Twenty times on the loom, hand over your work. The social partners who manage Agirc-Arrco sat down on Monday afternoon to negotiate measures to rectify the supplementary pension scheme for private sector employees. During this first session of this new round of discussions, unions and employers discussed the diagnosis, on the basis of three more or less loss-making scenarios for the years to come.
The Covid crisis caused a relapse of Agirc-Arrco, which had just regained its balance, and posted a positive net result of 966 million euros in 2019. In 2020, the regime recorded a deficit of 4.1 billion euros, including 5.3 billion technical deficit. This fall – less than the 10 billion technical deficit feared by the social partners a year ago – is explained by the 4% drop in contributions, brought down to 80 billion euros, while the long-term increase in pensions paid continues (+ 3%).
A rule of conduct
The gap with the initial trajectory is “not major”, according to the very admission of the president of Medef Geoffroy Roux de Bézieux, who in June in “Les Echos” displayed his confidence in the possibility of finding “a path for one. agreement with the social partners, without State intervention ”. Within the employers, we hope to sign before the end of July.
In 2019, the managers set themselves a rule of conduct: to manage the scheme financially over fifteen years, ensuring that the equivalent of at least six months of pension payments are always in reserve. Indeed, unlike the general scheme, this private scheme cannot afford to be short of cash.
The six month rule
The services of Agirc-Arrco have constructed three scenarios for the financing of the scheme. The optimistic hypothesis of an extension of the lifespan leads to a critical scenario, where the six-month reserve rule is violated from 2026. On the contrary, the pessimistic demographic approach of the Retirement Orientation Council, adopted in its June report (“variant 1”), would allow Agirc-Arrco to return to the green in 2029, and never to reach the reserve side alert rating by then (deficits would be low).
The second scenario takes a median position, assuming that life expectancy at age 60 will increase by 3 years for men and 1.9 years for women in 2040 compared to 2020 – this remains the central assumption of INSEE, perhaps not for a very long time.
The alert threshold crossed in 2029
Result: the reserves would fall below six months of benefits from 2029, with a technical deficit of 2.8 billion euros that year, and the regime would not manage to extricate itself from the annual negative balances before 2040.
“Variant 2 turned out to be the most consensual; moreover, it is consistent with the assumptions we made in 2019, ”notes Olivier Bogillot, negotiation leader on the Medef side. “Assets and businesses were put to use during the crisis. It would be logical that the effort does not relate to them, “suggests the representative of the employers – designating in hollow the retirees for the efforts to come. During the past decade, the social partners have made significant savings thanks to the under-indexation or freezing of supplementary pensions.
Other solutions than freezing pensions
At the CFDT, Frédéric Sève recognizes that “the assets suffered during the crisis, bankruptcies are in front of us, everyone agrees”, but relativizes the effort to be made to redress the regime: “Variant 1 is not completely fanciful, and in this scenario we can get by without financial measures. The truth is that we do not need a very strong correction to get back in the nails, ”he pleads.
At FO, Michel Beaugas also agrees on the idea that assets must be preserved, but believes that “there are other solutions than the freezing of pensions”, because “retirees see their purchasing power decline for ten years ”. He evokes the possibility of “confining the 4 billion deficit linked to the Covid”, and of “putting the increase in contributions on the table” – horresco referens for the Medef.
“We must reassure the French on the sustainability of the regime, but do not take hasty decisions”, slips Michel Beaugas. If there is no deal in July, he won’t complain.