Is there a need for a reference age in a points-based pension system?

Summary An important element of the pension reform debate is whether or not the new system should maintain a reference age. This note aims to contribute to this debate by clarifying some of the ambiguities around the concept of retirement age and by discussing the potential implications of implementing a points-based system. We emphasize the difference between the impact of reference ages in the current system - which modify the scale of the pension system - and the introduction of benchmarks in the new system, which can play a useful role in informing the insured. Recent economic literature has highlighted the role played by pension benchmarks, beyond purely financial incentives. This argues for maintaining a target in the new system to which the insured can refer. Rather than a single pivot age for all, this note argues for introducing a reference standard that is defined by the achievement of a target replacement rate, for example 75% of the last salary. Such a benchmark would lead to the definition of an individual full rate age, adapted to each career. It would also restore the initial objective of a pension system, which is to ensure that the standard of living is maintained in retirement. Such an age reference could also be accompanied by new services for insured persons to better prepare their retirement choices.