Minister defends pension deindexation plan

David Amiel, the minister of Public Accounts, stated that the government is not creating a generational conflict with its partial pension deindexation proposal in the 2027 Social Security Financing Bill (PLFSS). The plan aims to save 4 billion euros by temporarily limiting pension increases to inflation.

Deindexation details and thresholds

The proposal, found in Article 35 of the bill, sets a threshold for pension increases. Pensions up to 1281 euros will be raised by 2.1 percent, matching inflation. Pensions above this amount will be partially or fully frozen, depending on coefficients to be determined by decree. The article also allows for flexibility in tax exemptions for retirees.

Parliamentary debate and concerns

The measure is expected to be debated in Parliament this autumn and is a key part of the budgetary adjustments for social accounts. During a hearing with the Senate's Social Affairs Committee, Amiel faced questions about whether the plan would actually generate the 4 billion euros in savings. Marie-Do Aeschlimann, the new rapporteur for the old age branch, called the mechanism "original" and questioned its effectiveness.

Government response and tax exemptions

Amiel emphasized that the thresholds for pension indexing would be discussed in the parliamentary debate. He noted that the partial deindexation combines with a reform of the 10 percent tax exemption for retirees. The government has adopted the Senate’s version of this reform, which protects retirees up to 3000 euros. Amiel suggested that indexing could be adjusted further through reforms to this exemption.

Opposition from the left

The left has strongly opposed the proposal. Annie Le Houérou, the socialist leader, called the measure "not acceptable," citing the high cost of living and the challenges faced by retirees with low incomes. Amiel countered by referencing the pension freeze from 2014 to 2016, which was supported by the previous left government.

Generational concerns and budgetary effort

Céline Brulin, a communist senator, accused the government of creating a generational divide. Amiel responded by arguing that completely exempting certain generations from financial adjustments would be illogical. He noted that the government's planned effort on retirees amounts to 5.4 billion euros, or 10 percent of the 2027 budgetary effort. Retirees make up 25 percent of the population, but the financial burden on them is proportionally less.

Questions from other groups

Brigitte Bourguignon, a former Health Minister, raised concerns about the long-term effects of the pension freeze, warning that it could impact the financial stability of workers and companies. She questioned whether the freeze was a temporary measure or a turning point in policy.

Pension costs and demographic factors

Amiel outlined the financial challenges of the old age branch of the Social Security, noting that without any measures to control spending, pension costs would rise by 13 billion euros next year. This increase is partly due to demographic changes, the influx of new retirees, and higher average salaries during their careers.

Right-wing opposition and future reforms

The right has opposed suspending the 2023 pension reform and asked the government about potential financial gains if it were to be restarted. Amiel estimated the maximum gain for 2027 at 1 billion euros but noted it would be minimal due to pension rules and the need to inform those nearing retirement. He emphasized that the debate on retirees' contributions is ongoing.

Government stance on compromise

The government has warned it would oppose any attempt to "suspend the suspension" of the pension freeze, as it sees the compromise reached last year as valid until the end of the current mandate. Amiel emphasized that this is not the government's position and that the compromise remains in place.