The French retirement system is based on a simple principle: working people contribute to finance retirees’ pensions. But this balance, long solid, is eroding under the effect of the aging of the population and less favorable demographic dynamics. Today, the observation is clear: according to the latest Agirc-Arrco report published on April 14, France had 1.44 contributors for 1 retiree at the end of 2024, compared to more than 4 in the 1960s. A spectacular fall which profoundly changes the financial equation of the schemes, in particular for supplementary pensions.
This demographic imbalance is not trivial: it acts as a scissor effect between revenues and expenditures. Fewer assets to finance more retirees automatically means fewer resources per pension. The Retirement Orientation Council (Cor) recalls that the system remains generally under tension, with a deficit set to last. The reason? Resources which grow less quickly than expenditure, in a context of accelerated aging. “The retirement system will remain in need of financing for the long term” explains the organization. To compensate, supplementary schemes, such as Agirc-Arrco, adjust their parameters. This involves in particular a lower revaluation of pensionsor even an implicit drop in their yield. So, even if pensions continue to increase in value, they are growing less quickly than wages.
Pensions which gradually decline in the standard of living of working people
This is one of the most striking points of the Cor report: the relative loss of standard of living of retirees. In fact, pensions will not collapse, but they will lose ground : “The average pension would increase in constant euros, but less than average earned income” reveals the COR.
The figures speak for themselves: the standard of living of retirees, currently close to that of the entire population, is expected to decline to reach 87.5% by 2070against 97% in 2022. A gradual evolution, but significant for future generations.
This drop is explained in particular by technical mechanisms: indexation of pensions on prices (and not salaries), adjustments of supplementary schemes and extension of the contribution period. So many levers used to maintain balance at the cost of drop in replacement rate.
How to anticipate the shortfall today
Faced with this structural evolution, expecting only the system to maintain your standard of living becomes risky. The challenge is no longer just to retire, but to compensate for the drop in the replacement rate.
Three levers emerge:
- anticipate a later departure,
- develop a additional savings (PER, life insurance),
- regularly monitor the evolution of its rights to adjust its strategy.
Because in addition to the figure of 1.44 contributors for 1 retireea reality emerges: supplementary pensions remain solid, but their performance is decreasing. The Cor clearly confirms this “Replacement rates (…) will decline over generations”. A movement, linked to demography, which is therefore expected to last.
