Thursday, October 6, 2016

The Court of Auditors wants to return to flat the retirement of civil servants – The Figaro

VIDEO – are The efforts made since 2003 to merge the pensions of the public and the private are largely insufficient. A series of benefits which still benefits the officials makes the balance of the pension plan fragile and unsustainable. The Court presents different scenarios, including one called “Big Bang”.

In a report on the public service pension plan, ten years after the previous one, the Court of auditors considers that the reforms undertaken since 2003 is still insufficient. It recognizes that the efforts to merge the pension plans of the public with the private sector are real, especially on the ages of onset and the rate of replacement of pensions in relation to remuneration of activity. But the Court sees this convergence as “partial and fragile”. As a result, the sages of the rue Cambon believe that in terms of financial sustainability of the schemes, “the point of equilibrium apparent is not sustainable”. In other words, it will be difficult to pay for the public pensions in the future without carrying out new reforms.

Several major differences remain. First, the contributions are not always sitting on the same basis. While the private employees pay contributions on their entire salary, the employees continue to contribute their processing index, that is to say, without encompass all of the premiums. A device which benefit strongly with the senior officials for which the premiums are 55% to 60% of the compensation… but very few teachers (for which the premiums do not exceed 11%) or the teachers of the schools (5% to 6%).

The return to financial equilibrium is not sustainable

Secondly, the pensions of civil servants are still calculated on the last six months of treatment while those employees are on the 25 best years. If this rule does not imply today’s replacement rates are substantially different, it could contribute to widening the gap in the years to come, alert the Court. Regarding the benefits of family, if some of them are favourable to officials, others do not. Everything is not always in the same direction, note the Court. Finally, if we often hear that the maximum rate of payment is 75% of officials compared to only 50% in the private sector, in reality the difference is not 25% but much more reduced, says the Court.

In fact, the real difference public/private is played mostly with a category of particular officials, the “active category”, on the number of 700,000, which benefit from specific advantages (police, fire fighters…). For example, they go on average in retirement 4 years earlier.

these benefits are specific to certain categories and the demographic development, the pension plans for public servants will continue to weigh on public finances. The return to equilibrium of the system of civil servants of the State is possible only at the cost of maintaining the contribution rates high, weighing on the expenditure of the State. For the public Service hospital and the Region, it will be important to increase the rates of contributions, rules unchanged, to stay in balance, prevents the Court.

Scenario socially hardly acceptable

To prevent these risks, the Court has considered different scenarios, including one called “Big Bang” which would align the scheme for civil servants on the one of private employees, not only for new agents but also to agents at the position. But the Court recognizes that such a scenario would be socially hardly acceptable, and technically difficult to implement and would only become cost-effective at the end of… 17 years!

suddenly, the Court has considered other possible changes, more easy to implement, without calling into question the very existence of the regimes of the public service. It identifies seven levers to gradually adjust some parameters of the calculation of the pensions of civil servants, such as the elongation of 5 to 10 years of the reference period -that French prime minister François Fillon wanted to do in the 2003 reform, the enlargement of the basis of contributions and pension calculation by the integration of a portion of the premiums -which began to be made in the 2003 reform, the abolition of certain subsidies, the evolution of various rules relating to active categories, the progressive harmonization of family rights and marriage. Finally, the Court put forward various recommendations to strengthen the governance of schemes and their financial management.

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