The pension reform in France

According to the government’s official interpretation, the aim is to simplify the complicated pension system in France, consisting of 42 different pension funds and regulations, to create a single fund for all professions and to reduce the billion-dollar deficit of pension funds. That in itself would not be unreasonable, that makes sense. But is that also the point? Not really. Above all, it is about giving financial capital free access to the bond market and opening up new markets.


Hollande and Macron unite against the French working class

Asked if Macron was a president of the rich, former President Hollande answered No, Macron was the president of the super-rich. And Hollande had to know. After all, it was he who had recruited Macron. Hollande wanted to walk the paths of Gerhard Schröder and Tony Blair and also turn French social democracy into a “modern” party of the centre. He therefore, like Blair and Schröder before him, switched to a business-friendly line. He could use an experienced neoliberal economist and his connections to the financial world.

Macron seemed to be the right man for it and so he brought him to the Elysee in 2012 and made him his advisor for economic and financial policy. Previously, Macron was an investment banker and partner (associé-gérant) at the Paris investment bank Rothschild & Cie. In August 2014, under pressure from Hollande and against the will of the majority of the parliament, Macron was defeated by a procedural trick (Art. 49-3 of the French Constitution) Minister of Economy, Industry and digital.

In June 2015, Macron and Hollande whipped a neoliberal law, popularly known as the Macron law, again against the majority of MPs and the left wing of the PS, through parliament with the same procedural trick mentioned above. Guide of the law with more than 200 articles is mainly the liberalization of the French economy. The easing of shop opening hours and the expansion of Sunday and night work, as well as the cancellation or, in the case of large chains, the reduction of the allowances for employees, met with fierce resistance from the trade unions and from parts of the left wing of the PS.

At the beginning of August 2016, a law on labour market reform came into force. At the time, Macron was still minister of Economic Affairs in the Hollande government and was instrumental in drafting the law. According to neoliberal new language, it was about a “modernisation of labour law”, at the expense of the employees and for the benefit of the entrepreneurs, of course. The measures contained therein were classically neoliberal: relaxation of labour law, agreements at company level to undermine collective agreements, facilitation of redundancies and flexibilisation of working hours in order to reduce the statutory overtime supplements. Again, this law was driven through parliament with the help of Art. 49-3. It was popularly called the “El-Khomri law” after the then Minister of Labour, El Khomri. The answer of the workers and their trade unions was the “Nuits debout”, night watches, but they ran dead over time.

The separation came shortly afterwards. Macron was not very popular in the Social Democratic PS. Especially with Prime Minister Valls, he had frequent disputes. He had also probably realized in time that the PS would suffer a devastating defeat in the upcoming presidential elections. And so he left the sinking ship in time and founded his own party with the LREM. Now Macron wanted to become president himself. On 14 May 2017, he took office as successor to Hollande, who had not even dared to run for a second term.

Prepared by a long hand: the pension reform

But the most important project of the Macron government is the pension reform. Because, even if it is not so obvious at first glance: to make here the biggest friction for the financial industry.

It is lamented that the existing System is too complicated and confusing. A uniform system for all professions is now to be made of it. This sounds logical and even the CFDT union has been demanding this for a long time. And you could certainly improve the System. But this is not the intention, secretly they want to undermine the pay-as-you-go system.

The plan is to add the savings of the employees to the pension funds, which in turn should invest them for the contributors on the capital market. This is all the more irresponsible since interest rates are currently lower than the inflation rate, so the expected payouts would not even cover the amount paid in later. The administrators of the paid-in amounts can therefore only make profits with speculation on the stock market. But the next Black Friday is as safe as the Amen in the church. Then everything is gone. But what the heck, it is danced as long as the music plays. The shareholders of the pension funds collect their dividends, the intermediaries collect their commissions and at The Last Waltz one leaves the field. Then the market was to blame. Bad luck for the pensioners.

