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Hollande Revamps French Pensions With Longer Working Lives

President Francois Hollande will lengthen the number of years of required work to achieve a French state pension as part of an overhaul of the retirement system intended to trim the deficit.

French workers will have to contribute to the system for 43 years in 2035, up from 41 years currently, Prime Minister Jean-Marc Ayrault said yesterday. Contributions by both employees and employers will rise starting next year, though the government will reduce other payroll charges in an effort to contain labor costs.

“There isn’t a retirement reform on one side and economic policy on the other,” Ayrault said in televised comments from his office in Paris. “Our goal is growth. The place of work in our social model is essential. We’re going to reform charges related to family policy so that they’ll weigh less on growth. This will happen in 2014. There’ll be no increase in labor costs next year.”

The pledge to reduce other charges was key to winning support from Medef, France’s biggest business lobby, and keep wages in check at a time when Hollande is struggling to revive an economy that the finance ministry expects will barely grow this year.

“The prime minister has extended an olive branch on social charges and labor costs,” Medef President Pierre Gattaz said after meeting Ayrault. “If it results in a cut in charges, ‘‘I’d say, ‘bravo.’’’

The plans are aimed at eliminating the 20 billion-euro ($27 billion) deficit facing the pension system in 2020 and keep its accounts in balance until 2035, when the impact of the post war baby boom will begin to fade.

‘‘This is an important step,’’ said Michel Martinez, an economist at Societe Generale in Paris. ‘‘Companies and economic competitiveness are protected.’’

France’s effective retirement age would be about 66 in 2035 under the plan, Martinez estimates.

To contact the reporter on this story: Mark Deen in Paris at markdeen@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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