On February 20, 2025, the French Court of Auditors released a comprehensive report highlighting the current state and future projections of the country's pension financing, ahead of anticipated negotiations between social partners regarding further reforms to the retirement system.

The 2023 reform raised the legal retirement age from 62 to 64 years and aimed to stabilize the pension system amid rising demographic and economic pressures.

Currently, France allocates 13.8% of its gross domestic product (GDP) to pension expenditures, amounting to €388.4 billion—four percentage points higher than Germany.

Two-thirds of retirement funding comes from social contributions.

In 2022, the average pension stood at €1,626 gross per month, with retirees generally experiencing lower poverty rates compared to the overall population; however, significant inequalities still exist.

The Court of Auditors reported a slight surplus in the pension system for 2023, estimating an excess of €8.5 billion.

This surplus is attributed to multiple reforms since 2003 that delayed retirement ages and the rapid rise of inflation impacting revenues more significantly than expenses.

However, the general regime and the agricultural workers' regime, which together constitute 42% of total pensions, face precarious financial situations, whereas other regimes, such as those for liberal professions and lawyers, enjoy relative financial health.

The report forecasts a marked deterioration in pension finances by 2045, projecting that collective deficits across all pension regimes could reach €6.6 billion as early as 2025, stabilizing around this figure until 2030. While the 2023 reform is expected to provide a positive fiscal impact of approximately €10 billion by 2030, its effect will diminish thereafter due to rising numbers of retirees and increasing average pension amounts.

By 2035, deficits are anticipated to escalate to nearly €15 billion, and approximately €30 billion by 2045, potentially resulting in a total debt of €350 billion for the general regime and €120 billion for local and hospital public servant pensions.

Several key areas of financial adjustment were examined in the report.

Altering the legal retirement age from the established 64 years could yield significant short-term effects; for instance, an advance to 63 years could lead to an equilibrium deficit worsening by €4.3 billion by 2045, while delaying the retirement age to 65 could improve the situation by €8.4 billion for individuals born in 1972 and later.

Additionally, increasing the number of required years of contributions for a full pension from the current standard of 172 quarters (43 years) would also have implications for future balances.

Key findings indicate that increasing contribution rates by one percentage point could generate significant annual resources, estimated between €4.8 billion to €7.6 billion, depending on whether the increase applies to employer or employee contributions.

Furthermore, a strategy of under-indexing pensions against inflation could potentially incur savings, although this could adversely impact the net income of retirees.

The report emphasizes the necessity for a new reform to ensure long-term sustainability, suggesting that the aging population and inadequate rises in pensions relative to active income necessitate attention.

As discussions on pension reforms are set to begin among social partners in late February, the findings from the Court of Auditors aim to facilitate a shared understanding of the pivotal financial challenges facing the retirement system, without suggesting specific actions or recommendations.