I somehow seriously doubt raising retirement age by 2 years (from 62 to 64, life expectancy is 82) will "ensure a long-term financial stability". There are usually many other way to optimize the system, but macron chose exactly to take from people.
1. Years of retirement: -2 2. Years of retirement payments: +2 3. Years of retirement fund returns: +2
(3) is significant because at the end the fund will have about 40 years of payments. Suppose an 8% nominal return for two years on average, this means you're getting about 16% on 40 years of savings, or ±6.5 years of savings, on top of 2 years of extra savings by working two extra years, on top of needing 2 years of fewer pay-outs, meaning the 20 year retirement is cut by 8.5 years, or a -42% decrease.
Not to mention side benefits. (ample evidence that working and staying active longer, reduces healthcare costs on society, for example).
I'm simplifying the calculations quite a bit of course, but this actually has a massive impact.
Because a significant effect is imparted by childhood deaths to the average life expectancy, especially for men, and those individuals never contribute to any pension fund nor taxes.
That has a massive impact on the results of the calculations.
There is no significant retirement fund in France's main pension scheme.
Btw, these analyses were performed by the Council for the Orientation of the Pensions, a bi-partisan entity.
The other options you mention were :
* more tax on people (france famously already has the highest in the OECD)
* more tax on companies (which will just increase cost of work and thus drive jobs elsewhere)
* run a defecit (debt is already scary high, and it means essentially making pay our kids for grandma's old age)
What is the other way you had in mind?
Note: two years later paying out means two year more paying in. So two years "effectively is 4 years".
this is false statement. Corp tax usually applied on profit after wages paid, thus doesn't impact cost of work.
Hence, increasing the employer part of social charges increases the cost of work.
Anyway, the direct tax burden on French companies is already quite high. This means that French companies have difficulties competing with foreign companies. Mutatis mutandis they either raise the price to compensate (and so are more expensive) or keep the same price and lose margin (and have therefore lower capacity to invest).
Countries can fix tax levels as they want (it's one of few policy areas where European countries have full autonomy) but they can't use tariffs or import taxes to protect their market. We have all agreed to free trade, and the WTO will punish those who do. So in reality, you can't just tax any way you want, unless you want to destroy part of your local economy.
I cited specifically recent decrease of french corp income tax above, everything else is your speculations.
> lose margin (and have therefore lower capacity to invest).
investments are not included into margin, losing margin doesn't have impact on investments unless company become not profitable
I am not an expert, but of the top of my mind we have the following possibilities:
[1] balance the bottom of the age pyramid: get more working people. Either by creating a social/financial situation that gives young people the security to get kids or by easing work migration from places with many young people.
[2] balance the top end of the pyramid: make the health aystem worse so people die earlier and you don't have to pay pensions so long
[3] raise the retirement age so the fewer payers raise more money and you have to pay out less over time.
[4] change the way retirement funds are allowed to work with the money so they can work with the interest
[5] If bureaucratic cost is an issue with the retirement system you can save some money here, but it is going to be peanuts in comparison to the other measures.
[6] Raise the money from elsewhere (e.g. by taxing investment gains oe by raising wages and have a bigger fraction of the wage going to retirement funds)
Option 1 either takes long (kids that will be born in a few years will not be able to work until decades later) or has cultural side effects (a significant amount of migration can lead to all kind of tensions with the local population).
Option 2 is not an option on ethical grounds.
Option 3 is the easy option, although it has the side effect that people who know they are never going to retire might not want to get kids so the problem gets worse without some measure to counter this.
Option 4 is something scandinavian pension funds already do (investing the money for returns), although the risk has to be managed properly then.
If you can't motivate people to get more kids (well paying secure jobs and a positive outlook on the future) the only number you can reasonably adjust in an aging society is the retirement age. People live longer so they have to work longer. As a fraction of the average livespan they work the same.
If France raises the retirement age by two years to 64 they are still retiring earlier than all surrounding countries. Italy: 67, Spain: 66, Germany, Belgium: 65
yeah, for example I googled and found that corp tax dropped from 33 to 25 in last five years, so they literally took money from employees and gave to employers.
But trivial change could be to make pensions base on retirement age: someone can retire at 62, but get smaller pension, and another could retire at 78 but get much larger pension, plus have pension base on contribution.
That trivial change is essentially already the case. There's no law that requires you to work like some kind of slave. You can retire whenever you want. The laws are about the age to be eligible for full-retirement. You can already retire early and receive a lower retirement, or keep working for much longer and have a much higher income in retirement.
> corp tax dropped from 33 to 25 in last five years
To drive economic growth. France's gdp per capita is lower today than it was 15 years ago. In the US it's 45% higher than it was 15 years ago. France's corporate system wasn't working, and high taxes were a key reason from lots of studies.
Anyway, taxes aren't really that relevant for retirement. If a person needs to consume 10 units of goods/services (e.g. food, clothes, healthcare, whatever), and workers produce 40 units each, a population of 25 workers can produce 1000 units and sustain another 75 retirees (1000 production, 1000 consumption).
If you lower the retirement age such that there are just 15 workers and 85 retirees, you're now still consuming 1000 units, but only produce 600 units. There's massive shortages, prices skyrocket, and many people become poor because there's not enough production to meet their needs.
Raising lots of money through taxes doesn't change this fundamental issue. Even if you give everyone $ 1 trillion dollars of money, in this economic system, there's still not enough production to meet needs. So you need one of two things to solve it: more workers (= more production), or more productivity per worker (= more production). That latter point is not something the government can really control, although high taxes tend to drive productivity per worker down because economic activity is less rewarding to the source of the activity, as the activity is taxed. So high taxes can actually make this situation worse.
I'm aware I'm simplifying a lot but I hope it helps to show taxes don't address the root-cause issue.
actually, high corp taxes can drive economic growth, because they give incentive to companies to reinvest into the business and not into shareholder's pockets.
But on the other hand the shareholders were very happy, so there's that.
Here's Japan throughout the 20th century: https://commons.wikimedia.org/wiki/File:Japan_population_pyr...
France: https://commons.wikimedia.org/wiki/File:France_Animated_Popu...
I don't think they expected the population pyramid to turn out the way it did. People in the past worried about global overpopulation, I don't think they would've done that if they had had an idea that population would naturally cap itself out without anybody even doing anything.
It's understandable why these systems were set-up, but some generation in the future (maybe us) will pay the price.