Title page

Contents

Abstract/Resume 4

Introduction 6

1. Why a universal pension system would be a big move forward for France 8

1.1. Simplification, equity, modernisation, efficiency 8

1.2. Public- and private-sector pensions in the OECD: Toward a unified system 10

2. How have other countries managed the transition 14

2.1. Germany: Introduction of points in the private sector was just a formal shift 15

2.2. Sweden: Where NDC started at the core of the public pension system 16

2.3. Norway: Building on the Swedish model with flexible financial management 17

2.4. CEECs: Fast transitions amid the transformation of the economies 18

2.5. Italy: Long transition as past entitlements were not converted 20

2.6. Belgium: Proposed switch to a points system has been delayed 22

3. To what extent are DB, points and NDC inter-related within PAYGO 22

3.1. Computation of benefits and adjustment rules 22

3.2. Points and DB systems 24

3.3. Link with NDC 25

3.4. Accounting for changes in longevity 26

3.5. Financial sustainability and internal rates of return 28

4. Key parameters of the new system 29

4.1. Reference wage 30

4.2. Indexation of the cost and the value of points 32

Adjustments to wage growth, employment growth and longevity gains 32

Comparison with countries having a points or NDC scheme 35

Generic points system in France 37

4.3. Length of the transition and conversion of past entitlements 40

4.4. Would the reform imply a less redistributive pension system? 40

4.5. Balancing mechanisms 41

5. Conclusion 45

References 49

Table 1. Institutional arrangements for civil service pensions vs private-sector workers 11

Table 2. Systemic reforms implementing points or NDC pensions in OECD countries 14

Table 3. Rules for pension entitlements, initial benefits and indexation 36

Table 4. Simulations of the generic points system in France 39

Figure 1/Figure 1.1. High relative income and low poverty rate among older people in France 8

Figure 2. Remaining life expectancy at the average effective labour market exit age 9

Figure 3. Differences in gross replacement rates between the public and private sector Full-career case at the average wage from age 20 in 2016, in percentage points 13

Figure 4. Few OECD countries take into account wages for only part of the career 30

Figure 5. Ceiling on pensionable earnings, mandatory pensions 31

Figure 6. Projected change in the working-age population 34

Figure 7. Annual increase of life expectancy at 65 between 1980 and 2050 35

Boxes

Box 4.1. The mechanics of the German points system 44