Pensions: towards balance in the long term?

Summary The projections conducted in 2012 by the Conseil d'orientation des retraites (COR) still show large pension deficits in the short and medium term: their reduction will certainly be the focus of the discussions announced for 2013. On the other hand, the median scenarios of these projections foresee an almost stabilized situation by 2050-2060. Can we conclude from this that the problems that remain to be addressed are only temporary? A great deal of progress has indeed been made since the early 1990s, with reforms affecting both replacement rates and retirement ages. But the resulting balance remains very sensitive to growth assumptions, because of the mechanisms used to curb the share of pensions in national income. A 0.3 point decline in the rate of growth increases the ratio of pensions to gross domestic product (GDP) by about one point. Finding balancing mechanisms that are less dependent on growth could be one of the tasks of a possible structural reform, in addition to the objective of simplifying a particularly fragmented system.