French workers put their feet up at 62, and efforts to change that have resulted in riots. But their pension scheme is a messy, complex arrangement that bears no relationship to ours.
Photo: AFP
In the same week that hundreds of thousands of protesters took to the streets again in France in fury over the plan to raise the retirement age to 64, talk in New Zealand that our retirement age should go to 70 barely raised an eyebrow.
The message from French President Emmanuel Macron is that the country cannot afford to keep the retirement age at 62 and something must be done to prevent a collapse of the system.
But polls show that seven in 10 French people are against the plan and what has riled them further is that Macron used controversial executive powers to raise the age without a vote in parliament.
That has led to hundreds of demonstrations across the country and strikes by workers from rubbish collectors to petrol station staff.
Lyon-based New Zealand journalist Seamus Kearney says it's all about the work life balance. “That’s really a sacrosanct subject here in France.”
And while we might look enviously to France for its 35-hour week and early retirement age, everything is not as it seems, says Kearney.
Kearney says France's super scheme is complicated and confusing with a range of payments to workers depending on their industry and what their union has negotiated. He says workers pay different mandatory payroll charges that go towards pensions.
Among other groups, it is unfair to women who, on average, get paid less than men and start receiving the pension later than men.
Unions have challenged Macron's new policy, saying it does not go far enough to address the inequities.
On top of that, top economists have questioned Macron’s rationale.
“They’ve said ‘well actually, is it that urgent? Is it true that the pension system would collapse?’”, says Kearney. And while it’s true that France spends a lot on pensions compared to OECD, the GDP percentage is not that much higher, and the figures are predicted to balance out in the years to come.
Kearney says the battle is far from over but violent clashes between rioters and police are putting many people off joining peaceful protests.
New Zealand’s Retirement Commissioner Jane Wrightson tells The Detail the two countries' state pension schemes can't be compared.
“There’s a terrible problem that President Macron has got. Their pension costs are nearly 14 percent of GDP, which is very large. Ours is only 4, and we’re projecting to only increase it to 6.4 by 2061,” she says. “So we’re on a very different scale here.
“The other thing to note is that the French are really heavily reliant on state pensions. They don’t have private savings schemes.”
New Zealand's universal pension, where everyone gets the same rate when they hit 65, is not perfect, says Wrightson, but there's no need to raise it. (With the April 1 rise in benefits In New Zealand, a single pensioner living alone receives $496.37 after tax a week, a couple receive $763.64 a week.)
National would progressively lift the super age to 67, if elected, citing people's increasing longevity. Leader Christopher Luxon says it would be done gradually and people would have 15 to 20 years' notice.
Wrightson says we don’t need to do that.
“There is some chatter that everybody’s putting the age up internationally and that’s not true either,” she says. “About 70 percent of OECD countries have a pension age of 65 or lower now, and those that are putting it up – or talking about putting it up – the majority are only talking about putting it up to 65 over the next four decades.”
Wrightson says our focus should be on improving life for Maori, Pasifika people and women, who reach pension age less well off than other retirees – they’re the people who would be hurt the most by an age reset, along with those with manual labour jobs whose bodies are hurting by their mid-60s.
"I get upset when I talk to younger people who say ‘the pension won’t be around when I retire," says Wrightson. But of course there will be – it may be in a different form, it may be better or it may be worse.
However those young people should be starting to think about what they want their lives to be like when they retire.
Wrightson says people who want to find out more about managing their money and planning for the future can go to the independent website Sorted.org.nz.
Get a more in-depth discussion on the economics of retirement by listening to the full episode.
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