This report analyses spousal rights within the French pension system, comparing the effects of these schemes with the objectives assigned to them. Several avenues for reform are presented, compatible with a universal points-based pension system and aimed at improving the effectiveness of these schemes.
Spousal rights within the French system form part of what are known as derived rights, in that they depend on the direct rights of a spouse. These derived rights, or survivor’s pensions, were designed to cover the risk of widowhood. This risk can be defined as the fall in living standards following the death of a spouse, or the onset of poverty as a result of widowhood.
Under the current system, survivor’s pensions maintain, on average, the standard of living at the time of a spouse’s death. However, this average conceals significant disparities, with cases of overcompensation as well as net losses in living standards – particularly when the surviving spouse has a low pension in their own right, or none at all. These disparities stem from differences between pension schemes in how survivor’s pensions are calculated, which arise both from differing underlying philosophies and from the use of survivor’s pensions to pursue a range of different objectives.
The rise in separations has led to the emergence of a new risk requiring coverage: the risk of divorce. Under the current arrangements, it is the survivor’s pension that plays this role. In the event of divorce, the amount of the survivor’s pension depends on the deceased spouse’s subsequent relationship history. Moreover, the survivor’s pension can only be paid upon the death of the former spouse, potentially many years after the divorce, which reduces the take-up rate. Survivor’s pensions therefore appear to be an ill-suited instrument for covering the risk of divorce.
At present, all pension schemes restrict eligibility for survivor’s pensions to married couples, thereby excluding couples in a civil partnership (PACS). Such a distinction is not always easy to justify, and it is, moreover, poorly understood by policyholders.
The current rules governing survivor’s pensions are highly heterogeneous across schemes, differing in the age at which entitlement begins, the minimum duration of marriage required, the rules for dividing entitlements between divorced surviving spouses, whether or not other resources are taken into account, and the survivor’s pension rate. Such disparities are difficult to justify, and harmonising the rules should be an objective of establishing a universal pension system.
