Retirement: will civil servants have to contribute more to replenish the plan’s coffers?

The retirement plan for local and hospital civil servants is in deficit of several billion euros. A financial situation which could have repercussions for the agents attached to it.

All signals are red. The National Retirement Fund for Local Authority Agents (CNRACL) is experiencing an increasingly degraded financial situation. At the request of the Prime Minister at the time, Elisabeth Borne, a mission was entrusted to the General Inspectorate of Social Affairs (Igas) in 2023 to examine the state of the finances of this scheme which concerns 3.7 million territorial and hospital civil servants, active and retired. In 2024, the CNRACL will have a deficit of 3.7 billion euros. And if no measures are taken, the hole will reach more than 11 billion euros in 2030. Which will generate “a cumulative deficit of more than 60 billion euros”writes Igas, in its report made public Friday September 27.

Why such a financial slippage? First observation: the deficit was predictable due to the demographic evolution of contributors and retirees to this scheme. While at the beginning of the 1980s, the ratio was 4.53 contributors for one pensioner, it tumbled to 1.46 in 2022. Added to this is a higher-than-average life expectancy in retirement and a significant number of early departures, enough to further strain the plan’s coffers. The CNRACL is also bearing the brunt of the increase in contractual jobs in the public service which contribute to the general system and not at home.

The social risks of an increase in contributions

To put an end to this stalemate, the report proposes several avenues for recovery such as “compensation for the lack of contributions resulting from the use of contractual agents by the establishment of a levy for the benefit of the CNRACL on the salaries paid to contractual agents”. Igas is also studying hypotheses that would directly affect the wallets of civil servants, for example by increasing their contributions, which would reduce their net salary. However, she evokes the social repercussions of such an increase. “In this hypothesis, civil servants will request revaluations of the index scale or an acceleration of it in order to compensate for this loss”the authors of the report presume.

During the employee contribution, Igas is also studying the possibility of an increase in the employer contribution. And contrary to what one might think, such a measure would not be completely painless for civil servants. The increase in contributions leading to an increase in labor costs, “public employers will seek to moderate salary dynamics in order to gradually absorb this additional cost or to recruit contract workers rather than civil servants”warns the Igas.

Towards a higher contribution on premiums?

Another hypothesis: review the contribution base for civil servants. Currently, they contribute very little to their premiums even though they can represent more than 20% of their salary. If this were the case, the net remuneration of civil servants would mechanically decrease, but their future pension would increase. In the short term, the deficits would decline, but in the long term, the regime’s finances would risk being even more degraded. “Thus, if the financial effects of this measure prove positive for around twenty years due to the immediate contribution of contributions, the gradual increase in rights would lead, over this horizon, to widening the forecast deficits by around 15 to 20%”points out the Igas.

The most plausible avenue put forward by the report and which would concern future retirees, the alignment of the increase for children. At the CNRACL, it is 10%, as with the general regime, from the 3rd child. Then, for each additional child from the 4th, 5% is added to this 10%, while under the general regime, whatever the number of children, the increase remains capped at 10%. Igas therefore recommends aligning, “by a decree in the Council of State, the calculation of the increase for children at the CNRACL on that of the general system by removing the additional increase of five points for each child beyond the third”.