French President Francois Hollande’s plan to lower the minimum retirement age to 60 from 62 is fully financed through higher payroll charges, the government said.
The cost in the first full year is 1.1 billion euros ($1.4 billion), peaking at 3 billion euros in 2017, the government’s spokeswoman, Najat Vallaud-Belkacem, said after the weekly Cabinet meeting. The change, which takes effect Nov. 1 and involves those who started work as teenagers, will add no more than 110,000 people a year to the retirement rolls, the government said in a statement.
“It was a major campaign promise and a needed act of social justice,” Vallaud-Belkacem told a news conference in Paris today.
Hollande’s predecessor, Nicolas Sarkozy raised the minimum retirement age to 62 from 60 two years ago. Under Sarkozy’s measure, those starting work at 17 could still retire with full benefits at 60, with the result that they had to work two more years to qualify for a pension than someone who started at 19.
Under Hollande’s changes, full retirement will again be available at 60 for anyone who began work before they turned 20. Those retiring at 60 can count no more than six months of unemployment and six months of maternity leave as part of their job history, in addition to the one year of sick or maternity leave allowed under the old system.
The measure is being funded by a 0.1 percentage-point increase in payroll charges, which Vallaud-Belkacem said amounts to an extra 2 euros a month on a median French net salary of 1,600 euros a month.