The French pension system includes significant non-contributory schemes, which enable people to accrue pension entitlements linked to having children rather than to the contributions paid. These are known as family entitlements. Compensating for career uncertainties is the main justification for their existence. However, the current mechanisms do not fully meet this objective, as they redistribute benefits towards men whilst being unfavourable to part-time working mothers. It is possible to redesign these family rights by replacing child-based pension credits and increases in the period of insurance with a single pension credit per child. This paper provides an évaluation of the impact of such a reform, whether implemented through a proportional credit or a lump-sum payment. The choice between these two options depends primarily on the insurance role one wishes the pension system to play in offsetting the career uncertainties faced by women. Finally, this paper highlights the importance of bearing in mind that policies which directly address the factors shaping women’s career uncertainties are ultimately more effective than the ex post compensation that the pension system can provide.
Pensions reform: towards an overhaul of family entitlements?
Cette note effectue l’évaluation de l’impact d’une réforme des droits familiaux, soit via une augmentation proportionnelle, soit via un montant forfaitaire.
Reference IPP Policy Brief No. 8
Presentation
Key Results
- Compensating for career-related uncertainties is the main justification for the existence of family-related entitlements within the French pension system.
- The current arrangements are inadequate. Pension bonuses primarily benefit men, and increases in the length of insurance do not compensate for the loss of earnings suffered by women.
- Reforms to family-related pension entitlements – whether in the form of a lump sum or a proportional bonus – would help reduce pension inequalities between men and women whilst simplifying the current arrangements.
- Public policies aimed at reducing career uncertainties ex ante (increasing the number of nursery places) are likely to be more effective than ex post compensation measures (additional pension entitlements).
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