Pension reform. Sylvie Vermeillet: “If we do nothing, the standard of living of pensioners will drop by 20%”

Sylvie Vermeillet, Vice-Chair of the Senate Finance Committee from 2020, was the rapporteur for the Covid Commission of Inquiry and the debate on the Finance Bill 2023, which was voted on at the end of the year, particularly the taxation of super profits. Although the text of the pension reform was presented in its final version on January 10 by Prime Minister Elisabeth Borne, the tension is felt at all levels, or almost. The senator from Jura will once again be at the forefront as a rapporteur on this burning issue.

News: The government’s desired pension reform crystallizes all the tension. What is your position on the subject?

Sylvie Vermeillet: There is an extreme imbalance in the various pension systems. If we do nothing, the standard of living of pensioners will fall by 20% by 2070, as wages will grow faster than pensions. The example of railway workers is surprising: there are 130,000 active workers for 237,000 retired, so this particular scheme, like the RATP, is unbalanced between farmers and even seafarers. These are special schemes that are demographically unbalanced and therefore deficit. The state legally contributes to them, but in very different proportions because the benefits are not the same. Yes, pension reform is needed, but retirement age is not the main issue. Since the early 2000s, we have seen a decline in the number of contributors while the number of retirees has increased. In addition, healthy life expectancy is still increasing, but at a slower rate than in the past three decades, and the gap between men and women is narrowing. So you should be careful about restarting: 65 is too old. For me, I don’t need to go beyond 64 and look at 63 and other parameters.

How do you explain this development?

VS: We should start by increasing the birth rate. Today, there are 1.7 children per woman, but we’ll need to go above two to find a high number of working people in twenty years. Therefore, it is necessary to have a pro-natalist policy and help communities create kindergartens. Certainly, between 2035 and 2040, the number of baby boomers will decline, thus reducing the peak in the number of retirees, but this will not be enough to find a sustainable system.

“We should start by increasing the birth rate.”

How much does the pension system cost?

VS: Annually: 345 billion euros. Currently, pension funding is 13.8 percent of our gross domestic product (GDP). With a 1% growth rate scenario in 2070, this would also require about 13.7% of our GDP, excluding the costs of taking on the responsibilities of aging and dependency. Remember that since 1970, the standard of living of pensioners in France has steadily increased, reaching 108% of the working population in 2020. In other words, in general, pensioners live slightly better than working people. But it’s going down, and if we do nothing, that standard of living will drop by 20% by 2070 because wages will outpace pensions, and that’s the bottom line. So how will the elderly finance their addictions if their means dwindle?

How do you feel about special diets?

VS: SNCF and RATP are the main damaging schemes. It is legal for the state to compensate the demographic deficit of these regimes. But not special advantages. For example, I believe that it is not within the state’s power to reimburse the costs of retirement at age 52 for SNCF and RATP carriages. Moreover, I am in favor of, for example, paying a stipend to doctors for long-term education. Forty-three years of contribution is good and should not be touched. This is intolerable for an apprentice who starts at 16, but we will not ask a doctor who starts his career in his 30s to work until he is 80. The challenge of pension reform is social and intergenerational justice.

You are opting out of the 2023 Finance Bill (PLF), where you are not followed through on the taxation of super profits.

VS: PLF 2023 is 3057 amendments to the Senate, three intense and testing weeks. I am proud of the quality of the debates, which were exceptional. I have a lot of respect for this room. I fully agree with what President Gerard Larcher said when he said no in principle and yes out of discipline. With the centrist group, i.e. 57 senators, we are the point of balance, even if Les Républicains do not follow us in taxing super profits.

“BNP Paribas to hit 10 billion profit in 2022.”

What opposed you?

VS: Total, BNP Paribas, Société Générale, LVMH, highway companies, CMA CGM shipping are making super profits from the war in Ukraine. I am not in principle in favor of taxing large companies, but in 2020 when we voted for a billion euro aid to CMA CGM, when it generated 14.8 billion in revenue in the first half of 2022 (probably 30 billion in 2022). the company contributes to the needs of our country. Another example is BNP Paribas, 10 billion profit in 2022. Economy and Finance Minister Bruno Le Maire opposes taxing super profits, arguing that companies need the money for energy transitions. But I note that this didn’t stop him from taxing energy companies through infra-marginal rent, and he was right, but why not others? How is BNP Paribas affected by the energy transition? That is why the minister asked them to make efforts themselves, on the contrary, interest rates are rising. Moreover, it is not up to the companies to decide on the tax they agree to, it is up to the Parliament, even created to do so.

Then the situation changed.

VS: In September, Prime Minister Elisabeth Borne and Europe explored the topic. Moreover, the European Union (EU) has decided to tax the exceptional profits of energy companies by accepting our amendment (Editor’s note, the device allows the EU to deduct 33% of the taxable profits of these multinationals, over 20%). , as of January 1, 2023). But we wanted the participation of all windfall companies, not just energy companies. Why are transport (NDRL, 3.3 billion euros paid to shareholders of highway concessionaires in 2021), luxury, laboratories, insurance and banks raising interest rates unaffected by this outstanding contribution? We wanted an exceptional contribution from exceptional profits to finance exceptional expenses. It is normal for the State to recover a little when some people become very rich. Otherwise, I don’t see how you can keep the budget: paying aid and canceling taxes for three years means some tax revenue at the same time.

Are you opposed to abolishing the business value added contribution (CVAE) payable by companies that reach a certain turnover?

VS: A definitive repeal of CVAE over two years would devalue our public finances by €8 billion. 10 billion removals from CVAE were already recorded in PLF 2021. When our debt has reached 3000 billion euros and our country no longer borrows at negative interest but at 2.5%, it still seems inadvisable to deprive ourselves of the recipe. If the state needs strong and flexible companies, it also needs strong communities. We wanted to postpone the repeal of CVAE, if not forever. Nevertheless, I think the 2023 finance bill will be fixed.

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