If the state pay-as-you-go system already leads to small pensions and insufficient standard of living, one should think about how one could improve the existing system and which means could be used to finance it, instead of supplementing it largely with a funded system in order to improve the statutory pension. It is the duty of the state to ensure that people in old age can enjoy a carefree retirement, instead of handing them over to the whims of the financial market and the greed of the fraudsters, who roam there in abundance.

The strategy of directing employees ' money towards private insurance runs in two directions: first, the dismantling of the statutory pension insurance financed by the levy. After all, who would take out private insurance if the statutory pension insurance, in which you are compulsorily insured, were sufficient for a comfortable retirement? And secondly, the establishment and advertising of private supplementary insurance.

BlackRock is in the boat from the beginning

And Macron, the investment banker, has the right partners on hand for this: BlackRock first and foremost. Of the more than € 6,000 billion invested by asset manager BlackRock on the financial markets for its clients, about two-thirds come from pension funds around the world. BlackRock is also a major shareholder in almost all major corporations worldwide. In France, too, Larry Fink’s company is a major shareholder in almost all the major companies, with borrowed money everywhere, BlackRock’s capital is in it, Airbus, Renault, L’oréal, Total, Paribas, AXA, etc. But the money of the French Savers is usually still on savings books and BlackRock wants to get this money.

Macron, who wants to promote privatizations in France, has met Larry Fink several times. The two probably already know each other from his time at Rothschild. France’s privatisation measures are being directed by the Bank in favour of foreign investors. Macron also owes much of his election victory to the world of Finance and the help of international speculators. According to Mediapart, Macron " managed to finance his campaign […], to collect almost 13 million euros in donations in record time. Far from that of En Marche! cultivated Image of a campaign as spontaneous as it was popular, a powerful network of investment bankers discreetly opened its address books for the new president.“The money also came from London. It is the power of money that stands behind Macron.

On June 6, 2017, three weeks after Macron took office, BlackRock CEO Larry Fink was received at the Elysée and Matignon, the Prime Minister’s headquarters. Three weeks later, on 28 June 2017, Bruno Le Maire met Larry Fink during a visit to New York for a “bilateral meeting” and a “Dinner of Attraction”. The economy minister had traveled to the United States to convince Wall Street to invest in France.

In September 2017, Macron appointed Jean-Paul Delevoye, a former member of the conservative UMP and friend of the chairman of BlackRock France, who will be mentioned below, as high commissioner for pension reform. Delevoye held several posts in the government under President Chirac (UMP). He should now draw up the pension reform Plan. Delevoye met with the BlackRock Fund on 3 March 2018, as did all “actors in the field of pensions and pension saving who have requested this”, his cabinet told CheckNews.

On 17 October 2017, Prime Minister Philippe commissioned a committee on public action 2022 with about 30 experts to work on a state reform. Its members include Jean-François Cirelli. Cirelli, like Delevoye, a former employee and adviser to President Chirac, calls for hedge funds to have access to pension insurance. Cirelli and Delevoye are well known since the time of their work for Chirac. Now they worked together again on a project, this time for Macron.

On October 25, 2017, less than five months after taking office, Macron received with great Pomp for an entire day “the cream of World Finance, represented by Larry Fink of BlackRock, the largest Investor in the world, and by 21 other fund managers”. They met at the Elysée in the Murat room, where the Council of ministers usually meets, according to Le Canard enchainé a Premiere, this honor has never been given to a private company before. Five ministers, including Prime Minister Philippe and Finance Minister Bruno Lemaire, attended the meeting.

On 22 October 2017, Lemaire announced the drafting of a law aimed at giving companies the resources they need to “create, transform, grow and create jobs”. On 22 May 2019, the PACT law came into force. Most of the measures entered into force on 1 January 2020.

A discreet section has also been included in this law, which is intended to enable “better accessibility of retirement savings”. There are three areas of reform that affect the savings market and the insurance sector: saving for old age, saving for employees and life insurance.

