French people are plagued with doubt over retirement pensions. A recent study carried out by Opinion Way for the second pillar schemes – AGIRC and ARRCO – confirms people’s mistrust of this mainstay of our social insurance system. Employees are worried, insufficiently informed, badly prepared and just groping in the dark. What is becoming all too clear for them is that they will have to tighten their belts. Is this the beginnings of an awareness of the need to cater for this stage of their life?
Retirement – the great unknown
40% of private sector employees say they are not certain to have a retirement pension. Only 30% say they are confident while the same percentage just bury their head in the sand – they do not think about it. These figures quite simply demonstrate total misunderstanding in France of what is an opaque system. 68% feel they are poorly informed. And the figure rises to 79% among those under 35.
Even so, the study reveals that few employees make any real effort to anticipate the end of their working life. Despite the uncertainty and fears, only 39% are preparing for their retirement now, while 60% have put if off till later. Another study1 even shows that saving for retirement is actually on the decline. This only increases people’s anxiety over reaching retirement age.
57% would prefer to stop work at the legal age
For a long time, employees in France have been overestimating the pension they thought they would get on retirement. This is no longer really the case. A TNS Sofres study conducted in 2014 already showed a downward trend in the replacement income anticipated by employees. Today, 79% believe that their pension will be insufficient while 50% of pensioners, on the other hand, consider that their pension is sufficient. Is this an overdose of pessimism on the part of people still in work? No. They have, most certainly, taken on board the idea that replacement incomes are set to decrease over the coming decades.
Are French people ready then to work longer to earn more? Not at all. On the contrary, 57% of people in employment would prefer to leave at legal retirement age even if this means a lower pension. Only 6% believe that reducing pensions would be an acceptable means of bringing the pension systems back into balance. On the whole, responses show that whilst people in France are conscious of the problems they will have to face in the future, they are not at all conscious of the solutions required. But, if living standards in retirement are to be preserved without extending the duration of contributions then employees have no other choice than to save up or pay contributions. In this equation with three unknown variables, you just cannot have your cake and eat it too.