What kind of pension system reform? The major issues.

Summary The pension reform announced by Mr. Emmanuel Macron during the presidential campaign is based on a number of general principles, often summarized by the pledge "each euro contributed gives the same rights." As the details of the reform are not yet known, this note aims to contribute to the public debate by presenting the fundamental principles of a well-designed pay-as-you-go system, regardless of the target system chosen, and to highlight the points of arbitration to be decided by the democratic debate. We thus highlight the advantages of increasing pension entitlements in line with wage growth, and of establishing transparent rules for the evolution of settlement rates according to the country's demographic conditions. The choices to be made are nevertheless important: what overall contribution rate to choose? what convergence between the contribution rates of the different schemes? how fast to transition to the new system? how to improve the solidarity mechanisms? or what governance to put in place?