France has entered a long period of political instability due to the inability to find a majority to adopt the necessary measures to restore public finances. At the heart of these is the question of the balance of pension systems faced with the ageing of the population. As life expectancy increases, the length of time a retiree receives his or her benefits increases, which generates additional costs. The proposed solution, the postponement of the legal retirement age, is the subject of strong opposition among the population. Its suspension is not considered sufficient, which risks paralysing government action with the blocking by Parliament of the State Finance and Social Security laws.

This policy is not only questionable because it meets with strong hostility. It is based on an overly ideological analysis, the French need to work more, and above all erroneous. The ageing of the population is due as much to the increase in life expectancy as to the decline in the birth rate. The second factor is penalising growth but is a source of expenditure reduction since there will gradually be fewer family allowances. A rebalancing, both in terms of the level of benefits and tax incentives, should also be carried out in favour of the middle and even upper classes, where we are currently witnessing the sharpest drop in the birth rate.

The increase in life expectancy has a significant impact on household financial savings. The record levels of recent years have been attributed to concern about the political environment and the threats to the future of pensions. This is largely false. There is, of course, the increase in inequality and a phenomenon of wealth accumulation in the upper classes. But the increase in life expectancy contributes to this since from a certain age, we consume less because we have fewer needs and above all we are satisfied with the goods we own and which we thus keep longer. There is less temptation to renew your wardrobe and buy a new car.

This phenomenon will increase in the future, which will be bad for growth. Japan experienced it long before Europe with considerable financial savings that allowed the country to finance a public debt almost twice as high as in relation to GDP than in France. The other consequence of this aspect of ageing is that this wealth will be passed on to the next generation shortly before or at the time when its men and women themselves retire. The argument that the public debt will be passed on to the children of those who created it is false, since the latter will inherit the money necessary to repay it, and even much more.

Future retirees will therefore have their pension, their savings and their parents' inheritance. They will thus be the first in history to take advantage of such a favourable situation. The rebalancing of pension plans must therefore take these indisputable facts into account. By the end of 2025, households will have assets of more than 14,000 billion with financial assets net of debt of more than 6000 billion. Everything suggests that the level of this heritage will continue to grow. Housing is the main item of expenditure for a household and it should not be forgotten that more than half of the population is a homeowner and that this ratio exceeds 60% for retirees.

One of the weaknesses of economic thinking is that it always focuses on flows, the wealth created during the year and not the wealth accumulated over time. This is why taxation on households focuses on income (IR) and consumption (VAT). It was also designed at a time, in the aftermath of the two wars of the twentieth century, when their wealth was low or non-existent. But times have changed and we need to adapt economic thinking and the political message that stems from it to today's world. We are surprised and even denounce the idea of taking a few percent from the assets of wealthy households while no one is surprised that salaries and incomes above a certain threshold are taxed at more than 40%.

The way we look at things, and therefore the reforms that must be put in place to rebalance the different regimes, must take into account both demographic changes and the increase in the wealth of the population. For a large fraction of it, the pension they will receive will only constitute part of their resources since they will benefit from their savings and the assets passed on to them by their parents. But this wealth is unevenly distributed and it is justified that in this area too, a logic of redistribution should be imposed, with a greater increase in the value of low pensions and a brake on the accumulation of reserves from supplementary schemes and certain special schemes.

The move towards a funded system does not correspond to this logic of redistribution or to the security required of a pension scheme. The only certain beneficiaries would be the financial institutions responsible for managing them. But with such volatile financial markets, it is impossible to guarantee this security. The answer to these new challenges lies in a different sharing of contributions between the general schemes, whose long-term equilibrium would be ensured with sufficient increases to improve living conditions, and the other schemes whose accumulation of surpluses and reserves would be curbed.

AGIRC-ARCCO has reserves of more than €80 billion and a surplus in 2024 of more than €3 billion. IRCANTEC and the Banque de France have reserves of more than 10 and 8 billion. It is not a question of draining them but of preventing them from continuing to accumulate. The increase in contribution ceilings would provide the general schemes with resources to make up for deficits and in the future to finance the increase in pensions.  In the case of the Banque de France, the savings that the institution would make would allow it to pay an increased dividend to the State, part of which could be allocated to reducing the deficits of the other schemes.

The other argument invoked to protect the independence of the supplementary schemes is the management method that involves the unions and the employers. This is a good example and it is regrettable that it is not applied in companies. Germany, so often cited when trying to pass an unpopular reform, has been practicing it for a long time in the management of large companies. However, the recent decision to freeze AGIRC-ARCCO pensions in 2026 also provides an example of what not to do.

There are a lot of misconceptions circulating in economics. So someone who is rich would be someone who earns a lot of money and not someone who has a lot of money. Similarly, the increase in life expectancy would constitute a financial threat when, on the contrary, it contributes to the generation of savings that are profitable for the economy and make it possible to finance productive investments as well as public deficits. Finally, pension systems should not have a redistributive role and thus contribute to the reduction of inequalities.

These misconceptions have prevented policymakers from identifying the nature of the financial imbalances in the social protection system. We are celebrating his 80th birthday. But in the meantime, the rules of the economy have changed, and new solutions that incorporate these changes must therefore be proposed and debated.