Under the French pension system, the retirement age depends on the length of one’s working life: is this justified?

Aubert, Patrick

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Under the French pension system, the retirement age depends on the length of one’s working life: is this justified?

Patrick Aubert

November 2024

This paper analyses the conditions for eligibility for the full pension under the French pension system, examining the implications of the fact that retirement depends more on the length of one’s working life than on one’s lifespan.

Reference IPP Policy Brief No. 111

Quote this publication

Aubert, Patrick (November 2024). ‘The French pension system links the retirement age to the length of one’s working life: is this justified?’, IPP Policy Brief, No. 111. The Institut des politiques publiques.

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Presentation

In France, the point at which a pensioner can retire on a full pension depends more on the length of their working life than on their age, and some even argue that it should depend solely on the former. This situation stems from the regulatory framework established during the 1983 pension reform, the general principles of which have remained in place despite the various reforms that have taken place since then. The criterion of length of service as a condition for receiving the full pension is thus often perceived as having ‘made retirement at 60 possible’.

Whilst this condition has often been justified by citing the supposedly lower life expectancy of those who benefit from it, new estimates show that this is not in fact the case. People who are allowed by the pension system to retire on a full pension earlier do not have a higher mortality rate. Conversely, those who must wait until the age at which the reduction is waived do not, in turn, have a higher life expectancy. Historically, the groups of pensioners who have benefited most from a full pension at age 60 are, regardless of generation, found amongst the half of pensioners with the highest pensions.

These findings call into question the validity of the differences in treatment that currently lie at the heart of the French pension system. They suggest that, unless another justification for the current rules can be found, it might be appropriate to return to arrangements more in line with the system’s original philosophy, namely taking into account not only the length of a person’s working life but also their expected length of retirement in the rules governing retirement.

Key Results

Making the age at which a person becomes eligible for a full pension dependent on the number of qualifying quarters introduces a difference in treatment between insured persons which, given observed life expectancies, cannot be justified on the grounds of offsetting social inequalities in life expectancy.
Retaining the current rules would therefore, in the interests of the system’s necessary transparency, require an explanation of the principle of fairness on which this difference in treatment is based. However, there appears to be no obvious justification for this. Alternatively, the system should therefore be reformed to bring it more into line with actuarial principles.
This does not necessarily mean, however, a return to the rules that were in force prior to 1983. Conversely, if desired, it is possible to implement these principles within a system that would eliminate all reductions and increases, and would depend solely on the duration of the working life.
To achieve this, the statutory length of a full working life would need to be adjusted according to the age at the time of retirement, so as to take account of the fact that, if an insured person retires later and consequently has a shorter retirement period, the length of service required for their career to be considered ‘full’ should also be shorter.

Method and Data

Differences in life expectancy based on the age at which the pension system allows people to retire on a full pension have never really been measured. Indeed, although numerous studies and research articles have examined mortality disparities amongst the French population, this research generally forms part of a broader analysis of social inequalities. They therefore classify individuals according to criteria such as income level, educational attainment, socio-occupational category or occupation.

However, these criteria are only very loosely correlated with the ages at which people in different categories become eligible for a full pension.

The author has therefore, for the first time, estimated life expectancies differentiated according to the specific criteria that determine the full pension entitlement under current rules.

This estimate is based on statistical databases provided by the DREES, compiled from administrative data held by pension funds. It focuses on the most recent generations who were eligible for the statutory minimum retirement age of 60 and who retired just before the 2010 reform.

Partners

This work was supported by the Drees. In particular, it was the subject of a dedicated publication: ‘Thirty years of reforms lowering the age of eligibility for a full pension: what are the consequences for inequalities in the length of retirement?’, DREES Report, No. 125, November 2024.