France’s pension system needs to preserve the pay-as-you-go system while considering developing a supplementary collective funded scheme, speakers at a Fonds de Réserve pour les Retraites (FRR) conference said.

At the conference, organised to mark the FRR’s 25th anniversary, economists, public officials and financial market stakeholders shared their views on the future of the French pension system.

Speakers suggested that the proposed supplementary collective funded scheme would need to contribute to financing pensions and mobilise more long-term savings for the benefit of the French and European economies.

Three roundtable discussions were conducted at the conference, and a key observation throughout all was that, in the face of an ageing population and the deterioration in the ratio of workers to pensioners, the issue can no longer be addressed solely from the perspective of the system’s short-term balance.

The FRR highlighted that this conclusion also raises questions about pensioners' future standard of living, the mobilisation of French people’s savings and the capacity of these savings to finance the economy in the long term.

One discussion suggested that the issue cannot be reduced to a simple difference between pay-as-you-go and funded schemes.

Pensions Guidance Council member and Agirc-Arrco honorary CEO, Jean-Jacques Marette, highlighted the significance of demographics in the evolution of pension schemes, alongside other determining factors such as employment productivity and migration.

Organisation for Economic Co-operation and Development private pension analyst, Stéphanie Payet, added international comparisons to the discussion, which highlighted the diversity of existing funded pension schemes: individual or collective, voluntary, automatic or compulsory.

Meanwhile, former minister and Paris Bar lawyer, Jean-François Copé, called for pension reform and funded schemes to be firmly re-established in the political debate, and for the emphasis to be placed on what this type of mechanism contributes to the system's sustainability.

The discussions later focused on the prospects for the French system and on the conditions for the wider roll-out of collective capitalisation.

In particular, Cercle des Économistes founder and Rencontres économiques d'Aix-en-Provence president, Jean-Hervé Lorenzi, highlighted the pressures demographic and economic changes could apply to the relative level of future pensions.

Meanwhile, economist, Olivier Davanne, emphasised the benefits of collective management, which he said makes it possible to capture, over the long term, the risk premiums offered by the markets and to pool risks that many households cannot bear individually.

Finally, FRR former chairman of the Executive Board and former minister, Éric Lombard, emphasised two conditions for sustainable progress.

These two conditions involved social partners and parliament, and provided collective investment vehicles with sufficient resources to enable them to fulfil their role fully.

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