Hostname: page-component-586b7cd67f-t7fkt Total loading time: 0 Render date: 2024-11-28T07:10:04.811Z Has data issue: false hasContentIssue false
  • English
  • Français

A model of the French pension reserve fund: what could be the optimal contribution path rate?

Published online by Cambridge University Press:  29 October 2007

CHARLIE BERGER  and
ANNE LAVIGNE
CHARLIE BERGER
Affiliation:
Laboratoire d'économie d'Orléans
ANNE LAVIGNE*
Affiliation:
Laboratoire d'économie d'Orléans
*
Correspondence to: Anne Lavigne, LEO, Rue de Blois, BP6739, 45067 Orléans Cedex 2 (e-mail: [email protected]).
Get access Rights & Permissions [Opens in a new window]

Abstract

Current and expected demographic and economic trends are likely to jeopardize the financial sustainability of the French retirement pension scheme, which mainly operates on a pay-as-you-go basis. In 1999, the French government set up a Pension Reserve Fund (Fonds de réserve pour les retraites, FRR) the main objective of which was to introduce some public funding in the PAYG basic pension scheme to cope with its expected financial unsustainability within the next decade. This paper presents some simulation results on the projected evolution of the French Pension Reserve Fund under various assumptions. The main idea is to optimize the profile of the trend in contribution rates needed to meet the objective of a balanced basic pension scheme over the period 2006–2050. Our simulations show that under plausible assumptions the amount of funding is likely to be less important than the Government expected at the FRR set up, about 100 billion euros. Some stress tests show that severe shocks on financial markets may dramatically affect the funding profile of the FRR beyond 2045.

Type
Research Article
Information
Journal of Pension Economics & Finance , Volume 6 , Issue 3 , November 2007 , pp. 233 - 250
Copyright
Copyright © Cambridge University Press 2007

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Berger, C. and Lavigne, A. (2004) Le fonds de réserve des retraites à l'horizon 2050: quelques simulations à l'horizon 2050. Document de recherche du LEO, 2004–18.Google Scholar
Conseil d'Orientation des Retraites (2002) Retraites: renouveler le contrat social entre les générations. Premier rapport, La documentation française, http://www.cor-retraites.fr/Google Scholar
Conseil d'Orientation des Retraites (2006) Retraites: perspectives 2020 et 2050. Troisième rapport, La documentation française.Google Scholar
Conseil d'Orientation des Retraites (2007) Retraites: questions et orientations pour 2008. Quatrième rapport, La documentation française.Google Scholar
European Commission (2006) The impact of ageing on public expenditure: projections for the EU-25 Member States on pensions, healthcare, long-term care, education and unemployment transfers (2004–50). Report prepared by the Economic Policy Committee and the European Commission (DG ECFIN).Google Scholar
Fonds de réserve des retraites (2003, 2004) Rapport annuel.Google Scholar
INSEE (2002) Economie et statistique. n°355–356. dossier ‘Projections de population à l'horizon 2050’.Google Scholar
Poterba, J. (2004) The impact of population aging on financial markets. NBER Working Paper No. 10851, October.CrossRefGoogle Scholar
Pouget, J. and Skalitz, A. (2006) Les salaires dans les entreprises en 2004. Insee Première, N° 1067, février.Google Scholar
Vernière, L. (1999) Fonds de réserve: simulation de scénarios d'accumulation et d'utilisation des reserves. Questions retraite, n°16/17, février–mars, http://www.cdc.retraites.fr/Google Scholar
Vernière, L. (2005) Evolutions récentes des fonds de réserve pour les retraites: comparaisons internationales. Questions retraite, n°68, juillet.CrossRefGoogle Scholar