Starting from 2027, future retirees could receive a full pension if they would have contributed for 43 years.
On Tuesday, French Prime Minister Elisabeth Borne laid out details of the country's pension reform plan, progressively raising the legal retirement age to 64 and proposing a minimum pension for all retirees.
She announced that France planned to raise, from Sept. 1, the legal retirement age entitled to a full pension, from the current 62 to 64 by 2030 at a progressive rate of three months per year.
The French Prime Minister added that starting from 2027, future retirees could receive a full pension if they would have contributed for 43 years.
Borne pointed out that the current pension reform plan would allow people to have a minimum pension of 1,200 euros (about US$1,288) per month.
"Employees and the self-employed ... who have contributed all their life with income around the French minimum monthly wage (SMIC) will now leave with a pension of 85 percent of the net SMIC," she explained, adding that the government's objective was to balance the pension system in 2030.
"We conducted several months of consultation, we listened and we were able to see that there was another way to achieve this objective of balance in 2030," she said.
Thousands of gilets jaunes (yellow vests) have taken to the streets of Paris to protest Pres Macron’s reform of the country’s retirement system & inept handling of the inflation problem. Strikes & protests are grinding France to a halt. Take a look:pic.twitter.com/Gcoo1NDorC— Steve Hanke (@steve_hanke) January 7, 2023
According to the government, pushing back the legal age to 64 by 2030 while accelerating the extension of the contribution period will free up 17.7 billion euros (about US$19 billion) for the pension system. The government's initial plan was to raise the legal retirement age to 65.
If the pension reform plan were to be passed by the National Assembly and Senate, the first generation concerned by the postponement of the retirement age will be those born in and after September of 1961.
Angered by the pension reform plan, major unions have already announced a major strike on Jan. 19 across the country.
In his New Year address, French President Emmanuel Macron said that the pension reform was necessary to balance the pension system for the decades to come. In 2021, France's expenditure on the pension system equaled 13.8 percent of the country's gross domestic product (GDP).
However, the country's Pensions Advisory Council (COR) said that the share of pension expenditure would rise sharply due to the sharp contraction in GDP and would vary between 14.2 percent and 14.7 percent between 2027 and 2032.
In a report published by the COR in September 2022, the pension system watchdog said that from 2022 to 2032, the country's pension system would be in deficit.