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I read on https://www.lamontagne.fr/paris-75000/economie/les-retraites-ont-ils-beaucoup-perdu-en-pouvoir-d-achat-ces-dernieres-annees_14060647/:

le pouvoir d’achat d’un retraité non-­cadre du secteur privé a diminué d’environ entre 3 et 4 % selon les générations, entre l’année de leur départ à la retraite et 2020 ; celui d’un retraité cadre né en 1932 a enregistré une baisse de près de 14 %.

Google Translate:

the purchasing power of a non-executive retiree from the private sector decreased by approximately between 3 and 4% depending on the generation, between the year of their retirement and 2020; that of a retired executive born in 1932 recorded a drop of almost 14%.

The quote is accompanied by this graph that gives further details:

enter image description here

Why does the purchasing power of the pensions for the "cadres" erode much faster than for the non-"cadres" in France?

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  • What do you mean by purchasing power? Are you talking about how much they pay the person?
    – Joe W
    Commented Mar 11 at 2:02
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    @JoeW en.wikipedia.org/wiki/Purchasing_power Commented Mar 11 at 2:04
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    It seems to me they indexed/increased ('revalorisée') the small pensions with inflation, but not/less the large ones. Commented Mar 11 at 2:04
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    I understand what purchasing power is but not what it is supposed to mean in this context.
    – Joe W
    Commented Mar 11 at 2:24
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    "cadre" is not a good match to "executive". It's more an unclear, but legally significant, combination of manager/professional who is "more than" a skilled trades or hourly worker. An engineer or small team manager for example would not be an "executive" - which is higher-up position, but they would be a "cadre". Commented Mar 11 at 5:09

1 Answer 1

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The article seems to explain this:

Ces érosions s’expliquent principalement par les mécanismes d’indexation des pensions et par la hausse des prélèvements sociaux sur les retraités

It looks like they indexed/increased less (with inflation) the large pensions compared to the small ones. Not an uncommon strategy in other parts of Europe, I might add.

In Italy, higher pensions are increased by less than price inflation (75 or 90%), while small and medium-level pensions are indexed to prices. Similarly, Austria indexes pensions to prices only up to a ceiling; benefits above that level are increased by a fixed amount and Portugal will in future increase smaller pensions by more than larger ones.

A more recent OECD publication on the latter clarifies that "These thresholds, above which gross pensions are indexed by less than price inflation, are equal to 28%, 79% and 51% of the gross average wage in Austria, Italy and Portugal, respectively." It also adds that "According to Chcecherita-Westphal (2022), in Austria, Estonia, and France, government decisions may result in deviations from the indexation formula."

And the last piece referenced is an ECB publication that has this graph, dividing Euro countries by type of pension indexation. France's counts as 'partial':

enter image description here

And they have a collapsed note saying:

For instance, in France, indexation covers basic pensions, but supplementary pension revaluations depend on specific regimes (with no automaticity). In Estonia, France, Cyprus and Austria, government decisions may imply deviations from the indexation formula. In Portugal, pension indexation is determined by a backward-looking formula in which the main inflation benchmark is adjusted up or down depending on past real GDP growth; extraordinary increases have been granted by the government in recent years for the lowest pensions.

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