PARIS, June 11 (Reuters) – France’s retirement system is set to run larger-than-expected deficits from 2045 when the falling birth rate starts weighing on the system’s finances, the pensions advisory council said on Thursday.
• The council’s annual update said the outlook was largely unchanged from last year until 2045, but a recent downward revision to the fertility rate worsened the picture after that.
• As a result, the gap between contributions and payouts is now expected to reach 2.4% of GDP by 2070, a full percentage point higher than estimated a year ago.
• The update was based on fresh long-term population estimates from the national statistics agency, which expects the fertility rate to fall to 1.45 children per woman from 1.8 previously.
• The deteriorating outlook is bad news for France’s public finances, which last year included 422 billion euros ($486 billion) in pension spending, or 14.1% of economic output, the second highest share among advanced economies after Italy.
• The council said raising the retirement age is the only non-recessionary fix as every other lever, such as cutting pensions or hiking contributions, weighs on growth. Only working longer actually grows the economy.
• Higher immigration could help short-term finances, but migrants eventually retire too, merely delaying the financial reckoning by a decade.
• The report is likely to fuel debate about pension reform, which is set to be one of the major political battlefields heading into the April 2027 presidential election.
• To ease opposition to its 2026 budget, Prime Minister Sebastien Lecornu’s government agreed last year to suspend a deeply contested 2023 pension reform that gradually raises the legal retirement from 62 years – among the lowest for advanced economies – to 64.
($1 = 0.8679 euros)
(Reporting by Leigh Thomas;Editing by Elaine Hardcastle)
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