Under-indexing certain pensions: why and how?

Recent debates have highlighted, amongst other things, the idea of curbing pension expenditure by indexing pensions at a rate lower than that provided for by law, namely the rate of inflation. This technical measure forms part of a broader, but also more vague, debate on ‘making pensioners contribute’ to improve the state of public finances and meet the challenge of funding various policies. A ‘under-indexation’ of pensions was provided for in the draft social security funding bill for 2025 presented last autumn, with variations depending on the pension amount. The no-confidence vote against the government in early December meant that this measure was not implemented at the start of this year, but it is likely that, despite the lack of consensus on this measure, the idea will resurface in the relatively near future. The delay caused by the measure’s abandonment following the vote of no confidence in the Barnier government thus provides an opportunity to take the time to examine and clarify the potential grounds for under-indexing certain pensions: how does it fit into the debate on making pensioners contribute? Is it legitimate? What role does it play within the broader issue of managing the pension system? How should the details be determined?