IPP Policy Brief n°8 - October 2013

Pension reform: towards an overhaul of family rights

Mixed Race father holding baby in airIPP Policy Brief n°8

October 2013

Authors: Carole Bonnet, Antoine Bozio, Camille Landais, Simon Rabaté, Marianne Tenand

logo-pdf-min-2Pension reform: towards an overhaul of family rights?

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Summary:

The French pension system includes substantial non-contributive elements that link the right to retirement benefits with the presence of children rather than to contributions paid in. These are called family rights, the main purpose of which is to compensate for career hazards created by having children. However, the current arrangements only partially meet this aim, redistributing in favor of men while doing little for mothers who worked part-time. These family rights could be redesigned, by replacing the bonuses for children and increased benefits periods with a subsidy for each child. This note assesses the impact of such reform – either via a payment proportional to pension benefits or a lump sum payment. The choice between these two options depends chiefly on what role we wish the retirement benefits system to play in compensating women for the career risks they face. Finally, it is important to keep in mind the fact that policies that address directly women’s career hazards are ultimately more effective than compensating them later through retirement benefits.

Key points:

  • The main aim of the family rights in the French retirement benefits system is to compensate for career hazards.
  • Existing arrangements do not fulfil this aim. The pension bonuses mainly benefit men, while the prolonged insurance period does not compensate women for the loss of earnings suffered.
  • Reform of these family rights – by either lump sum or proportional payments – reduce gender inequalities in the pension system and simplify current regulations.
  • Public policies designed to reduce ex ante career hazards (such as increased child-care places) are likely to be more effective than post-career measures (such as extra retirement benefits).

The IPP Report (june 2013) of this study is available online (in French):

Réformer le système de retraite : les droits familiaux et conjugaux


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