The pension market is homogenised by opening up to competition, harmonising product taxation and making the legal framework more flexible. Since 1 October 2019, there has been the PER (plan dépargne retraite), which provides for a uniform private pension scheme with 100 percent tax deductibility. Contracts already concluded can be converted into the new private pension. Riester and Rürup send their greetings.

The provisions on the PER contained in the PACT Act may well be regarded as a preparation for the enforcement of the law on pension reform. The private pension industry expects an additional € 100 billion in revenue over the next 4 years.

BlackRock is also cheering, as the PACT law has made it possible to integrate a number of measures that promote the development of pension products sold by BlackRock in particular. The PACT law is a good plan for retirement, BlackRock writes on its website. It is regretted there that the French prefer to put their money on the savings book or invest in life insurance instead of private pension insurance. This market is quite expandable and the PACT law goes in the right direction. In order to get people to the pension funds, they propose, as expected, a reduction in employers ' Social Security contributions. Measures are proposed to strengthen the confidence of French women in the new market and to facilitate the conclusion of new contracts. In addition, a compulsory enrollment of the employees in the new insurance companies as well as a compulsory pension consultation for each every 5 years is proposed.

All preliminary consultations are therefore taken. The Macron government wants to pass the pension reform bill through parliament on 22 January, despite all the strikes and protests.

Impact on statutory pension insurance

In addition to compulsory basic pension insurance, there are also compulsory supplementary insurance policies, in which both employers and employees pay. All these different systems are to be converted into a single System. There is a first contribution assessment limit of approx. € 3,200 for the basic pension insurance. In addition, for each income from the first Euro, contributions will also be paid to the supplementary insurance companies, but beyond this first contribution measurement limit of € 3,200, contributions for employees between this amount and an income limit of approx. € 10,000 will only be paid to the supplementary insurance companies.

For the executives (frz. the “cadres” squad) applies a contribution assessment limit of about 27,000 €. This limit is now to be lowered uniformly for all to 10,000 €. What impact does this have?

Well, the already retired cadres will keep their pension payments. But now less money comes in from the still working cadres. The difference will only be compensated when the last retired cadre under the existing system has died. It is estimated that pension funds will miss out on between € 4 and € 5 billion per year, or around € 72 billion by 2040.

Impact on private insurers: although the cadres now have more net than before, but later a smaller pension, many will probably conclude private pension contracts as a substitute. A double rub for the banks and insurance companies, because salaries over 10,000 € are paid there and not at the hairdresser around the corner. The employer’s share from € 10,000 will then be eliminated for you. This amounts to a gift of € 2.7 billion per year or € 43 billion (60 percent of € 73 billion) to major employers by 2040.

In addition to all other controversial points, the deficits of pension funds will therefore increase rather than decrease. The policyholders are supposed to pay for this by having to work two years longer.

Two scandals at the edge

On December 16, Delevoye had to resign. Delevoye had “forgotten” to report ten mandates to the “high authority for transparency in public life”, which he held on a part-time basis. In particular, a mandate with Ifpass, the educational institution of the insurance companies, was incompatible with his participation in government and his professional activity as a lobbyist of the insurance companies. Delevoye also collected 5,300 € per month for this activity. According to the Constitution, however, a member of the government is not allowed to pursue a part-time job.. The public prosecutor’s office is already investigating after a criminal complaint by the authorities.

Many French women also find it particularly distasteful that Macron, of all people, promoted Cirelli, the CEO of BlackRock, from “Knight” to “Officer” of the legion of honour in the midst of the strikes against the pension reform. The legion of Honor was created by Napoleon, who after the Revolution converted the Monarchist awards into Republican orders, in 1802. The legion of honour is a French Order of merit to reward military and Civil Merit, excellent talents and great virtues.

“Conferring the legion of honour on Cirelli is a provocation,” said PCF national secretary Fabien Roussel on Twitter. It shows the close connection between Macron and the financial world.“For Olivier Faure, First Secretary of the Socialist Party,” BlackRock is simply the dark side of pension reform.”