The French system is a pay as you go system. It's not your money you saved you retire on (unlike, say, Malaysia), it's the money current workers are still putting in that you get. That, together with the proven actuarial fragility of the future French state to be able to make good on its current commitments makes this quite risky to carry out and makes it difficult to divide the kitty equitably : why should current workers pay for you if you bail out early?
Note that, in France, the level of mandatory contributions is such that you really do expect to retire on state pensions, as you don't have that much disposable income left over to do major investments. Contrast that with the US or Canada, where there is bare minimum state safety net, but individual investments, in your name, is where the bulk of your retirement is expected to come from.
There is a bit of verbiage worrying about the issue here, from the society of specialized actuaries in France.
In addition, logically, the increase in life expectancy would lead to a decline in the retirement age. " In all the countries where the system has been put in place, we have seen the retirement age reduced", notes Brigitte Écary. The figures confirm this: thus, in Sweden, workers can leave as early as 61, but the average age at which they retire was over 65 in 2014, compared to under 60 in France, according to the OECD. In Italy, the phenomenon is even more obvious: the retirement age, which was 60 for men in the mid-1980s (55 for women), has exceeded 66 and is heading towards 67 , compared to 62.9 years on average in OECD countries! And he should reach 67 in 2019, in line with the increase in life expectancy. The system itself would encourage individuals to work longer, since the calculation of the conversion coefficient takes into account the retirement age: the later a person decides to retire, the higher their pension. Conversely, people who would like to retire earlier will be able to do so, but in return for a lower pension. The retirement age becoming only a cursor, and no longer a cleaver on which politicians can tear each other apart...
Honestly, the system was already a house of cards when I left France in 1997. Nothing's changed. Macron is only doing this because he has to.
Economist in 2019:
This puts strain on the public purse, all the more severe because the French system relies on taxing today’s workers to pay the pensions of their elders. In June the official pensions advisory council warned that by 2022 the public-pension deficit would rise to €10bn ($11bn), up from its previous forecast of half that figure. Overall, France spends nearly 14% of gdp on pensions, a bit less than massively indebted Italy (16%), but more than Germany (10%) and way above the 8% oecd average.
Economist, this week:
This lifestyle comes at a cost. France spends 14% of gdp on public pensions, nearly double the oecd average. By 2030, according to Bruno Le Maire, the finance minister, the deficit in the French pensions system will reach €14bn. The new measures should comfortably close that gap. “Given the current environment of upward pressure on interest rates, this pension reform is an important message to investors,” says Ludovic Subran, chief economist at Allianz, an insurer.
What to understand here is that the system is already under strain, with the current age demographics. As France gets older...
As to room to for tax-based solutions:
8.55% Old Age Insurance (ceiling of 3,428 EUR) (Employer)
6.90% Old Age Insurance (ceiling of 3,428 EUR)(Employee)
So 15% of gross payroll already just for this. To which you add add health insurance deductions. Out of $100 being deposited to your bank account, there is typically another $40-45 pre-deducted by your employer and you. So yeah, "tax based solutions" aren't going to fix this.
More on that, from OECD:
France ranked 2nd¹ out of 38 OECD countries in terms of the tax-to-GDP ratio in 2021. In 2021, France had a tax-to-GDP
ratio of 45.1% compared with the OECD average of 34.1%. In 2020, France was also ranked 2nd out of the 38 OECD countries in terms of the tax-to-GDP ratio.
Or, another data point, see Data Summary table, France has one of the highest payroll taxes in the developed world. That payroll tax is often especially problematic for employers and low paid workers.
I also want to quote Roland from the comments:
I believe your proposal would create a feedback loop with an outcome that is difficult to predict and ultimately would reduce security.
And Phillip' answer:
The problem is that the average behavior of people in a macroeconomic system is much harder to predict that economists would like to admit.
I think it would be very difficult to switch horses from a pay as you go model to something else (due to the temporal coupling effect across generations). Either a flexible system as suggested in this Q. Or a system relying mostly on individual retirement accounts.
And even more so with a population with the entrenched attitudes of French people as per acquis sociaux ("earned social rights"). If that sounds snooty... veuillez m'excuser and let's see how many strikes come up in the next few months.
From some now deleted comments:
Don't think of this as a baseline, basic safety net. It is the whole pension plan for people, backed by the state. It is what they will have to live on and is intended that way.
Immigration isn't something I am concerned with in this answer. I am generally neutral, even positive, towards immigration. But it's not a core part, or solution, to this issue, not for France.
When modern French pension plans started post war, they used a 65 year old retirement age as basis. Since then the life expectancy has gone up, a lot (France is one of highest in the world👍). Other countries have responded to this pressure by upping their retirement age, not France. France is special!
French politicians have often campaigned on lowering retirement age, because it wins elections. See Francois Hollande. In the past, a low retirement age, in measures to send off people before even that, was a deliberate mechanism to lower the apparent unemployment rate. Macron is not doing this for his own pleasure: this is what you lose elections on, in France.
Once acquired, a benefit in France seems cemented in perpetuity. In the time of steam trains, retirement age for train drivers and machinists was 50 years old. Shoveling coal into locomotives and coal dust into their lungs, you can see why: they probably didn't live long past 50. It might have been the correct thing to do then, but it is still going on long past the disappearance of steam trains:
Train drivers can retire from the age of 50, but the average retirement age is 54 years and 1 month according to the CPRPSNCF activity report.
If this seems stridently ideological and right wing: consider what a possible collapse of this system in the future would mean to people nearing retirement age at that time - they would get pretty much nothing, having contributed all their life. Meanwhile, older people now, like in many countries, have more voting power than younger people and are not averse to using to further their own interests.
Their retirement is not at risk.