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December 2014
For the first time, the
Cour des comptes
issued a public report on the additional pension schemes
managed by the two main associations that act as pension funds for both executives and non
executive employees, respectively AGIRC (
Association générale des institutions de retraite des
) and ARRCO (
Association pour le régime de retraite complémentaire des salariés
Managed and controlled by social partners, equally representing employers and employees, these
pension schemes currently cover 18 million employees and 12 million pensioners. The pensions
they pay out (over €70 billion per year) represent a substantial part of
pensioners' earnings.
Cour des comptes
highlights the aggravation of these schemes
’ financial situation
, which
calls for urgent measures. In the run-up to the negotiations to be opened in early 2015, this report
seeks to raise social partners
’ awareness
of the vast array of choices that lie ahead of them to
improve the situation.
Urgent steps must be taken to overcome the schemesalarming financial prospects
Chiefly thanks to decisive measures taken by social partners since 1993, AGIRC and ARRCO managed
to save significant financial reserves between 1998 and 2008. These savings were intended to bear the
cost of retirement of postwar generations without resorting to debt. However, the sluggish growth in
wages following the crisis has heavily impaired the build-up of these savings since 2008. Other
government decisions targeted towards the basic scheme of the private sector have also had negative
impact on the
additional schemes’
financial situation.
Consequently, AGIRC and ARRCO have suffered persistent deficits since 2009, which now threaten to
exhaust their savings in the near future. If significant recovery measures are not urgently taken, these
savings will be depleted in 2025 in the case of ARRCO, and by 2018 in the case of AGIRC.
To achieve financial sustainability, several combinations of measures (impacting either social security
contribution rates, replacement rates, retiring age, or all of the latter) must be considered. It is up to social
partners to define them.
Even so, the possible weakness of the anticipated recovery and the limited room for manoeuvre imply
that efforts must be shared between employers, employees and pensioners. If social partners were to
leave the retiring age unchanged, there would be no other way to fund future pensions than to limit these
pensions value or to drastically increase contribution rates, with the risk of negative impact on purchasing
power and labour costs.
Regarding executives’ pensions specifically, a particular
effort from this category is paramount to
preserve their pensions. Additional transfers from ARRCO, (
which already pays out €
1 billion per year to
AGIRC) may be inevitable and could result from the two
funds’ merging
. Further steps to make these
transfers between AGIRC and ARRCO simpler, more transparent and fairer should also be taken.
Moreover, many government decisions regarding the basic private pensions scheme can jeopardize the
situation of additional AGIRC and ARRCO schemes. By and large, closer and more formalised
coordination should be aimed at.
A more efficient management and a higher quality of service should be achieved
AGIRC and ARRCO are managed by 37 additional pensions institutions, owned by large social insurance
groups, among which AG2R-La Mondiale, Humanis, Klesia, Malakoff-Médéric and Réunica rank as the
five major players. This highly decentralised organisation partly explains the high management costs
1.8 billion levied on contributions in 2013), that outweigh the basic pension scheme
’s costs by
20%, for a comparable scope of activities.
Cour des comptes
has identified important sources of improved efficiency, particularly in IT and staff
costs. Average wage levels are 25% higher than those observed in the basic pension scheme for private-
sector employes.
The quality of pension payment itself is affected by a high error rate, with almost 10% of AGIRC pensions
and 20% of ARRCO pensions in 2012 suffering an incorrect payment calculation, three payments out of
four resulting in lower income for pensioners. In addition, in 2013, about half of the payments were made
later than the prescribed period of 30 days.
Moreover, it is thought that fraud in additional pension contributions
could amount to between €
2.2 and
2.7 billion per year. Checks on additional pension contributions by the URSSAFs (
Unions de
recouvrement des cotisations de sécurité sociale et d'allocations familiales
, that is, the social contribution
collector for the basic pension scheme) have never been implemented despite being voted in by
Parliament as early as 2007. Furthermore, AGIRC and ARRCO do not benefit from intelligence obtained
by the URSSAFs to counter illegal employment. This situation is detrimental not only to the financial
stability of the schemes, but also to
workers’ rights
The decision-making framework of AGIRC and ARRCO should be reformed with due
respect to the special role of social partners
Social partners representing employers and employees could base their negotiations on even more
conservative economic hypotheses than in the past. They could also consider targeting minimum
thresholds for their financial savings and implementing
guideline principles to fix AGIRC and ARRCO’s
called “
(mainly, contribution rates, retiring age and
pensions’ purchasing power
Finally, additional pension schemes should better be taken into account in the presentation by the
government of France’s public finance commitments towards its European partners
, while respecting for
the major role of social partners.
Guidelines and recommendations
The Court firstly issues eight guidelines for the social partners, among which:
as soon as 2015, reviewing the implementation of the clause that mitigates the the effects of
’ indexation
below inflation;
as soon as 2016, implementing a set of measures
improving the schemes’ balance by
more than
5 billion as of 2018, and
more than €
120 billion by 2030;
strengthening financial solidarity between the AGIRC and ARRCO schemes, along with a specific
effort by from executives (members of AGIRC) whilst aiming at the merger of AGIRC and
ARRCO in the near future;
taking on more conservative economic scenarii for the upcoming and future negotiation rounds.
It secondly makes nine recommendations to the managers of the schemes and to government, including
the following:
designing a formalized framework of cooperation between government and social partners to
decide on basic and additional pension schemes;
reducing total management costs by at least 25% by 2020, that is, a savings effort of a further
150 million per year over the savings already agreed upon by the social partners;
improving the quality of payments and reduce delays;
implementing checks on contributions to additional pension schemes by the URSSAFs and allow
AGIRC and ARRCO to access information obtained to tackle fraud.
Read the report
Ted Marx
Head of Communication
+33 1 42 98 55 62
Denis Gettliffe
Head of Press Relations
+33 1 42 98 55 77